Seller at Open House Was Actually A Realtor

I went to an open house two weekends ago in Mission Viejo, California. It was a really nice house not on my original list of must-see interesting properties. It was one I just noticed while driving around. The yard sign said "Open House", so I decided to pull over and take a quick look. No realtor was present to greet me. Instead, the proud owner showed me the home throughout and did a pretty good selling job too. Then I glanced at the crisp, glossy brochure. This home was priced over $890,000, so I was already thinking to myself "no fucking way". I mean, some of the homes in that same area had been price much, much cheaper, but this was a really nice home. A lot of nice extras added in. It was the kind of place that just screamed "HELOC!" at you.

The owner knew it was out of my range. Don't ask me how, but it was cool.

I said thanks and was making my way to the door to leave when the owner started to ask me a series of questions, like whether I was working with a Realtor already. When I answered "yes", the owner didn't say "I'm a realtor too", but then proceeded to ask me a lot of questions about what I was looking for in a home and when I intended to buy, and then whether he could start to send me listings.

I'm like, WTF, I just told you I'm "working with a Realtor". I thought that was universal code for Realtors meaning: "Does not compute. No commission opportunity. Say Goodbye and Thank you. Seek New Target to Destroy."

But no.

This is not the first time this has happened to me either. I'm sort of new to home shopping in Orange County California, but maybe it shouldn't surprise me to see the amount of client poaching going on out there these days. It doesn't matter how forthright you are, or whether you state clearly "Yes, I'm already working with a Realtor!". I've noticed that many Realtors - and I'd say 1 out of every 2, will still try to sell you their agency over others.

This is probably fine as an attempt to get more business. I understand that completely. But if you're a Realtor, I can't imagine this approach working very well. And for me, you better damn well come prepared with some pretty impressive references. For example. I want to see references from your last 7 to 10 clients (homebuyers), because I'm going to call on them and ask them about your services and performance. I'm also going to ask them about your bedside manner and what sales tactics you employed. Did you pressure them into buying more house than they could afford? Did you tell them the truth about the value of the home they were buying despite what the liar loan "comps" were at the time? Did you recommend the buyer to a favorite, skid-greasing lender of yours, and if so, were they happy with the mortgage product they wound up with?

I think these are fair questions to ask. And no, I'm not expecting many Realtors to cooperate with such requests and voluntarily open closets to me like this. Too many bones might come flying out.

But sales is all about building customer relationships. It's also about building trust.

Why Don't Renters Receive A Tax Deduction In Kind?

Following the wildly successfully Open House Weekend in Southern California and Orange County, I was taking inventory of all the cash being thrown around by our federal government ($8000 federal tax credit) and the now de facto bankrupt state of California ($10,000 tax credit over 3 years) and I asked myself a silly question:

Why are any American taxpayers supporting or subsidizing this approach?

I think the answer is that as human beings, beliefs inform our actions. If you believe that the national and/or state economy will only turnaround by re-invigorating and re-inflating a collapsed asset bubble like real estate instead of subsidizing local jobs and new industries, then you will no doubt support such real estate tax subsidies. If you only get paid when a home is sold (due to the lure of such tax subsidies), then you'll also no doubt lobby support for such subsidies to continue.

My question is why can't renters receive similar tax benefits and subsidies?

Is it because Realtors don't get paid a commission when a renter extends his lease contract?

I can't think of any reasons why renters should receive fewer benefits on the national and state tax front. Or conversely, I can't think of why renters should suffer more under the current federal and California state tax codes.

Renters also have tight household budgets. They have work obligations. They pay federal and state incomes taxes. Many also have families, as well as short- and long-term financial goals that they strive to meet. Renters also volunteer and serve local communities. It might also surprise people to know that renters also happen to vote. The President of the United States, members of the US Congress, the Governor of California and the entire state legislature in Sacramento would be wise to remember this last point.

The suggestion I keep hearing is that renters don't pay property taxes, and therefore are equivalent in some way to a second-class citizen on par with extortionists and tax evaders. It is argued that renters sidestep responsibilities to the greater good and the community at large. By not paying property taxes directly, renters don't help to fund local schools and keep cities and towns "nice" and "safe". Because they do pay property taxes directly, homeowners (most of them actually homedebtors) meanwhile are to be commended and rewarded by both state and federal government (and thus by taxpayers everywhere) in the form of tax breaks and loopholes.

Is this fair taxation?

I consider it unfair and I would continue to believe so even as a homeowner (homedebtor) myself someday.

Maybe I'm old-fashioned, but I prefer to pay my own way. I don't like freeloaders. And I dislike the idea of anyone portraying me as such just because I didn't buy a $700K single family home when I first moved here five years ago.

The property tax argument is also ridiculous. Any landlord who is a landowner (or landdebtor) who pays property taxes himself, but fails to apply or distribute such costs to his tenants via the monthly rent charge might be a nice person, but he'd also be considered a financial imbecile, or both. Renters do pay property taxes. It's embedded in the rent they pay.

So I just don't get it. As a renter, I'm already accustomed to paying my fair share of income taxes both state and federal. But why are home debtors afforded greater protections under the United States federal and state tax codes?

Can someone explain to me why this is? How is this arrangement fair and equitable, and more importantly, what convinces people that these $8000 and $10,000 tax break arrangements are money well spent, benefiting the greater good to such an extent that no other options or subsidies be considered?

Seriously, I'd really like to know an answer or two.

A Challenge to America's Realtors

Yeah, I remember you.

I would like to issue the following challenge to every single active Realtor(R) in the United States of America to make a series of phone calls this coming week to your top five (5) home sales clients (home buyers) in terms of highest sales transaction value for each of the following three years: 2005, 2006 and 2007.

1. Ask them how they are doing? Job? Family? Finances?

2. Are they still happy with their new home?

3. Are they happy that they bought the home when they did?

4. Is there anything they would have done differently?

5. How has the financial meltdown and housing crash affected their lives?

6. Would they accept your Realtor services in the future?

Good luck.

Please add responses in the comments section.

Thank you.

Markus Arelius

Principal Reduction Plans: Obama's "Screw You!" To Responsible Taxpayers and Savers

You were wrong.

You were wrong not to leverage yourself into oblivion along with everyone else between 2003 and 2008.

You were wrong to try and save money for your retirement, your children's education, and that not too distant "rainy day" your parents told you about as a kid.

