Riverpark Update IV Cart Before the Horse

Remember Riverpark is supposed to built on new urbanist smart growth principles. Unfortunately the housing bubble popping has left Oxnard with ll the residents and none of the mixed use. That means these ultra high density homes will be generating twice the VMT the planners predicted. Dumb growth, dumb Oxnard, evil planners.

UC Davis?

WTF? Casey posits:

"Have 12K set aside for a year of school at UC Davis which she will transfer to in the summer."

Ummm, no. Really, no. The UC system makes CashCall look like a doting daddies' advance on allowance when it comes to their money. They smell fraud faster than Sputnik smells two week old ahi on a bed of calamari offal.

My HS Junior daughter is planning on UCD as one of her first choices. When I say no it isn't just Mrs G getting in "for a year" (not) starting this summer (not) if you can scrape together (not) the $12,000 (not) expenses. So, when I say no, it is not a prediction, it is a promise. If I'm gonna be slappin' down 17 large plus living expenses for three years (she's smart like her mom) then I'm sure as heck not gonna carry your bad debts as well.

Casey, you do understand that by the start of the summer term you'll be needing about $120,000 before the $12,000 comes available? Education is an investment, you have no investment funds available and I do not give you permission to use my daughters'.

Riverpark Update III

This post was supposed to be about traffic, VMT and vehicle accomodation. This first picture is one of several "roundabouts" or "traffic circles" or more properly "rotaries" the FHWA be damned. I grew up in a town with real rotaries. They've served generations with speedier traffic. Oxnard unfortunately drank the MUHD SmUGLER kool-aid. This picture speaks a thousand words. How comfortable are you with what's happening? The place is freakin' empty and you already brace for getting T-boned should you dare enter the circle of destruction.

Not scary enough? Version 2:



Two lanes of entering disaster. People in CA don't know how to work these things. Oxnard is also, how shall I say? Ummm, more beset by unvetted drivers than average.

But like I said, this isn't about traffic. Look past the rotary. What do you see? The Mixed use development that will be there? In this market? If it ain't broken ground it won't for a very long time. That next what's being built.

Casey is his own best poster

Man I am spending WAAAY too much time on comments here.

Gee, Beaver. Ya think?

I really need a solid plan to...

So far so good. Casey does need a solid plan.

outsource moderation

Oooops spoke too soon. Is this a new disease? Netism? Like Autism, Netism exhibits withdrawl from reality and inappropriate responses to stimuli.

once I really get going with my goal.

Is parole before 35 a goal? Casey's goals are no longer his own. He is owned by his debt.

I love all you guys but I can’t be distracted.

Casey can be distracted by CashCall popup ads.

This goal is for real. Too bad WordPress doesn’t make it easy for me to give somebody a “comment moderation” account and an ability for me to audit it.

Okay, we'll assume "this goal" means assigned moderating which is easy, Casey just doesn't know it. Just like all the real issues, what you don't know is what kills you.

One idea - do weekly interactive podcasts with updates and let you guys call-in at the end. As long as you guys don’t bring up too much about In-n-Out, Jamba Juice, Macaroni Grill, etc (a little bit is OK)

I vote for "What if they gave a trainwreck and nobody watched?"

T-Minus 9 Months to Our Goals, Post them here

Nota Bene: This is "Knuckles" the real cat. 18 pounds. Note no fat. This is what I imagine Sputnik was like before all the Bill The Cat drugs and Death Tunge head banging.

So. By Sept 10th 2007 I hope to have been able to redeploy my liquid investment assets into a depressed stock market and have cemented my reputation for prescience. My goal of having a top 100 weblog will have to be changed as since signing up this morning I've gone from obscurity to number 96 [Update: Fri nite #87, Sat morn #74, Sat afternoon #68, Sat nite #64 and asymptotic towards about 55 but I suspect another 10 places after entering a full cycle]. That little blue tag to the right. I want my office finished. It's gonna be bitch cold tonight, a hard freeze and the roof is not insulated yet. I want the office clean and my tools organized. New walkway. New patio. Iceberg rose garden and Korea grass on the upper level of the property. Landscape the lower level and middle hillside. For those interested I live on the side of a hill overlooking a golf course; street level, upper hillside, house pad, middle hillside, lower level, lower hillside. Multiyear project. Fun.

Oh, and I want Knuckles to poop in Casey's shoes.

Wake Up

rrrrring. Good morning Mr. Serin, this is a friendly wake up call. It's a chilly 5:55AM and we here at Countrywide have been following you activites for quite some time as your sitemeter so faithfully records. Anyway, seeing as you are already up an' at 'em we were wondering if you could get around to the small matter of the half mil you owe us? We here at Countrywide understand priorities. Sure, A-Bull-Buyer is taking up a lot of your valuable time so we want to help. What say you slip us a quick $40k or so from the coffee can out in the backyard and we'll keep this between us. No need get cell block warden to wake you up when we can just... now, now Mr. Serin. Rushing out the back door half in your clothes like that. It's not necessary. The coffee cn is safe. We have someone watching it for you. His name is "Tiny" and he's sitting here next to me in the nondescript sedan across the alley. Just one of the extra services we here at Countrywide like to do for our special clients.

Casey is a Little Slow

I know I’m a little slow with moderation

Gee Beaver, ya think?

I was busy talking to a BK attorney today

I call BS. You know why? Because if you were with an attorney of any kind you'd never post again.

and another adviser.

BS #2. You have dozens of the planets' best for free. Not one would meet you in person. Not one could afford the risk. Even if you met with an advisor with an o any one of them worth the time would run so fast you couldn't touch their shadow.

Comments will be released by tomorrow morning.

Snigger. SELECTED comments... Right?

Muncy property is going up for auction. With all the craziness lately, that caught me by surprise.

Huh? Why? Because you ain't been paying? Because you brg bout cash back? Where was the surprise here sport?

I bet that notice is somewhere in the pile of mail.

Gee, Beaver, yah think? Best case, what would you do in response to someone owing you money and not even being reachable?

You cannot answer the phone or door or open the mail. What about all this doesn't have sphincter factor seven written all over it?

Riverpark Update II

Riverpark is my candidate poster child for the Great SoCal housing bust. It has everything going wrong. In coming posts I'll show the stupid traffic circles, outrageous Mello-Roos, excessive HOA dues, covenants, density mitigation and more. But to start the old cliche: A picture is worth a thousand words. Graphitti from one of the gangs attempting to claim Riverpark as their territory.

Stalking the Wild Serin

N.B. This is our half-a-cat. More of a squirrel ona a bad hair day but the girls love her. She's pictured and this post is inspired by earlier posts today and her actions this morning. She got one of those little fake fur mouses and grabbed it and tossed it around and kept herself entertained. Didn't matter that it wasn't a real mouse, still fun. Thus I will try a little experiment and mirror some Casey posts and a few select replies. We can play with it here and not worry about our fake mouse stinking up the place or trying (hah!) to fight back.

Oh, and another thing. "Gordy" here has a brain the size of a walnut and as much common sense as a rutabagga. See the parallel?

The Twelve Days of Serin

On the twelfth day of Serin my broker gave to me:

12 twisted tales
11 ignored opportunities
10 tangential distractions
9 NODS
8 Housing hellholes
7 Snivelling sycophants
6 howling haters
5 fuuucked uppp fliiips
4 future foreclouses
3 blue balls
2 bipolar episodes
annnnd a sweet ride into bankrputcyyyyy....

