Jesus and Lilia Garcia

Jesus and Lilia Garcia, tiny-Trump™
Buyers/investors/speculators played their role in the bubble. $535K house on $65K income and equity from another house? Do the math.

2008-05-30: Lose Homes, Pay More Tax
Some of the biggest losers in the real estate slump are not purchasers of mansions they could not afford. They are buyers of second homes — or third ones, for that matter — who are sitting on a tax time bomb.

Two years ago, Lilia Garcia and her husband, Jesus, bought their dream house in Linden, Calif., for $535,000 and financed it in part by taking out a bigger loan backed by their previous house in nearby Stockton. They decided to hang onto the Stockton house and rent it out, believing that it would more than pay for itself and could be sold years in the future to help pay for college for their two children.

“We wanted to make it an investment,” Ms. Garcia said. “I should’ve sold it.” But the Garcias, who earn about $65,000 a year, fell behind on their payments after their tenant moved out and the interest rate on their mortgage rose, bringing their monthly payments on the rental home to nearly $2,700 a month, from less than $1,000. They view foreclosure as inevitable; they have not paid the mortgages on either house for months and now rent a home in Linden.

J. Scott Bovitz, a bankruptcy lawyer in Los Angeles, says the problem is widespread. “I’ve seen people not just buying properties to live in, they’re buying properties to become mini-Donald Trumps.”
(that's tiny-Trump™, J.Scott)

HP Tied in Blog Contest

Real Estate Blog Contest — Leaderboard

5/27/08, 11:29PM PDT

Shortly after this screenshot, HP took the lead.

Leslie Appleton-Young

Leslie Appleton-Young, Chief "Economist", California Assoc of Realtors
She looks like a total ding-dong. When she opens her mouth and speaks, she confirms it.

December 2005: Bursting of price bubble not in view
"Despite rising interest rates, a growing for-sale inventory and a slowing sales pace, the county's shortage of housing will prevent prices from dropping steeply, speakers asserted. "It's Economics 101," said Leslie Appleton-Young, chief economist for the California Association of Realtors. "It's demand and supply." Addressing the statewide economy, Appleton-Young forecast "a slight decline in home sales" for California in 2006. Many established homeowners have cashed out rising equity and now lack the funds to trade up to larger homes, she said. "We are going to see people staying in their homes longer." (LOL Cashed out equity and they are "staying in their homes longer." LOL You better ask Yvonne, Lela, Nancy, Kim, and John about that. Jane Hong, a bankruptcy attorney, had this to say about HELOCs, "It's a great way to lose your house," said Hong.)

February 2007: Bay Area housing strongest in state
Overall, sales of existing homes will decline 7 percent across California this year, Appleton-Young told local business leaders Thursday at the annual North Bay Economic Outlook Conference in Rohnert Park. But the downturn is tapering off, she said, compared to last year's 23 percent decline in sales."The worst is over," she said.

October 2007: Realtor economist ‘apologizes’

Ding-dong, she's baaaaaack!
2008-01-16: Economist predicts more housing woes
Leslie Appleton-Young, senior vice president and chief economist of the California Association of Realtors, blamed the credit crunch and buyer reluctance for a negative housing outlook for 2008.
"I think we are just about, if not already at, the bottom," she said. "It's not going to get much lower than that."

"You're dealing with buyers now who are waiting until the end of the market downturn," she said. (Uhhhh... Leslie, you're dealing with buyers that cannot AFFORD the PRICES!)

2008-02-25: C.A.R. reports sales decrease 29.8 percent
“The slight increase in sales predates the president's signing of an economic stimulus package including a temporary increase in the conforming loan limit, but that much needed reform could give the market some momentum,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. “Let's hope congress and the president see fit to make the higher loan limit permanent.” (Ok, so when people have incomes of $70K/year, a loan limit of $700K helps them, how? Affordability has to return.)

2008-05-24: Home sales offer hope to some
"Significant price declines are spurring home sales to bargain hunters and first-time buyers at the middle- and low-end of the market," Leslie Appleton-Young, CAR's vice president and chief economist, said in a statement. (So middle and low-end buyers can service $400-500K mortgage debt? I don't think so.)