You were wrong to wait for rental parity.

You were wrong to keep scraping just enough money together month after month in order to stay current on your upside down mortgage.

You were wrong to rent, and no, you'll receive no taxpayer-funded financial relocation incentive. That privilege is reserved for financially inept home debtors only, not smart, hard working savers.

You were right to game the mortgage lending system and lie about your income.

You were right to throw caution to the wind because real estate never goes down in value and even when it does, there's a safety net bought and paid for by your stupid tax-paying neighbors to catch your dumb ass when you come careening downward.

You were right to siphon the hundreds of thousands of dollars out of your home with home equity lines of credit (HELOCs) so you could buy those granite countertops, trips to Hawaii and that pathetically stupid looking white Lexus SUV for your wife.

You were right to follow the advice of corrupt real estate sales people and all of their army of duplicitous, REIC-bribed economists, because the effort and value associated with marketing a $500,000 house versus a $700,000 really is really worth the extra $6,000 you paid them in transaction commissions.

You were stupid to believe anyone in government, least of all a Harvard Law Review student come President, would defend U.S. contractual law or defend against moral hazard.

You were dumb to believe Barrack Obama would utilize common sense, prudence and a sense of fairness to govern

The United States of America is already headed for strategic default at 200 miles per hour. Obama's principal reduction plan just slammed the heel on the accelerator.

This really is change you can beLIEve in.

California Homedebtors Punished for Their Arrogance and Financial Ineptitude

Look, it's not a state or federal crime to be incredibly arrogant and financially inept, but you've got to admit it sure can cost a pretty penny.

How can so many people be up to their eyeballs in financial distress?

One would have to hit the rewind button back to 2004 and 2005 with our favorite Realtor sales schtick:

1. "15% (appreciation) is in the bag!"
2. "Get in now while you still can!"
3. "They aren't making any more land!"
4. "Buy now or be priced out forever!"
5. "It's a great time to buy a home!"
6. "Interest rates have never been this low!"

Oh man. I get all woozy when I think about these jewels of Realtor wisdom.

I really wish somebody would force every single Realtor in Orange County to send out a 360 degree survey to their past clients between 2005 and 2008. I think that would make very, very interesting reading. Alas, I cannot do this, as I'm not a Realtor.
And Realtors don't have the guts nor the integrity to do this. Oh, the rage that would pour off those survey pages!

I don't blame them. It would be too disheartening to realize just how many lives can be derailed financially as a result of one's own greed - that drive to see the transaction exchange take place, regardless of the foreboding consequences.

Many of the individuals who fell for lines 1 through 6 above have or soon will foreclosure on their expensive southern California properties. They will have to pay income taxes on the amount of debt forgiven by the financial institution or bank.
Lost home. Lost credit score. Massive income tax liability.

There are those who believe these individuals deserve financial aid from state and federal government. I cannot count myself among them. You signed the dotted line. You made your bed. Many of these people scoffed at renters and savers, and those who chose not to leverage themselves into oblivion. I can only salute them for their arrogance and naivete.

The Jeronimo Zone in Lake Forest

So what's the deal with the "Jeronimo Zone" in Lake Forest, California these days?
This seems to be the only freaking area in the entire community where single family homes are up for sale at a reasonable price.

Oh, wait a minute. It must be that Amtrak line. Yeah, that's it! Dammit if young families with children settling down in Orange county don't just love to live within busted earshot of a howling locomotive.

And what about my wildfires?? I distinctly remember requesting a single family home located as precariously close as possible to one of the more hot, windy and dry areas where wildfires most easily commence in Lake Forest!

Realtors and foreclosing debt freaks, please don't disappointment me now! What do I see here but a few SF homes available in Foothill Ranch!!!!! Sweet!



Hmm, raging wildfires or eardrum bursting train horns? Eardrum bursting train horns or raging wildfires?

Aww Gee, it's so difficult to choose!

Well, according to Redfin.com, there are a whopping 16 single family homes for sales in Lake Forest between the prices of $350,000 and $600,000 (4 bed, 2 bath).

But let's just see what Realtor.com has to say:


Realtors(R) of the NAR hate Redfin.com because Redfin capriciously states the previous sales history data of listings on their site. Realtors have the MLS, and apparently much more additional information and wisdowm that Redfin could ever dream of having. This is the only conclusion I can come to because Realtor.com indicates that there are not 15, but 55 freaking single family homes priced between $350,000 and $600,000 (4 bed, 2 bath) in Lake Forest today.

Meanwhile Zillow.com thinks Redfin and Realtor.com are both full of shit, because there are not 15, and not 55, but 57 single family homes available for sale between the prices of $350,000 and $600,000 (4 bed, 2 bath).

Jesus! Get it right, Realtor.com!



All I can say today is thank goodness for two things:

1.) For Jeronimo (or Geronimo) that merciless Apache medicine man, and
2.) The high level of data accuracy and integrity that is simply flooding the real estate numbers in south OC these days.

Doctor, I have a bad case of Schadenfreude

I re-read this article today from Dr. Housing Bubble again. If you're considering buying a home in Orange County California, I highly recommend it to you.

I think it's interesting to consider such an article when laid next to the very recent views (January 2010) of realtors like this one, who has stated he believes that home prices will increase 7.5% in Orange County in 2010.

I'm not saying prices won't increase by 7.5% in Orange County. However, given the long laundry list of suspiciously errant opinions on the direction of the housing market in California over recent months, I think the Orange County register needs to demand evidence and facts, not just subjective stated opinions of realtors. I don't care if a realtor has been in his/her profession for 17, 20 or even 2 years. Answering the "what" question is not good enough. Let's start demanding that the "why" questions be answered as well.

What evidence suggests to us that the Orange County residential housing market will increase by 7.5% in 2010? I just don't see it.

Zombie Banks!

So when is the government actually going to do something about all of these zombie banks? Jesus, I thought 2008 and 2009 was bad enough. According to TheStreet.com, 2010 could be even worse in terms of bank failures and pounds of taxpayer flesh to keep them alive and kicking.

Have you checked recently whether or not the institution you bank your funds today might in fact be a walking, undead, taxpayer brain-eating abomination? I did. I bank at a credit union and it's surprisingly doing alright, financially stable. Definitely not a zombie.

