Monday, July 24, 2006

Crisis? What Crisis?

The Bay Area, and most of California, has a real crisis on its hands. When are we going to get over our arrogance, our pride, our snobbery, and our attitude of "it's someone else's problem" and effectively deal with it?
"I have several friends relocating out of the Bay Area. I had considered Texas or Florida but the insurance rates and property taxes made them unaffordable. I have one friend who moved to North Carolina and he really likes it there. So that will likely be an area that I will investigate. I plan on staying in the Bay Area one more year. I am in a rent controlled area and my rent is fairly cheap so I can ride things out for now. I have completely given up on purchasing any property in the Bay Area. The houses here are disgusting and old. Prices could get cut in half and I still would not even consider purchasing any of this old junk. California, a once beautiful and sought after place to live, has become nothing but a Detroit except with better weather. The standard of living is so low here, I often cannot even fathom how individuals live. Most likely, check by check with no savings to speak of. It is both ridiculous and sad. Salaries have not kept pace with high energy costs and housing rises. In my opinion, 10 years from now, this area will be a shell of its former self."
And then there is this video (WMV, contains some "old" footage); it's only going to get worse. Why did all these people get adjustable rate mortgages when interest rates were at an all time low? For most people (e.g., not the self-employed with unpredictable income arrival) ARMs only make sense when interest rates are high and the borrower believes that rates will go down sooner rather than later. The answer is, of course, that it is the only way most people can afford to buy a house in California.

Again, this is a crisis. When are we going to start effectively dealing with it? Why isn't there a state-wide conversation about this?

9 Comments:

Blogger fredtobik said...

LOL @ that video I love seeing that... Well the good news is those people "probably" learned a lesson. I think it is funny they do those interviews looking for sympathy when everyone should be pointing and laughing.

I like what Heidi said "watch TV and enjoy our little house", that house was atleast 4k sqft I am sure keeping that house cool in Texas is real cheap lol...

thanks for that link...

I am not sure who you are quoting there, but it oozes of bitterness. The whole thing says "I can't buy a house so I am leaving", why does he feel he needs to buy a house? Is he trying to keep up with his friends? or the American dream? My favorite part is the disgusting and old houses, "I am going to go buy Heidi's house because it is newer!" The Bay Area and California, and even the U.S. do not need people like that, it reminds me of my two year old throwing a tantrum.

Patience is power.

Jul 24, 2006, 11:50:00 AM  
Anonymous Anonymous said...

Ok this is probably going to get me flamed, but here goes;

I hope it gets really really bad in California, I hope there are massive foreclosure rates, high volumes of bankruptcies, huge numbers of people unemployed, an enormous recession, and the value of the dollar plummets…

…with the caveat that I hope I’m ok! There lies the problem, everyone has the “I’ll be ok, it won’t impact me” attitude and that’s a recipe for disaster since almost no-one is preparing for the coming shock.

I consider this blog to be one of the best out there, and the preparations we’re making will (hopefully) leave us in a far stronger position that those folks who’ve got toxic finances etc.

Knowledge is power, and at the moment the knowledge we have of the coming financial storm is very powerful.

Jul 24, 2006, 11:54:00 AM  
Blogger marin_explorer said...

I am not sure who you are quoting there, but it oozes of bitterness.

I think the quote is taken from the Boycott Housing site. Bitter or not, I think they're spot-on regarding the quality of housing, infrastructure, and communities in the Bay Area. Comparing an upper-median ($1M+) housing tract in Marin to other places I've lived, and the contrast is remarkable.

Jul 24, 2006, 12:02:00 PM  
Blogger fredtobik said...

Anon:

If the scenario you describe happens, it will be bad for everyone. Another cause will be needed to enable it, besides a bloated RE market.

Some would say the Iranian oil bourse might add to the pot of recession stew. To put my conspiracy theorist hat on, I have a feeling that Iraq and the current Israel/Palestine violence is the begining of "iranian democritization", in order to turn off the burner that heats the stew.

I love jamba juice on days like this.. 110 on my deck yesterday.

Jul 24, 2006, 12:38:00 PM  
Anonymous ross valley local said...

I think it is funny they do those interviews looking for sympathy when everyone should be pointing and laughing.

Right--we should have sympathy for Heidi being so incredibly self-indulgent and short sighted? I'm sure they could've found an OK house in TX for $1700/mo. Perhaps they thought the could "do better". How many Marin homebuyers thought the same way?

Jul 24, 2006, 12:44:00 PM  
Anonymous ross valley local said...

--what I meant to say was: "I'm sure they could've found an OK house in TX for $1700/mo. with a fixed mortgage"

"110 on my deck yesterday"

The heat was insane; we kept cool on Tomales Bay @ 80.

Jul 24, 2006, 12:54:00 PM  
Anonymous Anonymous said...

Some of us are virtually invisible because we spend so little and save so much. Always have, always will. Don't fear the coming troubles they are the radiation and chemotherapy needed to kill the cancer of wastefulness that has spread throughout our society. One should prepare for it and help induce it by spending as little as possible. Make it a game, learn to do without things you thought you could not do without. Our grandparents did it and it made them strong while helping them survive. If things get really ugly we will live to see the wealthy traitors who rule this country turned into petfood and fertilizer.

Jul 25, 2006, 12:10:00 AM  
Blogger Marinite said...

It's always easier to find some little thing to complain about or some aspect of personality so as to dismiss the responsibility of having to deal with a problem. Now what did I do with that picture of an osterich with its head in a hole?

Jul 28, 2006, 10:27:00 AM  
Anonymous Anonymous said...

Hello, I am french and I live in Paris.

We have the same concern about the real-estate bubble in France (200% increase in 10 years) and prices have stopped increasing.

However, the risk of having a crisis is reduced by the fact that most of the frenchmen have bought their home at a fixed rate instead of adjustable rate as it is more interesting when the rates are low (besides we do not have your mortgage system).
Can you explain for what reasons did the people take adjustable rates to buy their home in the U.S. ?
Is there a legal reason ?

Thank you in advance

Sep 9, 2006, 5:12:00 PM  

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