Crazy Carnes - Final Chapter(?)

Chandra & Michael Carnes, Loco House Buyers Debtors Renters
(Part 1)

The final chapter of the Carnes' has arrived... for this bubble, that is. They started their real estate adventure by "purchasing" a million dollar abode (5903 Mountain Hawk ) under the guidance of super realtor, Chris Nunez. When the benefits of interest only payments disappeared, they managed to sell at a small loss and "purchase" another house (1086 Elsbree Ln ). This, however, was a price too far, and a little over a year later they were forced to sell using a short sale. But here is an alternative thought: they purchased this house for its peak sales price and then months later put it back on the market. Hmmmmm...

Sale History
07/29/1994: $241,500
09/21/2007: $640,000 - peak sales price
Feb 2008 - back on market - why so soon??
01/23/2009: $525,000

Zillow: 1086 Elsbree Ln Windsor CA 95492
Price Paid: $640,000
Days on Zillow: 292
For Sale: $669,000 $659,000 $599,000 $540,000
Recently Sold: $525,000

On the sale price of $525K, the buyers are foolish. Unless they have money burn (which is what they're doing), they'll watch the value of this house fall to under $400K. My guess is that they sold a few years back and have been renting, waiting for that "bottom", but most people still don't grasp the magnitude of the economic problems this country is facing.

This story is probably repeated hundreds of thousands of times all over the country. What made the Carnes' story unique is that they openly discussed their insane spending spree on PBS--NOW Part 1, Part 2.

3552 Kendell Hill Dr
173-400-037-000
494 Quince St Windsor CA

California Unemployment

The rate at which things are unwinding is even shocking me. I watched gold and silver climb $50 and $0.50 today, respectively, and I'm wondering if this is a sign of the next leg down in the stock market. I say this because a number of forecasters have been calling for large drop in the market in February; the stars may be aligning for that event. I was even a little disappointed because I've been contemplating another purchase of both metals, but I'll probably do it anyway.

California unemployment rate jumps to 9.3 percent
By SAMANTHA YOUNG, Associated Press Writer
Friday, January 23, 2009

California's unemployment rate jumped to 9.3 percent in December, capping a tumultuous year of massive job losses and a housing slump that has struck most of the country.

The jobless rate announced Friday by the state Employment Development Department represents a jump from the 8.4 percent figure in November 2008.

Excluding farmworkers, California lost 78,200 jobs in December as employers sliced payrolls to deal with the slowing economy.

California's unemployment rate hasn't been at this level since January 1994, when the state was coming out of its recession in the early part of that decade, said Stephen Levy, senior economist for the Center for Continuing Study of the California Economy.

"California, like the nation, is in the midst of a terrible and deepening recession," Levy said. "We all expect the job losses to continue and unemployment rates to go higher."

Tsunami of Foreclosures to Come?

Ivy Zelman of Zelman and Associates predicts a tsunami of foreclosures yet to come over the next few years, and the only solution she recognizes is nationalization of the mortgage industry. Wouldn't that be a great solution, 'Comrade Blogger'.

Hope for Housing? Not a fu**ing chance.

California Property Tax Shortfalls

This is not surprising but it's interesting how fast things seem to be unwinding as we enter '09. The MSM is starting to write about the dwindling property taxes. If you look at the NODs posted previously, you can imagine it's only going to get much, much worse. This is gonna be ugly.

2009-01-10: Property tax assessments could plunge across California, worsening fiscal crisis
California's plunging property values have already clobbered homeowners, but now the trend is promising pain for struggling counties, cities and schools that rely upon property taxes — a downward shift unseen in decades.

"It's the first time since the Great Depression that we've had a negative growth in property taxes that are the heart and soul of local government services," said Paul McIntosh, executive director of the California State Association of Counties.
...
Santa Clara County's property tax roll is projected to show low-single-digit growth, down from 7 percent last year. But that could well change as a growing number of properties are evaluated, said longtime county Assessor Larry Stone. Final assessed values will not be sent to property owners until mid-May.

"I've never seen an economic downturn as significant and pervasive as this," Stone said.
...
Shrinking property tax funding "exacerbates the need dramatically," said Santa Clara County Supervisor Liz Kniss. Applications for safety net programs here have increased almost 40 percent in the last year, as county leaders wrestle with a $220 million budget shortfall.

Homeowners whose properties are devalued "may be getting a break on their tax bill," Kniss said. "But they're going to feel it in the health care arena, in schools, and in what we are able to provide in services for the homeless."

Kern County Canary

(purple line is '08, tan is '07)
Hat tip to Bakersfield Bubble. Yet another county in Kalifornya with increasing NODs, which will eventually lead to many more foreclosures. 2009 has only begun and the news is grim on retail sales, unemployment, taxes, commercial real estate, and housing, in general. Buckle up.