Without the taxpayers whom they've royally screwed, many of the banks in America that we see today would have otherwise failed and been no more. But thanks to top tier bribery of our elected officials in Washington under the auspices of the 1st Amendment, we get....ZOMBIE BANKS!

They should be gone. New market entrants with better management, better and more competitive services and higher financially stability should have taken their place to serve the market. But no. We can't have that.

We taxpayers are the eternal host of the party to zombie banks!

Even after Lord of the Rings, I couldn't fully understand and appreciate Peter Jackson. Only after watching Braindead can one witness his true genius and apply it to our daily life. Zombies sure are scary.

CAR: A Positive Impact to the Market in Coming Months

California home sales increased 4.7% in November 2009 vs. 2008, and median home prices increased 5.8% in November as well.

This sounds fantastic. The residential housing market in California is getting revved up for a jaw-dropping recovery.

Right?

C.A.R. President Steve Goddard:

“Efforts by lenders and the government to assist homeowners at risk of foreclosure have led to fewer homes available for sale, and an increase in the state’s median home price. California’s median home price increased year over year in November for the first time since August 2007."

So government and lender actions have restricted market supply ("homes available for sale") in California resulting in "an increase in the state's median home price". So the market has actually not truly corrected itself yet. Without foreclosure moratoriums and government and lender finger fumbling, we might see a different set of circumstances. Higher volume supply of homes for sale and higher pressure to lower prices perhaps?

Mr. Goddard again:

“The extension and expansion of the tax credit until April 30, 2010, along with low interest rates, should continue to positively impact the market in coming months."

Is it just me or does it seems like Mr. Goddard and the California realtors he represents generally view a "positive impact" on the housing market in California to include following:

- low interest rates
- low market supply of homes for sale
- high sales prices
- federal tax incentives to encourage people to buy a home now

So I ask you:

Are low interest rates really a good thing?
For the short term home affordability? Maybe. But what happens, my realtor friends, when rates increase and the people who have been encouraged to buy now at $500K and $600K with these low rates decide to or must sell their homes in 2, 3 or 5 years and rates are significantly higher? I don't think they'll share your present views on this subject. The time to buy a home is not when rates are at their lowest, but when rates are at appropriate or even high levels. When rates go up, sale prices (and asking prices) typically must and do decline. When rates are low, sale prices are normally quite high (as they remain to be in Orange County California, for example). If I buy a $550K SF home today at 4.75%, in 5 years when rates are 8% or 9%, if I have to sell, I'm going to be f%$#ed.

Is a low market supply of homes for sale a good thing?
If you like to see high sales prices per home, then of course. This is great news for home sellers. As for potential buyers, well, this is the part where you're told to get in and pay now, miss the train, or piss off.

Are high home sales prices a good thing?
For sellers, definitely. Who doesn't want to sell a $230K piece of shit single family home in Lake Forest, California for $550K or $600K? Most homedebtors who live here already have this expectation. You'd have to be out of your mind not to love such a scenario. But why in the world would realtors be in favor of high home sales prices?
Gee, I wonder.

Are federal tax incentives to encourage people to buy now a good thing?
Government intervention certainly has it's place in both micro- and macroeconomic market scenarios. It can be a highly effective catalyst for stabilization and regulation, leading to economic recovery of either ailing and devasted (past tense) markets. The residential housing market has almost been reduced to ash in California. In some parts of the state (you know, since Real Estate is LOCAL!!), there is more incineration in store (in places such as Orange County once the tens of thousands of Alt-A and Option ARM mortgages come tap, tap, tapping at our tax-paying, chamber doors). Realtors want the government to provide the market these incentives to keep the market on life support, because if the government doesn't to this, then realtors either get lower sales commissions (from lower market sale prices per unit sold) or won't get paid at all (from far fewer home sales and transactions). I not only think this is a morally wrong position for realtors to take (as government incentives cost everyone a lot of tax dollars). It's economically unsupportable as well.

The housing market in California has been made sick by a combination of irrational exhuberance, irresponsible lending, irresponsible sales tactics, and irresponsible borrowing. What the residential real estate market in California really needs to do is take a freaking bath. First in its own blood, then in lye.

Government incentives should be withdrawn completely. $8,000 is a ridiculously small amount of money for California anyway. No more moratoriums and price baiting would spur a different market response. The supply of homes in the market would likely increase, the sales prices would decline for a time, but you would have higher affordability, good competitive bidding and more stable single family home prices over a longer term. Plus, the market would correct itself a lot faster. This would be a good thing for sellers, buyers and realtors alike - but over the longer term.

On the face of it, it just seems to me like the majority of people in the Real Estate industry have not accepted reality. They desperately want the market circumstances of 2004 and 2005 to somehow return on a white horse with wings, and the believe the government is the friend that's going to take them there.

If I were a realtor or a homedebtor today, then I can certainly understand this rather self-centered and rather delusional thinking.

As a renter, I'm going to wait a few more months. There's just way too much sewage upriver (toxic loans that will foreclose) that the CAR and its members are apparently unwilling to table and discuss openly with prospective buyers like me.

Realtors' MLS Hides the Rancid Truth

Surprise!! MLS data are not accurate.

OK. So if real estate market conditions are local, and millions of Americans study local market housing conditions and even shop for homes on the internet at sites like Realtor.com and other MLS-linked database services, then why is the information therein so incomplete and inaccurate?

If "local" is the critical factor here for buyers and sellers alike, then why not make a concerted effort to clean up the slop?

ArrrghhhhH! When will we all stop asking such ridiculous questions!!!

Realtors declare "trusted advisor" status in their industry by fiat. Our first mistake would be to accept this preposterous claim and then understand it to have been supposedly earned sometime ago. They have NO claims to such authority. The colossal housing crash of California and the nation has thoroughly stripped realtors of any such authority.

This MLS problem really needs to be corrected. Not just because it's feeding consumers inaccurate and incomplete data. That can happen with any database. It should be corrected because of the massively incorrect inferences that can be, and are, regularly drawn from such "local" real estate market numbers.

See the excellent write up here by Dr. Housing Bubble Blog on the same subject.

Let's get it together people. First do the home work. Then you can maybe play princess in front of the mirror all you want. Declare yourselves empresses of the kingdom of ashes for all I care.

Realtor.com: 4 Homes in Lake Forest Between $400-$500K

Why is it that there are only 4 single family homes (4 bed, 2 bath, 2250 sq feet) for sale listed on Realtor.com for Lake Forest in the price range of $400K and $500K?