Riverpark Update I (reposted)

I don’t “hate” Riverpark. Riverpark is a travesty, Riverpark is an example of excess in the bubble. Riverpark is a sad commentary on dysfunctional municipal processes. Lots more. I go on on my pathetic blog tomorrow. Oh and the newspaper reports the Riverpark disaster in progress today in order to get out in front of my reportage.

Visited the welcome center and registered. This will be interesting to watch it play out.

The friendly sales associate had me all to herself as i was the only visitor at this 2600 unit megaproject. The literature was silent but the salesperson vollunteered that the Mello-Roos is 30yrs, 0.8%. Thus $800/yr per $100k added to costs. Additionally, HOAs run from $200/mo for townhomes to $100/mo for SFRs. Thus $2400-$1200/yr TCO.

I'd guess the median sales price is $600k given the sales sheet provided with $1800 HOA and 1.9% tax bills. $100k down, $500k @ 6.2% and PITI will be about $3100 + $1000 + $200 = $4400/mo.

The entire site is supposedly 700 acres with 1/3rd open space, 3 schools, fire station, roads, 2600 DU. Hyperdensity. Hyperscary. I say supposedly because I've never seen so much public space dedication. Not just wide, winding streets but rotaries (traffic circles) and huge cul-de-sac bulbs. The developers read like a rouges gallery; SP, Centex and Shea. The construction looked adequate but the short driveways told me parking was going to be an issue in places. Previous posts already addressed ingress/egress. I didn't have the heart to ask about sales rates. It is too early anyway. Any sales were surely to contractors or other interested parties.

Housing Dada Mixed

This is the froth I warned about. Prices both wishing and selling are going to be all over the place. The large and dynamic inventory will make for a cloudy market. The small number of sales will increasingly include exceptions rather than regular sales closings. The shift to buyers market will leave some sellers unable to cope and thus escrows will be messy. Buyers will increasingly dictate terms; fast close, slow close, etc. In math we call this sparse matrix analysis. I haven't done it but it looks like 5-6 dimensions about 5% populated. Don't sweat the math or try to visualize 5 dimensions. The point is that depending on how you look at it you can detect many patterns. Look at this picture for an example:
The analog of a cresting wave goes quite far. No more rising tide, the wave crests, froth. The biggest wave at the end of an unusually high tide leaves little fishies washed up on the beach and as the tide recedes we see who was swimming naked. It won't be a pretty sight but it won't be a tsunami either although I don't put it past our great leaders to possibly make things worse.

January 9th, 2007 | Robert Coté

Young Casey Sleeps In

Nota bene: The" Young Casey" bit is a take-off of the imortal Douglas Adams "Young Zapphod..." title.

Here we are a day later. Casey was up late, Casey was/is getting sick. The sitemeter is showing declining interest. Besides, today is Monday. Monday is bad for Casey. 2-3 days of shitstorm rains down on Monday. I'd sleep in, I'd feign illness, I'd ... nevermind. I wouldn't. I'm not Casey.

Young Casey Signs Something

Shhh, Casey is sleeping. He was up past 2:00AM and is getting the flu. It'll be a day or more before he gets round to moderating me and censoring our man Homey.

So, here's what he did. He signed an unsecured promissary note to Countrywide for the difference twixt ashort sale and the outstanding 1st mortgage balance. And these are my replies. The first is up on his blog but like I said, the second will be a long time in posting. Post here for timely discussion.

Wow, did your real estate specialist attorney ever negotiate you a poor deal. You… did… use legal representation… didn’t you? Of course not. If you did you’d have grounds for malpractice. But everything’s turned out okay. The second lets their $75,000 position go with no complaint and no consequences to you. The first gets $239,000 immediately and $420/month for 5 years. They don’t even have to call the $420 income and you needn’t be bothered with deducting the interrest as there is none. Countrywide gets the equivalent of $270k for their $245k owed and some nice buyers gets a house. I’m just surprised that the 2nd leinholder has been so quiescent. How’d you do that Casey? Here’s where you can live up to one of your goals. Educated we unwashed masses who have no idea how to pull this off. Being able to walk away with no issues from 2nd trust deeds would save millions of people from foreclosure or worse.

"I still have a way to back out of it… i think."

Ummmmm, no. You signed it remember? The note wasn't contingent, you just signed an unsecured, unconditional IOU for 50 large. Come Feb 1st you'll owe the original mortgage, the fees and penalties and now an additional $416 if the short sale doesn't record by then. And if you think the second is going to walk on their $75k and o so within the next 2 weeks and the kind of person buying properties like this can complete escrow in two weeks... nevermind. What you believe is irrelevant.

Just so you hear it even if you don't understand; Countrywide did not agree to a short sale. They agreed to discharge a $260k plus penalties mortgage for $240k plus your $50k note. $50k over 10 years for let's say a $30k deficiency is the equivalent of a 12% interest bearing note. They only made it look like 0% so that they cannot be accused of usury in any future proceedings. As a special bonus they managed to move their note out from any cloud of bankruptcy discharge. Countrywide may be in deep doo-doo for even getting involved in our global credit bubble but they weren't stupid in this case.

Based on this binding result you could expect the 2 trust deed holder to demand a similar note in the amount of $80,000 at 0%. Add it up. $240,000 purchase, $50,000 1st, $80,000 2nd equals $370,000 over the next 10 years. Just what they would have recieved had you made payments for 10 years and then sold.

You don't have Larchmont short sale approved. Not by a long shot.

None of this matters. It's 7:30AM. You were up past 2:00AM and now you are getting sick. This day is lost to you as are another $800 at your new burn rate. And when you get to this comment for moderator approval you'll be so intellectually tired it won't stick. Quick look, no swear words, no personal family information revealed... approved. Just like the prblink signing and now Countrywide signing.

Young Casey Plays It Safe

Casey Serin's first crime of record has to be his pyramid scheme at the tender age of 14. You know, the send $1 to the name at the top of the list thingy. That was ten years ago and he has admitted to it even going so far as to acknowledge he was dumb and stupid... THEN.

Mortgage Falcon v2

JimBobJoeBobJim says: Robert, that is effing brilliant. When asking about my idea to "share" equity with stuck FBs. Now there's someone who knows how to stroke ego so I'm devoting an entire post to the answer.

How would I do it? The snarky answer is whatever way screws the mark the most. It's gonna be difficult because the first thought of the FB is that their house is worth far more than I will. So, first, I'll "pay" for an appraisal. You and I know that between the then market and my choice of appraisers and the fact that the FB has been neglecting even simple mantainence and hasn't even cleaned up for a showing that the number is gonna come in heart attack low. OMFG! thinks the FB, he thinks he is totally screwed. Still, the kids are in school, there's no money in the bank and his (and her) job(s) takes all his time. Moving and renting is worse than sticking it out if he can. That's when Robert the Mortgage Falcon (version 2*) swoops down. "Man, all you need is some help until the market turns. You paid $400k and you ain't no dummy. Someone, someday will pay $400k or more again. That's why I'm here. You see, I think you made a great investment, you smart investor type you and I want in on your money machine that's just stalled for the moment."

"Gee, that sounds great Mortgage Falcon v2. How does it work?"

"Simply, safely and the neighbors don't even need to know."

They're hooked and I've got my hooks in the same kind of appreciation that we saw 1996-2006 without having to actually go out and buy something.

