Sonoma Canary, Part 2

Sonoma Canary, Part 1

In light of the recent articles about banks dragging their feet on foreclosures to avoid flooding the market, the NODs for August '10 are not forecasting a rosy picture for Sonoma. These are not healthy numbers.

And with 250,000 active Option ARM mortgages in California, this debacle has a long time to run its course. Here are 13 Charts from Dr. Housing Bubble on the weak housing market--use it wisely.

I thought this was interesting. Checking NODs and Foreclosures for September, the following name came up, repeatedly: CARINALLI. Doing a little search on the name gave me this article:

2009-09-30: Carinalli creditors respond to bankruptcy filing
One day after real estate financier Clem Carinalli declared bankruptcy, the longtime Sonoma County families whose investments helped him build a real estate empire for the most part remained either publicly supportive or silent.
- All totalled, there were about 5 foreclosures and approximately 20 NODs over the past several months for this family of investors.

43 Foreclosures to start September (through Sep 3) is a fast pace. That would yield about 301 for the month if it remains steady at that pace.

NODs:
. . '08 . '09 . '10
Jan 451 . 394 . 255
Feb 513 . 468 . 380
Mar 498 . 553 . 407
Apr 509 . 497 . 354
May 505 . 491 . 389
Jun 492 . 562 . 303
Jul 460 . 615*. 275
Aug 482 . 425 . 383
Sep 191 . 399 . 400 through Sep 29
Oct 178 . 379
Nov 241 . 320
Dec 500 . 319

* New Monthly Record
* Sep '08: CA Law SB 1137 takes effect
* Dec '08: CA Law SB 1137 FAILS

Trustees Deeds:
. . '08 . '09 . '10
Jan 164 . 166 . 181
Feb 238 . 151 . 155
Mar 221 . 121 . 209
Apr 236 . 123 . 215
May 280 . 149 . 184
Jun 324 . 271 . 169
Jul 341 . 202 . 179
Aug 372 . 231 . 188
Sep 303 . 183 . 224 through Sep 29
Oct 195 . 210
Nov 184 . 218
Dec 229 . 195

"Maybe it will go away"

Shawn Schlegel, uber-Realtor / Tiny-Trump
"Maybe it will go away"... say it three times, and it will be so.

This realtard is quite a piece of work. And he's doing himself quite a disservice by airing his dirty laundry. If you're the lender and you see this story, you go out of your way to nail his ass, right?

2010-08-11: I won't pay it back
“I am not going to be a slave to the bank,” said Shawn Schlegel, a real estate agent who is in default on a $94,873 home equity loan. His lender obtained a court order garnishing his wages, but that was 18 months ago. Mr. Schlegel, 38, has not heard from the lender since. “The case is sitting stagnant,” he said. “Maybe it will just go away.”

Mr. Schlegel’s tale is similar to many others who got caught up in the boom: He came to Arizona in 2003 and quickly accumulated three houses and some land. Each deal financed the next. “I was taught in real estate that you use your leverage to grow. I never dreamed the properties would go from $265,000 to $65,000.”

Holycow on Holyoke

I'm sure this is a story repeated thousands of times... people buying houses, thinking they're getting a great deal, really proud of their decision. One of our favorite Housing Bubble Realtors Agents wrote about such a purchase, and how smart they were for it. It's easy to write with praise about these decisions when they happen, but how do they turn out in the long run? Let's take a look.

Here it is, courtesy of Sacramento Real Estate Gal:

2007-07-16: One Sacramento Neighborhood has Newcomers!
These are my new clients that just bought a home in Sacramento. They moved here from Florida and have the cutest accent.

It was such a pleasure working with them because they weren't the least bit jaded about the real estate market. They realized they were getting a good deal and jumped on it with no hesitation. The market analysis confirmed their happiness. Of course, it helped that they had done their own research online and knew the style and neighborhood of the home they were looking in.

They actually made an excellent purchase because of the following:
- they bought in a slow market
- they had done a lot (I mean A LOT) of research beforehand
- this one is the most important: the market analysis showed that homes in their neighborhood in a half-mile radius sold for anywhere between $30,000 more than they paid for their home to $200,000 more than they paid. Which means that every dollar they invest into the home will have more potential returns than say a neighborhood with a ceiling of say, $20,000 under all comps.

This is an excerpt from one of their emails:
"Thank you for all of your help and patience with this property and me! Thanks again. You are a wonderful agent."

Here is the house...

5001 HOLYOKE WAY, Sacramento, CA
4 beds, 2.0 baths, 2,155 sq ft
Year built: 1970
Sale History
11/09/2006: $326,000
Zestimate: $224,500 (Aug 8, 2010)

And here is the great big problem...

5009 Holyoke Way, Sacramento, CA
4 beds, 2.0 baths, 1757 sq ft
07/15/2010: $189,000

5101 Hemlock St, Sacramento, CA
4 beds, 2.0 baths, 2,126 sq ft
02/23/2010: $160,000

4910 Holyoke, Sacramento, CA

03/19/2010: $185,000

4906 Holyoke, Sacramento, CA
05/27/2010: $179,500

And I count no fewer than 7 foreclosures in the neighborhood, two of which are on Holyoke.
Put simply, this purchase was one of those life-impacting, bad decisions.

Addendum:
Calculated Risk just posted on a story about real estate Northeast of Silicon Valley. While it didn't touch on Sacramento, it does illustrate the continued problems in housing and unemployment in California. We've got a long way to go.
2010-08-09:

East of San Francisco: 20% Unemployment, House Prices off Sharply
In Stockton, which had one of the highest foreclosure rates in the nation, the median home price of $100,500 is down from $397,000 at the height of the boom — a stunning 74% drop.
-

Gen-Y: Stupid is and stupid does, I guess.

$100,000 in student loans and it's not even from a "coveted" Ivy League skool (sp).

Three words...

RETURN ON INVESTMENT.

2010-07-29: Gen Y: No jobs, lots of loans, grim future

Jordan Hueseman, 25, accrued roughly $100,000 in student loans at the University of Denver earning a bachelor's degree in international business and a master's in business administration. On the job hunt, he found his graduate degree sometimes hindered more than it helped.

“At one point, I applied to Whole Foods, hoping they might see some potential for me to move to some type of management position,” Hueseman said. “The e-mail I received from them said I was far too overqualified for any of their hourly positions and as such would not be considered for a position.”

Hueseman said that after one job application, he was told he should leave his degrees off his resume. Hueseman said he was tempted to follow the advice but couldn’t bring himself to do it.