Anyone want to submit a theory?

Man, you gotta love the locations shown here. If I only I were a nerd for trains.

California Realtors: 2010 to be "New Normal"

Ms. Leslie Appleton-Young of the California Association of Realtors:

"I think what we're going to be doing in 2010 is building a foundation for what will be called the new normal. The recession is probably over as measured by a decline in growth, negative growth if you will. But the recovery will be contingent upon additionally likely stimulus spending and doing more to facilitate job growth because I really feel that if we don't do more direct policy initiatives aimed at putting people to work, this is going to go on for quite some time."

Not bad. For a realtor.



I'm pinching myself. Did she just say..? I'm pleased to observe a realtor in California finally displaying some measure of honesty about the situation we are all in and the uphill battle that most certainly lies before us in this state and around the nation.

California real estate appreciation, including appreciation of home values Orange County California, was based on a lie. Reckless lending practices, duplicitous sales tactics by realtors all across the state, not to mention financially inept and credulous decisions made by home buyers (homedebtors) all poisoned the water we're now swimming in together. Only now that water has become raw sewage do we understand. Ms. Appleton-Young knows and must now admit that the government is broke and it's probably going to take a very long time indeed for all of the crap to settle to the bottom, and for the stench of lies to be blown away by the ocean breeze.

The one thing I must disagree with Ms. Appleton-Young on is the call for more stimulus spending.

We DO NOT, I repeat, WE DO NOT need more American taxpayer dollars appropriated to prop up an industry that was built on lies and questionable sales practices in the first place. The price crashes all around California and Orange County are a market correction. This is not in dispute. It has been long overdue and repeatedly obstructed by the stimulus spending initiatives and political action committees funded by the CAR and NAR. Americans would benefit significantly more over the long term from a thorough housing market correction, not less of one. Stabilized markets should be our destination of choice, not the cliff hanging of the last 10 years. Of course, realtors would rather have the clocks turned back to the imbalanced market, irrationally high prices, lax lending standards, poorly informed and credulous buyers, and other craziness so that their own felt pockets could be appropriately lined with sales commissions.

I don't know about anyone else, but I don't pay my state and federal income taxes to support the REIC and the financial livelihood of California realtors. As far as I'm concerned that money should be used on something far more productive than rewarding debt slavery among those least capable of ever paying back such debts.

Get a Job, Orange County

Don't look now but, uh, unemployment in Orange County California went down from 9.7% to 9.4%.

I guess this is the part where we all start to celebrate about the employment tax dollars that are going to start flowing back into state and local coffers.

Remember When It Was This Easy?

So You Want To Buy A SF Home In Lake Forest? Better Like Trains

I checked out Realtor.com today and searched for a home to buy given my annual income. I searched for a 4 bedroom 2 bath, any sq foot home in the $400,000 to $500,000 range.

Most of the homes for sale on Realtor.com in Lake Forest, California given such parameters are to be describes as - oh how shall I say this politely - pieces of shit. Most are run-down, poorly maintained short sales or foreclosures. And what's really amazing is how so few single family homes in Lake Forest have anything even closely resembling a backyard.

Anyway, I digress.

I found a whopping 21 listings on Realtor.com priced between $499,000 and $400,000.

One could decide to buy such a home at such a WTF price, but when I looked at the map I noticed something rather surprising. Most of the homes for sale were located very near to the Amtrak Train Line that runs right through Lake Forest on it's way northbound and southbound between Irvine and San Juan Capistrano.

Can you imagine paying between $400K and $500K to listen to this kind of nonsense day in and day out for 30 days, let alone 7 to 10 years?

Update Mid July 2009

Well, we're smack dab in the middle of summer. I've been busy as hell over the last several weeks both traveling and working on several major work-related projects.

Man, I hope everyone is hanging in there this summer. We are going to have a "very interesting" latter half of 2009. I feel it in my bones. Can you?

A lot's happened over the last month and half since my last post, but especially just recently:

$20 million in cuts for K-12 education in the Saddleback Valley Unified School District. If California ever gets to 47th rank nationally from 46th, do we send a gift basket to Governor Schwarzeneggar or to State Secretary of Education, Dr. Glen W. Thomas?

OC business and personal bankruptcy cases skyrocketed up to 62% in May 2009.

The California Association of Realtors shares with us that the median home price in Orange County is $474,110 (median family income in is $81,260), 6 times income.
Gee, one does wonder why Orange County is the riskiest housing market in the nation right now, or why foreclosures in California in July 2009 are up 24.7% year-on-year. Congratulations California and Orange County Realtors!

Dr. Housing Bubble shares with us another great, detailed post explaining how the FBI has found the state of California to be ranked No. 1 in the land in rampant mortgage fraud! Nice. First, a heaping helping of state-wide financial bankruptcy, followed by a tinge of moral bankruptcy for dessert. Dee-licious.

And in cas you want to know just why California is still issuing IOUs at Day 12 of the most embarrassing of state-wide budget crises, let me just clue you in. It is because:

a.) Each and every single California lawmaker in Sacramento is an incompetent, self-serving, cretinous dickhead. There are no exceptions.
b.) Californians voted these freaking idiots into office in the first place.

In other news that will probably shock readers of The Rancid Truth Blog to their very core, Realtors openly display their penchant for pathological lying.

I like Nick Gogerty's youtube video:



And finally, Lawrence Roberts at the Irvine Housing Blog, one of the finest educational resources you will ever find about the great housing crash (that is still ongoing to some degree at the nation-wide epicenter in Irvine), takes us back to a time of the last housing market bottom: 1997. Very informative read. Recommended.

Foreclosures Are Not Like Death

Sometimes you read a newspaper article and don't quite understand....what.....they're trying to....Did they just..?

There was an article in the Orange County register today written by Greg Hardesty and Rashi Kesarwani about local foreclosures and the psychological and emotional toll it is taking on local citizens and their families.

I think I understand the underlying message that is trying to be conveyed here (i.e. foreclosures are an event worthy of mourning), but I don't believe the three case examples cited are very supportive to the main idea.

Mr. Palmer's story is a sad one, but in my view it serves best as a textbook example of how deplorable health care costs have become in the United States these days, not to mention the soul-devouring frustration of dealing with disingenous healthcare insurers. Mr. Palmer's case serves to remind us all that even with the highest morality and greatest intentions to fulfill our contractual obligations, we are all just one serious illness or two away from permanent "foreclosure" ourselves.