The original Mortgage Falcon v1 is at: http://exurbannation.blogspot.com/2006/04/real-mfer.html

A Modest Proposal

Loan originators have been running wild, destroying the economy. Prison time? Witch hunts? Public examples? No, we need to hurt these people. Exactly the way they've hurt us. Force them to disgorge their personal gains.

Mortgage broker goes home to his wife:

"Honey, we need to sell the house."

"God, why?"

"We have to pay back all the money we made on those phony loans."

"OMFG, this IS serious and what do you mean we?"

"Remember that money WE got back when WE closed on this McMansion? That WE. And that's not all. The settlement requires that we only sell to a documented qualifying owner/occupier client with a court authorized independent appraisal so we won't get enough money to pay the fines and pay off the mortgages. We'll owe taxes on the difference."

"Again with the WE..."

"Dearest, remember that vacation to the South Seas? WE can't untake that trip for instance."

"Oh.... and... if we don't?"

"I go to prision."

"Yes, but what's the downside?"

"Hah, hah. Very funny. We have to sell everything and cut to the bone and then cut some more. You are implicated too just like Casey and Galina. There is one problem however."

"Yeah, what?"

"Where are we gonna find an agent to sell this place? All the ones I know are in jail."

Suggestion Box

Back to more abnormal posts and a new year.

New features being added:

Blogs O'Shame
Blogs O'Note
Unmoderated Casey Posts
Transit Myths by the Numbers
Why Macs? Tracking the OSes
The Riverpark Fiasco

Suggestions?

International Currency Discussion, Casey Serin Edition

Jamba Juice is a iamfacingforeclosure unit of currency. 1jj equals one rasberry banana with wheat germ shot beverage purchased at full retail on credit including transaction fees. While a prudent investor would save store coupons and wait for "free shots" specialsthat isn't 1jj. You see inplicit with 1jj are the assumptions that anything below a certain financial threshold aren't worth expending any intellectual capital upon. Better to consume, indulge, spend, and otherwise pamper oneself rather than sweat the small stuff. The actual convertibilty of 1jj to dollars, even our weakening pesobucks is subject to much debate. In this Casey is like his own country. Subject to GAAP 1jj would be about $80 because of the list price, the overdraft penalties, subsequent carrying charges, paperwork, time lost in the consumption and subsequent time lost dealing with the consequences and most important; opportunity costs. Opportunity costs is often misunderstood and is certainly something Casey never heard of before attending some advanced courses. In those course they teach you that opportunity is knocking and you cannot afford to not answer the door. This even works in a rapidly rising market. But as readers suspect by now in a rapidly declining market worse than the opposite is true. Casey has a burn rate. By investing what will eventually total hours to his 1jj indulgence he has foregone the opportunity to stop or at least slow the bleeding.

Pagans! Pagans! Pagans!

Celebratory Saturnalia. Supposedly part of the Winter Soltice but observed several days later. Hmmm, what else is observed a few days after the solstice?

Happy Holy-days!

For Our Druish Friends

Wishing everyone a solemn Alban Arthan as we honor the souls of the trees we sacrifice then deify in our living rooms. Hang the revered kerm-oak, drink the blessed wassail. "Yule" feel so much better. The Norse had the right idea taking 12 days for Jole. Oh and all the recent religion adherents that have since renamed these Christmas, Christmas Trees, holly, sacramental wine and the 12 days of Christmas as if changing the name makes a difference; Merry Christmas.

Casey Fix Dec 23rd Edition

Casey is on sabatatical. Sabatical, an interesting word; a period of paid leave granted to a college teacher for study or travel, traditionally every seventh year. Of course 7 minutes seems to be our Gen-Y Nega-Hero's max attn spn so in order to keep his faithful followers (stalkers?) in full cheer, presented for your amusement Casey Channeled:

Wow, sometimes the whole thing seems to be pressing in on me. I know that the best thing to do is push right back. When life give you lemons, make lemonade! And boy do I seem to have a lot of lemons! So that's today's new direction; squeezing my resources of every drop of value. I promise, this time for sure, I'll follow this strategy to completion. It is the least I can do to set things right. I feel better already knowing that my thinking about making an effort is already making a difference! Time for a reward. No, not Jamba Juice, I've learned my lesson. Introducing Serinade! Yes, I've monetized my faults and turned them into virtues. Serinade is my fantastic new product. And I have my haters to thank for it. Hah! Anyway, you can click on my links to order your own all chemical lifetime supply of Serinade on my -real- website. Or you can just whip some up yourself. Not only are all the ingredients ABSOLUTELY FREE! but with careful deal structuring you can get cash back on the purchase of the ingredients.

First off you'll need some prarie oysters. You see it takes some large huevos to make this work.

Then you'll need.....

Oh, sorry. More on this later my 7 minutes of max atn spn are up and so are my 15 minutes of fame. More later after a quick power nap and slug some Serinade! The drink that keeps on taking.

Latest Casey (for posterity)

BK -sooner- is in his readers’ interests and his as well. BK is a forgone event. The discussion is one of sooner and voluntary versus later and involuntary.

Things Casey is stuck with:

Liability due to -proven- and -prosecuted- fraud.
Taxes.
Damaged relationships.

Things Casey can dissipate:

CCard debt.
Future debt accrual.

So far in these three extraordinary months by Tim’s estimate his efforts have yielded $60-80 thousand in additional debt. Freakin’ tax late penalties from Dec 11th are $600 alone. I know, noise, just like the $37 (1jj) Jamba Juice overdraft. The Jetta Junker (1JJ) barely qualifies as worth tracking. He shoulda “bought” a “business car” and tried to claim it as part of livelyhood. That’s the stuff a good lawyer coulda tole him in SEPTEMBER. Too late now, the best he can hope is to squirrel cash. Not advise, just sumptin’ I herd on da street.

I’m frankly tired of Casey running up a bill on my tab. Begs the ethical question; you see a robbery. Is it your problem? Jean Valjean Casey ain’t.
----

Good Idea: Clip coupons.
Great Idea: Open mail.
Absolute necessity: 30 minute spreadsheet.

Bad Idea: Movies.
Really Bad Idea: Collige to get “riche.”
Fatal Mistake: Full speed ahead.

Which ones have your attention? Better yet, why are you reading my recreational musings? You need to be working Excel like a hedge manager.

Here, I’ll save you the trouble. The spreadsheet needs only a dozen datum in a 3×4 matrix. Ignore all else and track three months of 4 properties’ realistic sales price. You “bought” futures contracts on margin. I don’t expect you to understand that tech talk but even if you paid cash for all your “assets” you are ummmm, in a difficult place. You have to pay people to stop the bleeding. You don’t even have any bandages. This isn’t all that bad… yet. It just seems you can’t make a decision until things do get that bad.

Lost Kitty, Please Help!

Sputnick, the launch has been postponed. It is safe to post again.

Homey says those pimp shoes were last years anyway. AIN'T NO BIG.
We have fishy treats and have disconnected the scrotal electrodes.

Promise. [Everyone else talkabout Casey here.]
Update:
My latest Casy bashing here for posterity as I expect him to go down soon.