Shawn Forgaard

Shawn Forgaard, House Investor
You wanna know something... I don't think he'll come away from this "wiser". Hey, Shawn, you just pissed away $800K in stock options, what are you going to do next?

Repeat after me: the average person should not invest in real estate.


2008-05-11: California man losing nine homes in mortgage mess
LOS ANGELES (Reuters) - A California man who has defaulted on nine homes and expects banks to foreclose on all of them, forcing him into bankruptcy, says he now considers it a mistake to have invested in the real estate market.

Shawn Forgaard, a 37-year-old software company project manager, bought one home for his family to live in and nine more as investments. He stands to lose all the investment houses in the mortgage meltdown but says he has come away wiser from the experience.

"Everyone stumbles. I'm not going to hide or run or live in denial, or with regrets," Forgaard told Reuters in an interview. "On the surface it looks like total devastation but it's just the opposite. I'm confident our lives will be much, much richer as a result."

Forgaard bought a house in Santa Cruz, about 60 miles (100 km) south of San Francisco, in 2000. Four years later, using $800,000 in stock options, he began snapping up investment properties, putting 10 percent to 40 percent down on negative amortization loans -- in which payments do not cover the interest so that a borrower's balance grows over time.

Experts say speculators like Forgaard, who count on real estate values to keep rising to pay off their debt, play a risky game and doubly so when they use neg-am loans.

"You are essentially betting the house on the strength of the housing market and if you're that leveraged in debt and the market goes down, you're going to lose your shirt," said Austin King, director of the community organizer ACORN's Financial Justice Center.

"To do it eight or nine times over is eight or nine times as foolish as just doing it once," he said.

Blanche Evans

Blanche Evans, Realty Times
Well, finally time to add Blanche to the Hall of Shame®. She has truly earned her spot, here.

Hat tip to Housing Doom.

2008-05-06: Why Buy Now? Media Is Wrong About Housing Slump
Why buy a house now? You’ve been getting bad information. Here’s why.

The financial press is worried that they might have gone too far — paralyzing the nation into recession by piling on housing. So they’re finally beginning to question the indexes where they get their data, and whether the news is really as bad as it seems. Slowly but surely, headlines are changing from ‘Don’t Buy A Home Now’ to ‘Is It Time To Buy?’

We said it here first on Realty Times — that consumers aren’t getting the full story. Indexes [sic] can be misleading because of the locations, prices, types of housing, and rates of increase they track.

2006-09-24: A Soothing Voice Amid the Market’s Chicken Littles
But Blanche Evans, the author of “Bubbles, Booms, and Busts: Make Money in Any Real Estate Market” (McGraw-Hill, 2006), isn’t buying it. She sees the current slump as more of a breather, as well as a chance for buyers and sellers to “reposition” themselves to take advantage of the long-term upward trend in housing prices.

In other words, she contends there is money to be made in real estate even if prices head south for a while.

Ms. Evans, who is also the editor of Realty Times (realtytimes.com), an online real estate news service based in Dallas, says the current slump has mainly forced a lot of quick-money speculators out of the housing market. “In the normal market people are still buying and selling homes,” she said. “The market is not crashing; the fundamentals and incentives are still extremely good for everyone else.”

“This is all about improving your position,” Ms. Evans said. “When things are bad, they’re not bad for everybody; they may not be bad for you. That’s when you should improve your position. Buy, sell or hold. It’s a poker game.”

David Lereah

David Lereah, ex-chief economist of NAR
Was the chief spokesman of the NAR and is responsible for hyping the housing market with comments such as: "If you paid your mortgage off, it means you probably did not manage your funds efficiently over the years. It's as if you had 500,000 dollar bills stuffed in your mattress."

Dr. Housing Bubble has a good summary of this character:
2007-08-17: Greater Expectations: Quotes and Psychology of a Modern Day Housing Bull.
Wikipedia_David_Lereah
Truly a perfect fool for the job.

2008-05-06: Latest from Dr. Housing Bubble

2008-05-06: It’s Going to Get Worse
Economist David Lereah was once the housing market's biggest cheerleader. Now he says the bust isn't near over, and home prices still have a long way to fall.
"We're not at the bottom," he says. "[People] want it to be near the bottom, but we're not there yet. The leading indicators are still very bad. Pending home sales are still in bad shape. Mortgage applications are low … There's still supply out there in abundance … This thing is going to get worse before it gets better."