The case of the Brixey family is so far removed from Mr. Palmer's, I almost got lost. OK, so I'm sure the Brixeys are going through a ton of mental anguish right now, afterall it must be quite difficult for large families with children to lose everything and start anew. However, it's pretty easy to see that, of the three stories described, the Brixey's probably utilized the least common sense and financial restraint in their decision-making over the last several years. I'm not saying they deserve foreclosure. I'm just asking the question after reading "$700,000" and "2005" in the same sentence, is this the part where we're all supposed to be shocked? I'm glad they're getting the help from friends and the community. But it is a sad and frustrating truth about Orange County real estate that very few constructed family residences here - even those priced at $700,000 - are really suitable for familes of three children, let alone six.

Cue the melancholy music and cut to a psychologist name Sharon Gerstenzang, Ph.D., of Fountain Valley who specializes in high conflict, trauma and crisis:

"Some mental health experts liken the experience to grieving over a loved one's death. Being foreclosed upon can sometimes be more than like a death in the family."

Well, I'm going to have to disagree with the honorable doctor on this one.

OK, so losing one's home may indeed be a traumatic experience that makes people very sad.

But foreclosure is not death, nor is it a "death in the family". If people are really feeling this way, then we have an incredibly mentally sick American society.

Homes are lost in fires and floods and storms in the hundreds every year across America. Also, family members are killed in traffic accidents, home accidents and violent crime. Some families are shredded by divorce. Some children go missing and are never found again.

Those are real examples of painful, brain-searing loss, from which few ever fully recover.

Relatively speaking, home foreclosure, while traumatic, is temporary. It ends. You can pick up your shit, move away and live on in another place. You can go rent a house or an apartmen and estabish a new life for yourself and family. You don't have the previous roof over your head, but you have yourself. And you have your family.

Most of the foreclosures in Orange County today, I suspect, are rarely related to Mr. Palmer's harsh circumstances. Life-saving drugs were so expensive and his insurance coverage was so restrictive that he decided he had no other choice but to leverage himself into oblivion to just stay alive! How in the fuck can the Brixeys or the Tiffins be placed on equal footing with that?

They shouldn't be.

Foreclosure is more often than not the end result of when individuals buy more house than they could really afford and cannot meet their financial obligations under contract (the mortgage). Not always, but frequently foreclosures are often linked to risky financial decisions made years ago that have resulted in default. Low to no down payments, pick-a-payment mortgage programs, adjustable rate mortgages and buying at the housing peak.

These are events brought about by a human being's own cognitive thought process and own volition. All of us would be wise not to compare such events with the loss of homes to natural disaster, or to the death of a loved one.

Sure, Americans who live their lives as if it were a Lifetime Original television series entitled "Foreclosure" with Meredith Baxter Birney, might wish their foreclosure to be as traumatic as death. I can imagine that it might "seem like death" for some to find out just how incredibly naive, foolish and financially inept they really were.

But foreclosure is not like death.

In fact, let me close by saying that every single foreclosure and bank owned property that doesn't get marked to market is preventing the very economic recovery that this entire nation will soon desperately need. How ironic is it that ongoing taxpayer support for over-leveraged homedebtors may result in the death of economic viability for the United States of America?

Botox profit down 58% in 2009

You may notice that your local Realtor may not be looking their "best" lately. This may be one reason why:

Allergan Inc., maker of the wrinkle-smoother Botox, reported Friday that its first-quarter profit fell 58% as the recession slowed sales of eye and beauty products.

California Association of Realtors Use Outlaw Josey Wales to Sell Homes in 2009

The California Association of Realtors have chosen to dump their advertising dollars this summer into some fairly lame radio spots.

The first one is so dumb, I hesitate to post the link here. Man, it royally sucks. Not that one should expect much creativity from the NAR/CAR dudes.

SPECIAL NOTE TO REALTORS, THE CAR AND THE NAR ORGANIZATIONS:

Listen, we radio listeners have had quite enough of ads portraying dumbass married couples making stupid financial choices in your "appeal to action" ads, thank you very much all the same. We don't need to be reminded how emotionally self-centered, irresponsible and carefree people have been when working "side by side" with Realtors on the biggest purchase of their lives! Look, Century21 sort of ruined this theme for everyone with the Suzanne Researched This ad. I mean who doesn't remember the classic bloodsucking Realtor line: "This listing is special John! You guys can do this!!"



The second radio ad from the CAR has a very different theme. It's called "Piece of Me". A little bit of Dirty Harry mixed in with some outlaw Josey Wales and some Pale Rider.

The final message of tha ad is: "The California Association of Realtors. For your piece of California. For your piece of mind".

Christ. How appropriate is it that Realtors can suggest that any of their actions are responsible for home consumer "piece of mind"? I'm trying to figure out for the life of me what they could possibly mean by that. Where were California's Realtors when the notices of default started flowing in from the subprime crisis? Did they hold "Piece of Mind" seminars to former clients? Did they give back a piece of their ill-earned commissions on such garbage sales?

And just where are the California Realtors going to be when the tidal-freaking-wave of Alt-A and Option ARM loans first come up for recast this summer?

Honestly, how does using a 6%er help me or my piece of mind in buying a house in the third most fucked up real estate market in the country, southern California?

Oh, it's going to be a fantastic summer in California real estate, you can tell.

Man if I'm Realtor, I'd sure keep some extra funds available for the dry cleaners:

California Alt-A Foreclosures: A Wave of Mutilation

WAVE OF MUTILATION - The Pixies
cease to resist, giving my goodbye
drive my car into the ocean
you'll think i'm dead, but i sail away
on a wave of mutilation
a wave
wave

i've kissed mermaids, rode the el nino
walked the sand with the crustaceans
could find my way to mariana
on a wave of mutilation,
wave of mutilation
wave of mutilation
wave

wave of mutilation
wave

Housing Ladder To Nowhere

I've posted a number of local, Lake Forest, Calfornia examples where, during the time frame of approximately 2004 to 2007, people really bought in to the irrational exhuberance over "owning a home" and paying top dollar. The housing ladder only went up and the number of rungs was believed to be unlimited.

The examples I've cited have been mainly single family homes, and typically with 4 bedrooms, 2 baths or more. I want to make this important distinction, because none of us should lose sight of the fact that families are involved here. The lives of parents and children are probably being turned royally upside down by these trying financial times.