Mornin' Sunshine. So, Casey... what's this about putting your wife's credit cards ~$30k into bankruptcy? It ain't a cafeteria, it's a courthouse. You don't pick and choose and besides, you keep acting like it is a choice you can make. You may have had a choice in Sept. not now. You are worse than bankrupt. Bankruptcy means you cannot go forward under current obligations. You are far worse off, you need bankruptcy for protection. At this point almost any scheme you try without court supervision is going to look like an attempt to defraud your creditors.

Right On Schedule, Casey Goes Silent

As I predicted on his blog a while back the late December "quiet period" to build suspense or something. Really, I don't care. I invest nothing except a few minutes per day in a sick form of voyeurism.

Of note is the fact that it appears he has moderated my comments that use Chris Record and the Phoenix "college." I thought he'd let them slip through but now I suspect the import of his lifestyle is finally sinking in.

Growing Up Los Angeles

KB Homes is dropping out of the downtown hirise venture. Apparently it no longer fits their core model of suburban sfr construction. Amazing how a whiff of economic reality can wipe out years of urban cheerleading.

LA is the embarrassing end product of every FOAMER (Forces Of Anti-Mobility) and SmUGLER (Smart Urban Growth LovER) and NUTSO (New Urbanist Transit Supporter) and TROGlodyte (Transit Only Groupies) plan. It’s amazing to hear every single time: “We don’t want to become like LA” and hear the solutions attempt to replicate every urban feature of Los Angeles. I
particularly recommend the insight of Mr. Cox in recognizing VMT/sq mi as agreat QoL and congestion indicator.

The advocates of SmUG avoid substance. They liken sprawl to pornography, they know it when they see it. They call SUVs, gas-guzzlers, ignoring the fact that they generally replace vehicles with poorer mileage. They decry the paving over of America despite 5.2% or less of the nation is even developed. They ignore 9 decades of sociological data that speaks to density and degree of urbanization. They manufacture crises such as affordable housing or global climate change and then claim to be the
solution. They misallocate limited public resources to transit. They confiscate huge swaths of private property for use as public space.

If there exists a public imperitive for afforbable housing then th4e taxpayers should pay for it. Truth is the taxpayers won’t pay and there is no public policy interest so would be social engineers posing as planners impose unreasonable demands upon developers.

ChurchSignGenerator dot com

More fun than a stations of the cross marathon.

All That IWas Old Is New Again

Someday, say about Jan 12th when the banks start getting keys in the mail instead of checks there's gonna be some confusion and running around. Hold off for a minute that you can't really mail the keys back, the people that will be doing this don't know that. So, the junior loan processor talks to the loans supervisor who gets the senond vp of consumer credit accounts to come down and look into this pile of keys where a stack of checks should be. After a minute of scratching his youthful full head of hair he says; "Hey, is old Smitherers still around? You know the guy that was with the company 7-9 mergers/takeovers/aquisitions ago from that company that used to lend their own money out to the community and the community would deposit their money with them? I think it was called something something b-a-n-k." "He is? Good, get him up here and see if he remembers." Crotchety old Smithers is actually an ancient 49, his hair has a funny whitish tone in places. The whole tableau resembles the final scene of Logan's Run. Smithers looks at the pile of keys, the upturned faces full of botox and worry and says... "Oh, 1991 except faster and deeper and longer. About time. Hmmmpf." Reaching over to the wall he scrapes away posters announcing in-house education classes for tapping 401ks, cash back at closing seminars in Maui, HELOC loans at the local Hummer dealership to reveal a door. Painted over and nearly invisible only the faintest outline of the name "Repos and Dispensations" is visible. As the seal is broken, like on an ancient tomb, a whiff of Aquanet and Grecian Formula curls the nose hairs of the onlookers. Smithers bursts in to a room full of sleepy 50 somethings and says "breakout the bong and disco ball fellas, it party time once again!"

Starter Home Price Revealed

272 Grandview Circ
Camarillo, CA 93010
MLS ID#: 612689
$548,000

Is it any wonder people think we are overpriced? $670/sf. What are people thinking?

Starter

New game folks. Guess the price. With Ventura County down 8.2% y-o-y time to see if the rest of the planet and my other readers who prefer to remain anon what this galactic gem is worth.

Single Family Property County: Ventura Year Built: 1956
2 total bedroom(s) 1 total bath(s) Approximately 821 sq. ft.
Approximately 0.17 acre(s)

No fair looking it up. Just guess and tell us where you are guessing from.

Rent v. Own

2780 Avenida De Autlan
Camarillo, CA 93010
MLS ID#: 614107

This baby rents for $3300. But what about buying?


2780 Avenida De Autlan
Camarillo, CA 93010
MLS ID#: 613868

$1,219,000
5 Bed, 4.5 Bath
3,510 Sq. Ft.
0.18 Acres

So, a million dollar mortgage at 5.5% is $5677.89, taxes another $1200.
Cost to own is twice the cost to rent. Or the house is worth $600k if you prefer.

Megaopoli & Diaspora

California is sending forth its best and brightest. The unspoken subtext is that the most productive segment of society are the ones that are moving. Who can blame them?

What's to attract top talent when the cost of living is so out of sync with pay? Davis ain't Boston. We looked at buying a place for my daughter to live in while attending the school of her choice. For about 15 seconds. $350/sf for the most modest of houses in Davis? Our local CSUCI "solved" this by getting into the real estate business with extensive planned developments preferential to faculty and staff with speculative caps on purchases.

As to "The OC." Unless you bought in a decade or more ago its got nothing. I mean really, you can't tell OC from SFV and except for 15 degrees the IE for that matter. They don't even grow oranges anymore fergawdsake. The OC is just another part of the teeming LA megaopolis. Ventura County might escape that fate if the housing bubble pop is large enough. Still, the traffic is miserable and there's no will to stop it from getting worse.

Latest Bit O'Theater

Our subject thinks a quick comment about his latest debt laden scheme will fire up the page views. 36% interest only loan, 6 months with a 10% surcharge at 6 months; $4500.

ANALYSIS: 6 pmts $150, 1 pmt $4950. Effective rate 60%.

Now of course Casey didn't really do this.. A stunt to build traffic, nothing more. Odds on after "reading the comments" he'll claim to have reconsidered. Pretty lame.

Unwrapped

I don't want to be a Shadow Earth to Casey's Amber but people have been asking for summary comments so they don't have to wade through and/or add to his click count so I'll up postings. Play nice. This means some scrolling as multiple threads will be active at the same time and really, nobody needs to know that he's an a$$hat or that it is all a scam, etc. That said, making fun of Jettas and other Gen Y epicaricacy is always welcome as is Baby Boomer Bitchin'. Jump in.

So, his illegal attempt to wrap the Utah house unwrapped. My take:

Robert Coté
December 8th, 2006 at 8:05 am
Wow, who saw this coming? [raises hand]

What would my morning be without my daily Sputnik? That damn cat owes me a few keyboards; coffee, beer sprayed all over the place. Thhhhpft. Hey, I think www.dailysputnik.org is available.

Anyway, let’s play good news/bad news. Good news, your conveyance wasn’t probably legal. Bad news, lawyers cost money. Good news, the agent isn’t owed the comission. Bad news, good luck getting it back. Good news, Utah isn’t too far to drive. Bad news; uhhh Jetta. Good news; the blog has an interesting topic. Bad news, not all attention is good attention. Good news, with so many actors the pentultimate courtroom scene is liable to resemble “What’s Up Doc?” Bad news, you’ll be playing the Striesand character and the judge won’t be your daddy.