Bertrand Family

Kristin and Mike Bertrand, Home ATM / House-debtors

The pattern repeats... HELOC your way to a better lifestyle, months or years later, hand over the keys.

They say they are "casualties of a faltering economy". I say they got caught with their hands in the cookie jar. Refinanced "a few times". Repeat those words... "a few times." Two words for them: 'Risk management'.

They might want to invite the Moises to the party. They're going to need some help, soon.

Here's a video of lovely Ventura: Foreclosures

2008-04-04: Local couple starts a group
Caught in the downturn
Kristin and Mike Bertrand say they were not casualties of the mortgage crisis, but of a faltering economy. When the couple purchased a home in 2001, their combined income was more than $140,000. They determined their mortgage, then around $360,000, was affordable.

But they refinanced a few times, taking out equity to pay for bills. It compensated for a reduction in income, tens of thousands of dollars in loan fees and for upgrades.
Mike Bertrand, who builds and markets Web sites, has had job changes and had been out of work since February. He started a new job in mid-April with an annual salary of $62,500 — not nearly enough to afford the $4,200 monthly payment on a new mortgage.

He admitted that if they hadn't refinanced, there is a chance the family could have stayed in the house.

Donald Luskin

Don Luskin, so-called CIO Trend Macrolytics /Propagandist
Enemy of Freedom? You decide.

Ironically, this guy has his blog, titled...
Chronicle of the Conspiracy:
Join us as we discover, document, expose and challenge the bad people, the bad institutions and the bad ideas that stand in the way of wealth creation -- and show you how to fight back!

2006-09-22: Economic Mythology
Yet many investors seem to believe that the consumer has only been spending because of gains in real estate during the so-called "housing bubble" of the last three years. They believe that when the value of your home rises, you experience a "wealth effect" — you are willing to spend more money, simply because your house is worth more. Economists have studied the "wealth effect" in depth. Based on these studies, most economic models say that when the value of your house goes up by $100, you are willing to spend an additional $3 every year.

So how big is the "wealth effect" for housing? According to data from the Federal Reserve, the value of real estate held by households grew by $1.7 trillion over the last four quarters. Three percent of that is $50 billion.

So out of the $555 billion in spending growth over the last four quarters, the housing "wealth effect" explains only $50 billion. But what needs explaining in the first place? Simple income growth already explains all but $5 billion of the spending gains.
So who needs a housing "wealth effect?"

Another often-heard reason for doom-and-gloom about the consumer is high energy prices. Is that story any more true than the one about the housing wealth effect? Nope.

2006-12-15: All the Data Point to More Rate Hikes
But the forces of pessimism that have fought against this current economic expansion from the day it began have seized on the housing slump as yet another of their reasons to foretell disaster. What else has it been over the last five years of growth: war, scandals, hurricanes, energy prices, outsourcing, deficits, you name it. All wrong, then and now.

2006-12-29: Pundits Misread Bonds in '06
Except that the economy just refuses to act anything like the bond market is supposedly predicting. Even the worst-performing sector of the economy — residential real estate — gives every sign of stabilizing. While a supposed "housing crash" is going on, homebuilding stocks have been steadily rallying for the last five months. I think real GDP in the fourth quarter of this year will come in about 3% — and that meets anyone's definition of a strong economy.

2007-07-27: Market Correction
If you're looking to buy, the so-called collapse of the so-called housing bubble is great news. Your dream home just went on sale! Attention all you Kmart shoppers.

2008-05-04: Housing Near Bottom?
I'm not here to tell you that home prices are at absolute bottom this very moment. But I can argue pretty persuasively that they might be. Or that they are close.

2008-05-04: Mish Rebuttal to Previous Moronic Article

Big shout out to 'msaghirmd'.
http://www.youtube.com/user/msaghirmd

Don Luskin - Propagandist


Tribute to Peter Schiff
Listen to Luskin at 2:55. This guy is insane.
"Billions of peasants around the world are willing to work in poorly lit and poorly ventilated factories just to get our paper money, because it's that precious."