In my view, people who work today in the real estate profession rarely if ever admit to the social impact of their recent handiwork. Realtors, mortgage lenders and bank CEOs will talk all day about new listings, median home prices, monthly sales numbers and perhaps notices of default, the new tools for their website, and a recent closing experience, etc. But they don't seem to fully appreciate that behind all of these astonishing numbers are people. People just like you and me. People with hopes and dreams. People with worries and loves.

The downturn in the California housing market has quantifiable ramifications to be sure: bankruptcies, business closings, lost state and federal revenues, lost tax dollars, federal and state budget crises, increased taxes, unemployment (housing related and other), budget-related degradation of public services, and reduction in funding to school districts. These are serious, quantifiable issues that we've only begun to come to terms with.

But the other side of the coin is equally blemished. The social price tag of this downturn may not be known for many years. The housing market bubble and crash has affected people personally and psychologically in terms of their daily stress, their overall health, as well as the cohesiveness and well being of families. It may be too that the crises brings people closer together than before, which would be a good thing. My posts on this blog have often been sarcastic and angry. However, I do feel badly for those who made honest mistakes and for those who suffer because of them, especially young kids who may not fully understand what's gone wrong.

Since I started The Rancid Truth Blog about Orange County Real Estate in 2005, I was pissed off. Really pissed off. I've worked very hard, traveled extensively and earned good money. I've paid more than my fair share of state and federal income taxes, yet I have been utterly priced out of the volatile housing market here. I should be paying more for the privalege of renting a single family home, but I'm not. It's cheaper to rent here. And we all know today that Orange County California home prices were fueled by snake oil sales people (liars), irresponsible lending, irresponsible borrowing (lying on mortgage qualification docs), and unabashed greed.

And I'm still pissed off about all of this.

Sure, I was the responsible one. I didn't take massive risks, yet my federal and state taxes are going up, my rent stays the same, yet I'm helping unqualified people stay in homes that they can't afford, and that I might otherwise have been in a position to buy myself (if prices where allowed to adjust) and assume all of the responsibility that this might entail, including paying local property taxes.

I'm convinced that I'm right to be angry about what's happened here (and still happening here), and to demand change. I don't want a medal for being financially prudent the last 4 years. But I do think that the housing market needs to be allowed to shake itself out and correct, fully understanding and appreciating that there will be significant financial and social casualties in the process. The sooner the market heals itself, the sooner it can recover.

On to today's example:

The setting is June of 2005, Lake Forest, California. The single family housing market is white-hot. Home buyers, lenders and Realtors are living the high life. Homes are selling like umbrellas during a rainstorm, and at stratospheric prices.

A lovely 4 bedroom, 3 bath single family home, 2,150 sq. feet and 10,800 sq foot lot (most of it on a useless backyard incline) located in the beautiful Bennett Ranch area, sold to a new owner for $680,500. That's $311/sq foot.

Fast forward 6 months later to January 2006. The home sold again, this time for $795,000! That's $370/sq ft!

It's now April 2009 and the home has shed it's toxic loan glamour and become a short sale offered at $445,000 ($207/sq ft).

25551 Glen Acres, Lake Forest, CA 92630

Glen Acres is the place to be.

Home Sales Up in Orange County. Mortgage Defaults Also Up.

Orange County median home prices rose 2.2% between February and March of 2009.

Meanwhile, Orange County home mortgage defaults increased 19% in Q1 of 2009 over Q1 2008.
So is it finally time to sing halleluja to an OC housing market recovery?

I don't know man. I've got a really bad feeling about this. And this.

I mean seriously, with all that we have experienced in the last 18 months within this state, do California residents now make the biggest procurement decisions of their lives when there is uncertainty about future employment?

In other news, if you live in OC, you're home is probably overvalued (overassessed) and you're probably paying more in property taxes than you should be. Many homedebtors in OC are now filing appeals with the county to adjust their home property tax bills. But less property tax revenues in OC is going to likely negate some drastic cuts in educational programs by OC school districts. These cuts included firing teachers, eliminating courses and closing down elementary schools.

A Home Price Haircut - Apache Style

2005 must have been an interesting year in the Orange County housing market.

Very interesting.

I mean, could things have gone any better for homesellers, buyers and flippers at the same time? No way! College textbooks will no doubt include case studies about 2005 as the year of idiocy, of the seemingly unending, carefree, unregulated, real estate orgy.

15%+ appreciation on home sales. Skyrocketing home prices. Champagne and chocolate fountains. Hot hors d'oerves. And of course, parties around OC would not have been complete without the loud, depreciating jokes about foolish renters and housing market doomsayers.

"I just bought a new SF home for $700K last weekend! Guys, I'm so rich now!!!"

Four years later we can only look back at this period with our heads cocked to the side and a "WTF?" look of grimace on our faces.

That's all we can do. Because the damage is done. And like it not, we're all paying for it. Big time.

Today's example is 21892 Apache in Lake Forest. The location is appropriate. This is a beautiful 4 bedroom 3 bed, single family home with a massive backyard in lovely Lake Forest. The home is close to schools and far enough from the free way and the train to enjoy.

Now let's look at the ridiculous sales history that could only make sense to individuals in complete and utter denial, or in a drunken stupor of irrational exhuberance:

February 18, 2000: Sold $313,000

July 4, 2005: Sold for $700,000

November 14, 2005: Sold for $744,000

April 22, 2009: For Sale for $499,000

The greater fool asks: "So, uh...guys..like, where did my 15% per year home appreciation go?"

Oh, it's in our homedebtor bailout taxpayer checkbook. We'll go get it for you.

$499K for the same house that sold for 40% more before.

Now that's a home price haircut Apache-style.



Thanks again to the Orange County realtors, mortgage brokers, and financially inept borrowers for the greed and complete lack of integrity, and for all of those funny jokes.

Ready To Rumble?

Ahhh, late autumn 2005. All is right with the world. Single family homes are selling like hotcakes all over Orange County, California. 15 to 25% home price appreciation seemingly everywhere you look. OC realtors cashing those commission checks, buying H3 Hummers and brand new Lexuses, or just putting in their own little "cement pond" to celebrate the ongoing gravy train of success. Real estate house flippers are, well, flippin' out.

Good times. Good times.