Well enough, off to “work.” Got my tea (40 bags, 99 cents Trader Joes 2 for1), got my cup (free, some healthcare client promo), got my thumbdrive ($9.99 1Gb Frys), got my new office (TuffSheds $40/sf including granite countertops), got my laughs for the day and a new story to follow. I smell a roadtrip!

December 8th, 2006 at 8:51 am
It was so obvious I didn’t even bother to explain previously. The Utah “buyers” were in with the agent. The agent got a few percent and the “buyers” got the rest as cash back at closing. Sweeeet. Best part is they knew the wrap wasn’t binding. They got their money, got to live there for a few months and left Casey holding a bigger bag. Hey Casey, wanna buy some sweeeet tranches from Ownit?
----

Everyone understand about Ownit? The mortgage broker industry is bening killed. No, not dying, murdered. The secondary market is cramming back "bad" loans they know the originators a cannot cover. It's like forcing someone out of a poker game because they cannot match the raise. No split pots, just cover the bill or die. Good for the secondaries, bad for the brokers.

At the very least, if you laughed at the "What's Up Doc?" comment, tell me. Feedback will help determine future post content.

Mortgage & Housing Worksheet:

Robert’s Way Too Complicated Mortgage & Housing Worksheet:

1. How much do you make? $_ _,_ _ _.00

2. How much do you really make? $_ _,_ _ _.00

3. Is the difference between 1 & 2 greater than 10%? [y/n]
3a. If yes; forget it, rent.
3b. If no proceed to step 4.

4. Multiply #2 by 3.5 (4.0 in California). @2×3.5= $_ _ _,_ _ _.00
4a. This is the most home you can afford.

5. Is the median in your area 50% more than #4? [y/n]
5a. If yes; forget it, rent.
5b. If no proceed.

6. Pay off at least one car.

7. Pay off ccards and student loans.

8. Collect 3yrs of tax and employment records.

Congratulations you can now apply for a 30 year fixed rate conventional mortgage.

9. Any interst or questions about other types of mortgages? [y/n]
9a. If yes; forget it, rent.
9b. If no; continue.

10. Shop for the lowest fees and rates.

11. Go house hunting with your prequal letter in hand. Be careful to keep the sellers agents from smearing the document with drool.

12. Is there any doubt whatsoever in your mind that the sellers agent is not your friend? [y/n]
12a. If yes; bend over and pray they at least use vaseline.
12b. If no; continue.

Congratulations, you are a homeowner.

Oh, Alright Let's Talk About Casey

That silly performance artist seems to have our attention. As we all know for these types of personalities it isn't about good attention just any attention. Unfortunately that makes us enablers and his blog also gets so edited that any useful information is expunged. I also don't want him distracted from rescuing my money so let's talk about the whole thing here where there are no adds or agenda.

Save the Electrons

[_] Excellent post
[_] Whatinthehell are you blabbering about?
[_] I agree [_] Think you are drinking the koolaid.
[_] Unfortunately you cheerypick your anecdotes
[_] The volume of data precludes usefulness going forward.
[_] Too much data not enough analysis
[_] Your conclusions are leap from what you demonstrate.
[_] The plunge protection team will save their sorry butts
[_] The greatest story never told contnies to confound the nattering nabobs of negativity.
[_] Keep up the good work
[_] crawl back under whatever rock ...

Personally I'll wait for the posted data to be revised before believing anything.

Calendar of Events

January scary
February worry
March of the Lemmings
April Fools
May but probably won’t
June swoon
July to die for
August not so robust
September to remember
October all over

Golf Courses = Racism?

Once again if look hard enough everything is race based:
http://magazine.uchicago.edu/0612/investigations/golf.shtml

"[D]evelopers have turned to exclusionary amenities, which remain unregulated. The amenity of choice for the last two decades has been a residential golf course, Strahilevitz believes, because “golf participation functioned as a better proxy for race than income, wealth, or virtually any other characteristic.”

I have been told I am white. I live on a golf course. I bought in the 90's.

Here is why I bought:
Lot size. Other neighborhoods offered 1/4 acre or far less.
Quality of construction.
Early 1990s price squish-down" that made much better properties only slightly more expensive.
Land-use assurance. Golf courses don't go smart growth" or "new urbanist" or "transit oriented development" or "blighted urban upzoning" or ...
Taxes. No HOAs, no assesment districts, no Mello-Roos.
Privacy/traffic. Cul-de-sacs and winding tertiary dendritic narrow roads.
Potential for retained value/appreciation.
High civic participation.
Good schools.

Yep, racism just oozes from my list. And I'm sure that if someone of color had offered $100k more at the time it would have not mattered because what was impotant wasn't the green but the black/brown and white.

The author mistakes cultural factors for racial considerations. That makes them the racists in this situation.

Political Fallout

"__________"


"...the core goal of conservatism is to conserve the existing power structure."

I consider myself sympathetic to what was called conservative and I'm getting really tired of it being associated with the current Republican administration. Conservative is not deficts and spending. Conservative is not foreign adventurism. Conservative is small govt, constitutional authority, devolution of powers. Rightfully decry the current and impending power structure but please don't involve conservatism in the process.

Recall a time, ancient in the current political cycle but recent in the history of modern democracy; "The Conscience of a Conservative" by Goldwater was one side and JFK another. Today JFK couldn't even get the Republican nomination because of his extreme conservative positions.

What we have now is capitalism running ahead (evolving faster) than its democratic checks and balances in the field of economics. To compound the error we have politics outrunning its traditional constraints.

Creative Exurban Taxation: Gasoline

Excise taxes on vehicle fuels need to rise. This because inflation errosion and mission creep under funding are stressing the various trust funds. About 10 cents per gallon equivalents would be about right split evenly between States and Federal. I'd very much like to see the Feds offer to reduce the Fed Excise component 1 cent for every 1.2 cents of State increases up to say an 11 cents increase combined.

These are not sales/consumption taxes. Fuel taxes are a convienient form of use fee. They aren't perfect nor perfectly fair but they are taxes after all. I've no truck against shifting to other forms of use fees. The "gas tax" is simple and difficult to avoid. Most alternatives have the flaws of expensive to implement and subject to much political distortion.

What higher gas taxes will not do is anything to address the externalities Mankiw posits. Eurpoe has higher gas taxes and still sees the same general trend towards POV mobility choice. I am particularly enraged by the budgetary argument. These are TRUST FUND monies. Even now at both the state and Federal levels that trust is being abused and Mankiw advocates even further errosion. On the economic front mobility = wealth. Mankiw thinks that we can discourage mobility and become wealthier for it. I am not convinced.

Changing the nature of these use fees traditionally used to cover internalized infrastructure costs to one of a new general tax subject to state and federal whim is extraordinarlly poor public policy unless there's been a change in the trustwortiness of our electeds that I've missed and Mankiw has discovered.

Bucolic Pre-Planner America

A Craftsman movement would be great but not possible in today’s political environment. Planners will not allow 1100 sf homes on 1/4 acre and back alley services. Planners will not allow wide boulevards and muncipality mantained tree belts. Planners will not allow neighborhoods or communities to develop over time organically and naturally without their guiding hand. Nice but not possible unless we first kill modern planning.

Planner Victim? Deserving Idiot? Realtor Fraud?

http://www.venturacountystar.com/vcs/mo/article/0,1375,VCS_167_5032952,00.html

You gotta love these. Buys in a ridgeline near a major freeway interchange about land zoned for major retail for over a dozen years and gets a shock when major retsail is built.

Excerpt:
"The view from their hilltop home is much different today than the one they paid extra for in 2002. It went from sweeping views of the countryside to neon signs, concrete walls and lighted parking lots."

"The Realtor told us they didn't know what was going to go down there. If we'd known, we probably would have looked around somewhere else,"

What is Urban? Rural? Exurban?

5) In responding to Astrid, who said "Is .1 acre SFH really better than townhouse with good sound insulation and decently planned parking space?"

I replied: “No question. First 0.1 acre is a whopping 4300 sf. 40x100. Not suburban except in the minds of the planner classes.”

TOLurker expands and asks: My house sits on a lot exactly that size and it is considered a suburban lot around here. It’s not inner city Toronto, where they typically have houses on 15’ wide, 20’ lots. Even 12’ lots. 25’ is a big honking lot in the downtown core. So, if my neighbourhood densified, you could fit two houses on one lot and double my neighbourhood’s density. (which they more or less accomplished with all those stinking 30 storey condos. I would have preferred no high rises and lots of 20’ lots.)

Toronto is a bit of an exception eh? Even for Canada eh? We can try to work the margins and provide both an efficient and desireable environmentwith careful density planning. God is in the details. In the US the extent of careful density planning involves changing 16 DU/ac to 20 DU and approving the development with an exception to the city's General Plan. 10 DU/acre doesn't so like a lot. It is also 19,000 persons per square mile. That's a high school, two middle schools and 6 elementray schools. That's 120 of your 640 acres in that square mile. Roads, fire stations, shopping, commercial? Once the gross popualtion density is considered those 10 du/acre don't look so suburban anymore.

No Commentary Necessary

Exurban Energy

4) “What this means is that Kunstler has the entire end of suburbia as we know it exactly wrong. Higher energy prices will spur new energy efficient construction and demand for less congested (more) freeways and erode support for the cenurbs as jobs move to where the people live not vice versa.”

TOLurker expands; "Certainly higher energy prices will force new construction to be more energy efficient. (I’m all for that). But aren’t high energy prices connected with recessions (in the short run) which will kill new construction? If people facing $5 gas demand less congested freeways, will they, hurting in this recession, vote the tax increases for new and additional freeways? Don’t more freeways eventually result in more kilometers driven, more cars and more congestion? What is energy efficient construction anyway—are you referring to the buildings? Or the layout of the cities? Because I think the latter is just as important in reducing energy use as the former."

Building NEW energy efficient is easy and justified. Retrofitting outmoded cenurbs is prohibitive and doesn't pay. The biggest POV energy thief is congestion. I see a new under the radar movement that understands this. A recession reduces congestion; a buffered system to some extent. In truth it just buys us some time to fix the problems.

I think you are incorrect as to urban development patterns on the old fashioned density intensity mixed use modal being energy efficient even with new construction materials and methods. I'd like to hear your thoughts however. Me, I see with one exception the cenurbs and exurbs being similar in gross energy consumption. The exception? NYC which "reports" some 30% lower energy consumption per person than any other US city. That's just too extreme to be anything other than a difference in reporting.

ARM Twisting

3) “When the ARMs start twisting it is the cenurbs that will see the greatest impact not the exurbs. Transit costs typically increase much faster than general inflation and marginal ridership decreases in poor economies.”

TOLurker asks; The cenurbs will have greatest impact because of the ARM time bomb knocking out marginal home owners, or the cenurb TRANSIT SYSTEMS get knocked out by the crap economy? Because I’m sure the exurb marginal ARM home owners will get screwed, too, if not worse.

A little of both. Remember, the cenurbs had only recently and only statistically marginally demographically improved in the 1990s early 2000s. THe cities are going to have a cash crunch and transit/transportation is a likely victim. Without those continuing investments the reasons people were drifting back will go away. There are a lot of compromises with urban living, not a negative, just a consideration. A general recession will unfortunately change a lot of the components; transportation above but also crime rates and costs of living. An economic contraction will cause people to "age in place." That means the stream of younger people constantly replenishing the people who marry and start families and move to the 'burbs will slow. Then there's the last 90 years of exurban diaspora. This slowed in the 90s-00s but will re-acellerate. And college is on the cusp of major changes; not good for the Bostons of the nation. Non of these are urban fatal but enough small cuts and you can still bleed to death.

T-Shirt Suggestions Requested

HARM at partick.net andI need T-Shirt suggestions.
—————————–
Housing Checklist:
[x] Bucket of Money
[x] Box of Stupid
[x] 6% for Realtor
—————————–
A House is a Home with a HELOC
—————————–
Ask Me About My Equity
—————————–
PITI Me, I Bought in ‘05
—————————–
Broke is the New Paradigm
—————————–
My House Has Achieved A
Permanently High Payment
—————————–
McMansion
McJob
McScrewed
—————————–
My ARM is Bigger than Yours
… and It’s Still GROWING!
—————————–

Bubble "Goodliness" vice "Truthiness"

“As to the housing bubble; The housing bubble is a good thing. It is a voluntary mechanism to raise municipal revenues and assures more efficient use of existing housing stock thus reducing sprawl and stimulating the economy.”

TOLurker comments: More efficient use of housing stock – because people double-up in a house? More people in fewer houses? I thought that happened in a recession when young’uns move home and you have more housemates, intergenerational families under one roof. Last I checked, the housing bubble was exacerbated by restrictive planning policies demanding low density versus high density, a lot of speculators flipping empty houses (and causing more houses to be built than there is real demand for) which will (has?) result in many never-unoccupied houses in exurbia.

There's a bit of, okay a LOLT of tongue-in-cheek here. The housing market is indeed voluntary even as it is manipulated but those restrictive urban policies IMO exacerbate the bubble by pushing unnaturally high densities not low.

Recessions Hurt Transit

TOLurker asks several involved questions. I will use these spaces to address them.

I said; transit saw its’ highest usage in 40 years at exactly the same time gasoline was at its’ lowest inflation adjusted price ever. Real transit advocates should be pushing for cheap gas but their emotional desire to punish autos in a misguided belief in a zero sum game and will instead continue to shoot themselves in the foot.”

TOLurker asks; Why? Could this be directly a cause of a booming economy and more commuters, rather than low gas prices directly equals an increase in the number of transit users?

Acouple things come to play. People can only afford effective transit in good economic times. A recession is a qquadruple threat to transit. First as you note, fewer users. This means the same fixed costs and reduced incremental revenues. The 11th rider on a bus is nearly free to service, their incremental fare no matter how small is still above the average of the original 10 riders. Second, People don't have either thee time or money to utilize transit unless there is a good economy. Third, for the same reasons taxpayers are less willing to tolerate the extremely high expenses and inequitable provison of transit when they feel a squeeze. Finally, transit is slow and resistant to reducing costs thus a spiral of reduced services hetrodynes into reduced ridership and the cycle reinforces.

Higher -energy- prices are also a variable cost of transit provision. Since transit users pay none of the capital costs and a fraction of the operating costs, 1.4th to 3/5ths generally, a rise in energy costs disproportionally squeezes transit prices. On a cost basis transit and POV are a wash but that isn't the problem here. A 20% incrrease in fuel costs for a POV is something like a 5% increase in out of pocket costs but if passed on a 20% increase in transit energy costs would be a 15% increase in fares if actually passed on as increases. Transit being extremely elastic vice POV the 155 is usually delayed an rather expressed in delayed expenditures, reduced service, etc.