One fine day, a nice little 5 bedroom, 2 bath single family home on Rumble Drive in Lake Forest comes up for sale for $725,000. Rumble Drive is located within earshot of the excruciatingly loud Amtrak train line between Irvine and San Diego, and the busiest and most treacherous roadway in Lake Forest: Six-lane El Toro Road.

This home last sold for $398K (little over half the original buy price) just 2 years before ($398K in 2003). But it's 2005 and dammit if prices for single family homes weren't hitting the stratosphere all over Lake Forest and all surrounding OC communities! I've gotta fix it and flip it, dudes! I gotta make some moves and be somebody. They all said it could be and should be done. Besides, Gary Watts and Connie de Groot are the smartest people in the whole wide world.

A year after the November 2005 purchase, the home is listed on the MLS in December 2006. Over a series of 2 1/2 years the home is listed, delisted and then relisted again with perfectly neurotic pricing changes. One can almost sense the frustration and disbelief. This can't be really happening. Or can it be?

Today the home is up for sale again on Redfin, his time for a brutal sale price of $499K as of March 29th. More price declines may be in the offing.

Bought for $725K shortly after market peak. Today the home is for sale for $499K at over $225K less than that 2005 purchase price.

22901 Rumble Drive, Lake Forest, CA 92630

What would you do-Oo-Oo, for a Klondike Condo??

Some person might indeed be willing to brave blistering winds and scorching, uncontrollable, wildfires for an opportunity to own and occupy this beautiful 3 bedroom, 3 bath condo in the Trabuco Canyon (Lake Forest) area.

I remember fondly back to a time in early 2005 when I first moved to Orange County and started renting, when a local Realtor, after listening to my confusion about local single family home prices here, proceeded to admonish me about my expectations. He said that I needed to set my "sights a little lower" than a single-family home, and "consider buying a small condo instead". "Work you're way up" the rungs of the home ownership ladder to achieve your dream of Orange County single family home ownership!

In other words, "Ride that bubble, dude!...Don't worry, everybody's doin' it!".

This lovely condo was purchased back in November 2004 at a perfect, Hubba Bubba Bubble Gum price of $435,000!

Today's 2009 Asking Price: $350,000 (a pre-approved, packaged short sale)

Address: 28496 Klondike, Trabuco Canyon, CA 92679

A Trillion Dollars Looks Something Like This

If you enjoy a good fright, then you'll love this.

By the way, the Federal Reserve Bank of the United States is printing up about $1.2 trillion more US dollars this week. Thanks Ben!

The United States federal budget deficit is estimated to be $1.845 Trillion!.

Not to be outdone, President Barrack Obama's multi-year federal budget proposal is $3.6 trillion!

My fellow Americans, prepare for the spending power of whatever few dollars you do earn and have saved to be utterly and completely destroyed by rampant inflation. The tools to stop it are broken.

Thank you, incompetent and greedy homedebtors and real estate investors everywhere. Thank you mortgage brokers. Thank you realtors. Hope it was all worth it.

Schiff hits it out of the park. Again.

Peter Schiff is the greatest.

A Little Condo Price Battle

There may be a friendly neighborhood price battle brewing for 2 similar condos on Calle de Paseo in Lake Forest, CA.

21093 Calle de Paseo
3 bedroom, 3 bath Condo, 1606 sq feet, purchased just over 4 years ago for $480,000.
Asking Price: $399,000 ($248/sq foot)
Days on Redfin: 304

21143 Calle de Paseo
Another 3 bedroom, 3 bath condo, 1623 sq feet, purchased March 2007 only a few months from OC market peak at a breathtaking $530,000.
Asking Price: $379,000 ($234/sq foot)
Days on Redfin: 8

According to Redfin, both are short sales.

There remains yet a third condo for sale on the same street:

21123 Calle de Paseo
2 bed, 3 bath, 1441 sq feet priced quite differently.
Asking price: $429,900 ($298)
Days on Redfin: 491

21143 must have seen the writing on the wall and gone for the jugular with the $20K under comp (21093) asking price.

Even if a potential buyer were to come on the scene for any of these condos located in the same lovely area, short sales can take an awful long time to shake out.

Down on the Corner

A lovely 4 bedroom, 3 bath, single family home purchased on a hot August day in 2006 for $715,000. 2,000 square feet and a 5,984 sq ft lot.

Fast forward almost three years later and this corner abode is one of the lowest priced short sale single family homes in all of Lake Forest, California.

$715,000, which is almost 7 times the median income here in Lake Forest (approx $99K per anum), must have seemed like the "price is right" back in 2006. Nevermind the home's location being nestled almost equidistant from both the Amtrak train line and the 5 Freeway.

Asking Price: $399,999

Address: 24191 Hurst, Lake Forest, CA 92630

Creedence Clearwater Revival - "Down on the Corner"

This can't be happening

So you buy a beautiful home in 2006 for $975,000. I mean, why not? Jacuzzi, swimming pool, massive backyard, lovely Saddleback mountain area.
You've got the means. You've got the financing. Home prices appreciating everywhere you look by double-digits. Now's the time. Get in, or be priced out forever.

A few years later things go pear-shaped financially. Foreclosure. Short sale. And suddenly all the granite in the world no longer justifies the scenario where the asking price means double-digit appreciation over the previous buy price.

Asking Price: $749,900

Address: 8 Puerto Nuevo, Foothill Ranch (Lake Forest),CA 92610

Using Fear to Earn Real Estate Commissions: "Housing Prices Going UP in Orange County!"

I am searching for a home to buy in Lake Forest, California and surrounding communities. I wanted to share with you a recent real estate flyer I received via e-mail from a rather well-respected, highly experienced realtor in the area. I've removed the names to protect the shameless (except for those quoted in the flyer).

Read it. What do you think?

Housing Prices Going UP in Orange County! So Consider Buying NOW.
In case you forgot, you first contacted me through my web site at www.xxxxxxxxxxxxx.com and started searching there for homes. You have been getting your requested emailed updates from me since then.

If you are waiting for housing prices to hit rock bottom before you buy a home to live in or rent out, wait no longer.

Orange County home prices last month ACTUALLY ROSE for the first time since June, according to DataQuick.

The median selling price was $375,000 — up $5,000 from January but still down 27.9% from a year ago.