Hopefully this will stimulate the discussion. It is by no means pontification or tablets from the mount just my resonable take on asubject I know a lot about.

Not Peak Oil Again.

I've examined the reports of the last 148 years.

Cantrell II has -potentially- more oil than the Peak Oilers said could ever be found.

Jack II has -potentially- more oil than the Peak Oilers said could ever be found.

Recent extraction technologies have added to useable reserves more than were ever considered possible.

Peak Oilers don't get it.

VIRTUES

"A virtue is an habitual and firm disposition to do the good. It allows the person not only to perform good acts, but to give the best of himself. The virtuous person tends toward the good with all his sensory and spiritual powers; he pursues the good and chooses it in concrete actions."

No one was interested in the deadly sins or spiritual (heavenly) virtues so this is just to close out the subject. From the Catholic Catethism above it is self explanatory especially for my regular readers who display extraordinary accumen.

The question remains: Is it enough to say?; "I think it is time for me to sell." or is it necessary to say "All the signs I see indicate this is a terrible time to own real estate."

Is there a moral obligation to let people fail?

The Seven Hevenly Virtues

Things won't always be this bad. thee bloodhoundblog won't be around much loonger with his 21 reasons why Phoenix is special. The Bhuddist Realtor of Sacramento (delicious irony that) is already prursing other exciting prospects. The ethical Realtorslike Jim the Realtor of NorSD County are dutifuly reporting the truth. So, with the Seven Deadly Sins in full force but crumbling what are our options? There are two. roughly secular and spiritual. First the spiritual:

Ethical Action on the part of participants. From:
Truth - Truth is a comprehensive term that in all of its nuances implies honesty, accuracy, sincerity, integrity, and reality.

Respect for the life investment people are making. From:
Love - A deep, tender, ineffable feeling of affection, devotion, and/or compassion toward a person.

Courage to tell the truth when all around are lying.
Courage - The state or quality of mind or spirit that enables one to face danger, fear, or change with self-possession, confidence, and resolution; bravery.

Expertise and the skills to efficiently employ the best practices available. From:
Wisdom - Knowledge, and the capacity to use the best means for attaining the best ends; good judgment.

Creativity because a shifting moral and economic ground requires it. From:
Creativity - The ability to produce through artistic or imaginative effort, characterized by originality and expressiveness.

Compomise to achieve best outcomes for all.
Tolerance - The practice of recognizing and respecting the beliefs or practices of others.

Independence, beholden to none. From:
Freedom - The power to act, speak, or think without externally imposed restraints.

The Seven Deadly Aspects of the Housing Bubble

1. Confusing housing with lifestyle consumption. Lust (Latin, luxuria)
2. Aquiring more than is healthy. Gluttony (Latin, gula)
3. Conflating living costs with investment. Greed/Avarice (Latin, avaritia)
4. Money for nothing. Sloth (Latin, acedia)
5. TBD as the blame game has barely started. Wrath (Latin, ira)
6. Keeping up with the neighbors. Envy (Latin, invidia)
7. Mistaking ownership for personal validation. Pride (Latin, superbia)

Up next the Seven Heavanly Virtues and the Seven Cardinal Virtues of The Housing Restoration. Yes, The Housing Restoration. You heard it here first.

All around the equity ladder
The FB chased the HELOC

The broker thought ’twas all in fun.
Pop! goes the loan rate!

A penney for a pergraniteel top,
A penney for a bidet.
That’s the way the money goes.
Pop! see equity fly away.

Up and down the City Road,
In and out of the marketplace,
That’s the way the money goes.
Pop! goes the tax base.

Half a pound of tuppenney Pergo,
Half a pound of Pella,
Mix it up and make the flip go,
Pop! goes the FB fella.

What's truly amazing is that the 16th century original warned of the dangers of pawning ones' assets for prolifigate spending habits.

See Whaat Happens?

The local rag of plausible deniability has this article:

As housing prices in Ventura County are going up, enrollment in local schools is going down, and that means less money for education.
That's because most school funding is based on enrollment, so if schools have fewer students, they get less money from the state.
"As we're in this slow decline, it's difficult to balance the budget," said Charles Weis, Ventura County superintendent of schools. "It's difficult to keep teachers and programs in place."

Countywide, enrollment dropped by 1,500 students last year, Weis said.

Full Story: http://tinyurl.com/pg558

Of course there's a whole lot more than just housing prices but it is a piece of the picture.

Holy Freakin' Fresno

I'm in Fresno helping a friend execute an estate. Among the things necessary is vacating the current house and finding a rental after convincing him not to buy. We drove through just two small neighborhoods in the NW (Chance/Perrin) and there were 5 within 5 minutes. 3/2/gar $1200, $1450 w/gardener & water. That tells us the reversion to 120x rent is a 40% haircut. Nice Timeseries: http://www.consrv.ca.gov/DLRP/fmmp/time_series_img/fresno.htm

What Where When?

Robert, what area do you think of when you think of investment property?

Investment property:
1. Unrecognized value.
2. -Potential- for appreciation.
3. Proximity for personal oversight.
4. Stable community.
5. SFR/Townhouse/4plex. A personal preference.
6. Pool of renters.
7. Rational land-use regulation. Some would call this a personal foible but I call it putting my money where my big mouth is and voting with my feet.
8. Nowhere near transit.
9. No HOA.
10. No Mello-Roos.
11. No pending plans for rezoning, a freeway, etc.
12. Defects are okay but no unkowns.
13. There’s about a hundred “second tier” factors as well.

So, with all that in mind an casting out from my location the conclusion is obvious. I cannot find a property in the US that I personally consider a worthy investment property at this time. Spring ‘08and I’ll bee looking at maybe San Luis Obispo, Santa Clarita, Simi Valley, North San Diego, Big Bear.

Places I don’t consider; core urban areas, large metro conurbations, high end (Santa Barbara, Orange County), bad weather communities (Bakersfield, Ontario).

Places I wish would open up; Coastal California, Cape Cod, low density Gulf Florida pennisula, the next Sedona.

Do I paint a picture?

Bubble? No!

It isn't a Bubble, it is a pustule. Feel free to try for one upmanship.

"There is no way you can justify the math."

"Christopher Thornberg, who says the Southern California housing market is a bubble beginning to pop, has left UCLA Anderson Forecast to strike out on his own."

"Look at what your house was valued at three years ago and what it is now. Is it really worth 70% more? The answer is no," he said. "There is no way you can justify the math."

http://www.latimes.com/business/la-fi-thornberg15aug15,1,4462297.story?coll=la-mininav-business

Dumb Money

"Rhetorical question: Is private equity "dumb money"?"

Does Fortress taking Intrawest private for a 50% premium answer the question? All that debt won't go away but all the asset valuation backed by resort area land holdings will. This isn't a deal that has to happen unlike the Homebuilders who had their buyback programs to prop up the price while the insiders cashed out of Lyons who by going private can report awhole lot less. When Intrawest is carved up and sold off for debt repayment things will get interesting. There seems to be some weird bet that the Vancouver Olympics will enhance their BC holdings but I want the name of the bank that okayed this white elephant deal.

Quote-O-Note

"How about a "hard-soft landing?""

- PIMCO's Paul McCulley

FBs Need to Grow Up

It would be immoral and a hindrance to their development as responsible citizens to intercede and shelter them from facing the full consequences of their actions.

The problem with compassion in this case is that it isn’t compassion. I have an infinite supply of compassion. Anyone with a modicum of humanity can manufacture more at any time. No, what people are trying to pass off as compassion is actually spreading pain to those of us who don’t deserve it. Money handed to stupid people or even people with money problems is no more compassionate than give heroin to addicts. Worse, all the offers of compassion to date have been in the form of people offering these FBs my money. It is my money and calling its forcible confiscation “compassion” doesn’t make it compassionate. Look into my children’s eyes. Tell them we cannot visit grandma this year. Tell them they cannot afford the “free” California College education they earned despite being accepted. There, tell them about compassion and needing that money to resuce somebody who paid 4 times as much for a house as they could afford thus pricing these children out of their childhood communities when they grow up.

Go ahead, be compassionate. Just don’t call anything less than the necessity that they face the consequences compassionate.

Inflection Point

Nothing like disaster staring you personally in the face to sharpen the mind and narrow focus to the important facts. These things are “brainers.” The problem is so many people sleepwalking or in denial.

It is important to remember that housing is priced at the margins. That’s also why the bubble won’t be as injurious to the general economy as some here believe. Imagine getting a letter in the mail saying you won a million dollars. Next day you get another letter saying a mistake was made, you only won $400,000. Did you just lose $600,000? Only if you went out the night before spent it all (MEW). [Calculations below.]

I’m not too worried about the coming and needed recession even if it is late and thereby harder than necessary. The jobs that will be lost are largely parasitical and not ultimately productive nor are they the jobs we wish to have created in a modern economy. Obsolete jobs are best cleared out. A recession will ease our crushing immigration pressures here in California as well. Schools are already talking about closing buildinngs, saving billions. Lower taxes, less crowded schools; what’s not to like? Maybe the national psyche can find enough breathing space to heal as well.

How deep will be the declines? Anyone will be able to justify anything from 0% to 80% with careful work. Small Midwestern stable communities that missed the bubble will drop in real terms with inflation but prices will stay flat. Certain problem properties in wildly speculative areas, a mudslide in Califorina for instance will see 80% declines. A brutal winter or two in New England with home heating oil prices or a brutal summer or two in Phoenix with home cooling prices could literally leave empty unsaleable houses. That’s 100%+ declines where governments may be forced to pay for dispensation. But all these are extremes. I’m guessing 25% on the national median which is actually about 35% on any one house same sale and 40% in the bubble zones with some truly spectacular outliers. Why the small difference twixt BZ and normal America? The problem is/was a nationawide credit/lending issue not local real estate issues.

Just like any herd behavior at infection points and changes in direction individual chaos overwhelms underlying trends. There are still large numbers of sheeple in the Euphoria category. Witness the continuing negative savings rate and massive MEW amongst some while at the same time people like me have recently sold off every non personal piece of real estate.

At the top of a cyclical process this noise in wave terms is called froth. Hmmm, who in the highest levels of economics do we remember using that term? "Although a 'bubble' in home prices for the nation as a whole does not appear likely, there do appear to be, at a minimum, signs of froth in some local markets where home prices seem to have risen to unsustainable levels." - Alan Greenspan 06/08/05.

Likewise at the trough the disorderly behavior of individuals will in wave terms be likened to churn. This is indeed the point of maximum oportunity. Those of us with forward thinking perspectives will be able to take advantage of those still panicing.

I commented back in April on the closer resemblance to physical waves ratrher than mathematical waves: http://exurbannation.blogspot.com/2006/04/why-are-home-prices-still-going-higher.html

By my estimate $2.5T in MEW is unsupported by reasonable asset valuation. In total somewhere between $7T and $9T in phantom equity is exposed in any retracement to the mean. An orderly retreat will allow inflation to eat away much of this. A decline in the dollar may result in a disproportionate amount of pain to be taken by foreign investors. No matter how the pain is spread, there will be consumer pain. Likewise because of govt spending policies that resemble the proverbial cricket in summer we can expect massive deficits and even larger tax inceases. I hope everyone likes their neighbors because nobody is moving for a very long time. The new immobility class has moved in to stay.

Let's Go EV

Or not...

Oh dear. Where to begin? Okay, first we are comparing brand new, cutting edge, designed for efficiency, small, niche vehicles to the 8.8 year old average US automobile (23mpg) in this efficiency comparison. Second, don't fall for the lie of omission in comparing electricity to chemical fuels. Only 31% of the energy used to make grid electricity actually gets to the customer. When that electricity is used to charge a battery this can be 60% but never less than 20% losses. So, getting useful work out of an EV is about 25% efficient. the claims of 0.3-0.5 kW-h/mile is 1000-1700 BTU/mile. For conventional vehilces 1.58 kW-h/mile is 5,400 BTU/mile or 23 mpg as calculated but the equivalency ignores passenger loads. While there is no definitive information it is highly likely that EV useage resembles the average occupancy of the commute segment of road users; 1.2 passengers while the US average is 1.57 passengers.

You see where I'm going with this, EVs are not anywhere near as efficient (yet) as their proponents claim. Within the next few years as solar comes down in price and/or increases in efficiency and as technology improves maybe but not yet. Oh, and it is important to note that a huge portion of the claimed transportation efficiency derived from EV designs can be applied to IC primary movers; low cD, narrow tires, limited capacity, range, advanced materials energy recovery, etc.

In short, every bit of advancement helps but there's no magic bullet here swithing to electricity from hydrocarbons.

Californians use 414.4 gallons of gas per capita per year (8th lowest in the US). 14.5 billion gallons. How much electricty is that? 530,982,417,478.593 kW-Hours. California can generate at present 46,000 Megawatts. We'd need and additional 61,000 Megawatts of energy to make it into the battery. Let's not mince words, we'd need 3 times as many power plants as we have now. Too hard to grasp? How about 28 new Diablo nuclear power plants (2x9.5 million mW-H reactors). Actually more like 40 Diabos. [insert lame ; "better the Diablo you know" joke here] And what would that cost? Nukes cost about $2000 per kilowatt to build. $122 Billion dollars. How much does that gas we Californians guzzle cost? $47 billion. Surprised? Gets better. Anyone here doubt that an order for 40 nukes could garner a volume discount? Yeah, like half price. A 50 cent per gallon surtax would pay the capital construction costs in 7 years. And what would the electricity cost? Remember we don't have any capital costs to amortize. 1.5-3 cents likely. We pay 14 cents now.

We could do it and it would make sense but we won't do it because of a combination of boiled frog syndrome and the cognitive dissonance of the eco-warriors.

How FB can you be?

A fellow real estate investor is in a bit of a pickle:
http://www.realestatejournal.com/columnists_com/investorprofiles/20060727-hodges.html
Select quotes:

"...took out an adjustable-rate mortgage (ARM) with an initial 10.3% interest rate that will increase after two years... believed would be just over 7% but was actually 10.3%."

"Home appreciation could save him eventually, he says, if potential development of a year-round resort at Malans Peak and a generally strong market continue to boost Ogden housing prices."

"[H]e is marketing the home as for sale by owner."

And my favorite:
"in Ogden [Utah], there is little room left to build new housing near the mountains, where the home is located."
Happy Trails Mr. Klein.