For calendar month February 2009, Orange County saw:

$375,000 median selling price that is 42% below June 2007’s peak of $645,000.
Single family homes sell for 41% less than their peak pricing (June ‘07) while condos sell 46% below their peak in March 2006. Builder prices for new homes are 42% below their February ‘05 top.

Home prices usually rise in February vs. January. Last time they fell in this period? 1999!

January was the 7th straight month of sales gains vs. the year-ago period. That follows 33 consecutive months where sales failed to beat the previous year’s pace

Delores Conway, a real estate economist at the University of Southern California, says home prices have come down 40 % in Los Angeles and Orange County since the mid decade peak.

She notes that those prices, coupled with record low interest rates, mean today’s buyers can secure the same monthly payments home buyers enjoyed six years ago."

This is marketing from a Realtor. This person is trying to earn my trust.

Look, I understand as well as the next person that even Orange County California Realtors have to earn to eat.

What I don't agree with is cherry picking recent 2 month MLS and DataQuick numbers, throwing down a fear hypothesis (prices going up) in an e-mail piece with zero supportive evidence, all in order to cajole people to buy a home and promote a self-serving, commission-paying agenda.

We've all seen this film before. And it sucks.

If I'm of just average intelligence and I read the above Realtor pamphlet with the stated 41% drop in single family home prices, I'd be asking myself "why did that happen?". "What factors could cause such a major drop?", and then determine whether this drop might continue down to 50% or 60% or more?

50%! You're crazy!! NO! NEVER! That can't happen. This is Orange County, California!

No, you've got to BUY NOW or....*yawn* you'll be priced out of the market forever you no-buying-fence-sitting-wastes-of-space!!!!!

I'm just an idiot renter here. But do we really need this? I mean, given all that's happened over the last 2 years in Orange County residential real estate, at what point do we conclude: "Hey, we should really stop ourselves with all the shameless bullshit!"?

Here's a message to Realtors from a prospective buyer: Drop the fear tactics, and do what you can to start instilling some confidence instead.

Renting in Orange County. No Ball and Chain.

I'm still renting a single family house here in Lake Forest, California, paying way less than it would otherwise costs me to go into debt to live in a similarly-sized home per month here including mortgage, insurance, taxes and upkeep, particularly when one considers the economic situation and unemployment risks in this state. I mean, if I lose my job in the coming months, I have flexibility to pick up and go elsewhere. Look Mom! No strings!

I've said all along that this is wrong. It should be a privilege to rent and have this kind of freedom to get up and freaking leave. I should be charged a freaking premium to live this way and have no real obligations other than the monthly rent and utilities, especially right now.

But Orange County, California, and I presume many parts of the United States of America, have had it wrong all along. Instead, homeownership (homedebtorship) has been marketed at the premium, partly due to narcotic-like liar loan products since 2002, the resulting run up in single family home prices, and the incessant industry lies about "home appreciation" that everyone and their dog was suppose to "take to the bank". Come on. Who doesn't remember the famous Orange County, California adage: "15% is in the bag!". Jesus, who in their right mind isn't for 15% appreciation on their money?

But I've been renting. And I've been saving.

Like a mad dog.

I can't say I'm way, way ahead. Indeed, I've even lost money on investments over the last 12 to 18 months. But I have no ball and chain to me. I'm still throwing money into savings accounts and retirement accounts. I've cut my expenditures where I can. I started to grow a garden in my back yard, and I'm not eating out as much. Driving my car less and my motorcycle way more.

That all said, I would love to "own" (or actually go into debt for a home) here. I have been looking too. Carefully so. Homedebtorship definitely makes sense under certain circumstances. But not under all circumstances, and certainly not at any price.

We are now witnessing record home sales in Orange County the last few months.
And local realtors have claimed that these transactions have occurred either at or above the asking price! So these buyers either have a lot of down payment cash available, or their willing to continue borrow large amounts of money to live in a house. That's their choice. They must have awesome job security and a dependable income too, or maybe they won the lottery and inherited some serious dough.
More power to them.

Single family home prices are coming down now and mortgage rates too. Maybe the time is now to buy, or at least may be quickly approaching?

Not in my view. Not yet because home sales prices are still not congruent with local incomes in Orange County. Not yet because renting is cheaper, and it shouldn't be. Landlords can't rake renters over the coals. They certainly want to, and there time will soon come. Also, as I have stated numerous times on this blog, I do believe more housing trouble is on the way in the form of the shamefully under-reported Alt-A prime loans.
Sunny times are not necessarily guaranteed, nor is it "full-steam ahead" for California housing market.

2009 Realtors Say: "Fence-sitters, Your Wait May Be Over!"

Realtors have no shame. They are completely out of touch with reality.

"It's a great time to buy a house!"

Yeah, but not because it's right for me or a good future investment. It's always as great time to buy a home (even as prices fall like a rock) because that's when you get your 6% commission check.

"They said we should wait."

Millions of Americans were convinced to buy a home in order to "get in now while you still can", "there not making any more land", "buy now, you can always refinance". Realtors continued to find greater and greater fools as the Ponzi scheme built itself up higher and higher. They cashed their commission checks and still managed to face themselves in the mirror every morning.

"I want one, Mom!".

Jesus Christ! Trillions of dollars of paper wealth have been destroyed forever in either home values, or 401Ks in just 18 short months. One might think that the National Association of Realtors could propose something a little less along the lines of "childish greed" in their television commercials.

We have enough overgrown children already who have proven incapable of reading their own signed mortgage contracts, thanks very much all the same.

No, the NAR wants you to get off that fence and buy, buy, buy?

Why? For future investment wealth?

No. Because they want their 6%.

The sooner the investigations begin, the better off we will all be.

Lake Forest California in Home Price Nose Dive

Well, this is interesting:



That must be the sound of Lake Forest home debtors saying something to the effect of:

"AARRRRRRrrghhhhhhh, Oh MY GOD! Oh my GOD! My House Is Worth What???? WhoaaaaaAAARRRRIGGHHHHHH!"

Then there is the sound of crickets.

Or maybe it's just fence-sitters who don't trust realtors, or prospective buyers who just can't find the $100,000 down payment required to secure the $650,000 worth of mortgage financing:



And then there's the bone-crushing Alt-A Prime mortgage recasts ready to come on the scene in May and June 2009!



Are we hitting bottom in Lake Forest, California home prices?

(Graph pics from Altos Research website)

You're A Fly On The Wall: Mortgage Broker Sales Meeting