Monday, September 10, 2007

Shame on the IJ

Well, I was going to show some discretion and let this story in the IJ rest and not form the centerpiece of a blog post. But apparently, a passing comment in a different post was too terrible to bear and indicative of me not being sufficiently considerate and sympathetic to this Marinite's plight... Never mind the fact that for the last two+ years this blogger (and, of course, other bloggers) has feared and lamented this very outcome and duly condemned this housing bubble for this very predictable and unnecessary eventuality. But back then, everyone was so busy making money in RE and living it up with RE profits and fantasizing that 20%+ appreciation was "in the bag" for perpetuity that no one cared; we bubble bloggers were loons after all. Back then (even still) the Marin IJ was doing everything in its power to encourage the housing bubble and be the local real estate industry's propaganda whore. But how short is the typical Marinite's attention span...

So without further ado, I give you the Marin IJ's latest tear-jerker sorry sob story du jour.

Here is the summary of "the saga":
  1. An individual (whom the IJ is quick to point out on numerous occasions is poor, old, legally-blind, suffers from multiple sclerosis, and female) lives in a terribly small house in Fairfax with kitchen curtains that read "bless this house" (if there is any doubt of this woman's sweetness, the IJ quickly dispels it).
  2. The house needs a new roof and other repairs.
  3. She is approached by an evil Southern Californian broker (Southern Californians are the sworn enemy of any self-respecting Northern Californian) who offers to refinance her into a loan (presumably with some equity extraction so she can fix her house -- blessed be the housing bubble's guaranteed riches).
  4. We are told she refused mightily but in the end she yields to the seductive powers of her nemesis and she "reluctantly" signs the loan documents... officially taking her first step into victimhood.
  5. Her original lender calls her up and persuades her to refinance with them for a better deal.
  6. So she attempts to rescind the Southern Californian deal, believes it is kaput (and the reasons for why it is not are completely ignored and we are led to assume she is being victimized), and signs on the dotted line with her original lender.
  7. But as it turns out, our poor, blind, sick female now ends up refinancing into not one but two subprime loans!
  8. Not realizing this of course, she doesn't know that she needs to pay the Southern Californian loan. And so, after some time has passed, she receives a notice of default.
  9. Not knowing who to pay (the evil Southern Californian lender or the angelic Northern Californian lender), she apparently doesn't pay either of them.
  10. She will now likely lose her home of 30 years to foreclosure unless some heroic Marin attorney, her local knight in shining armor, can come to her rescue.
Never mind that bloggers were yelling and screaming (in a vacuum it seems) that sad stories such as these were all too likely. The real question is not so much why these bad-things-happening-to-good-people stories appear in papers but where in the hell was the IJ and other local news papers during the run-up in the housing bubble? They were out pimping for the local real estate industry of course; falling all over themselves cheering on this housing bubble (and all that it entailed) as high as it could possibly go when what they should have been doing was acting like independent journalists, examining where the housing madness would ultimately likely lead and prudently cautioning the poor, old, blind, men and women of the county. This piece by the IJ is nothing more than emotional button-pushing; the dark side of the "better buy now before you are priced out forever" fearmongering.

If accurate in its stated (and presumed) details, this is truly a sad tale... there can be no doubt of that; I hope it has a happy ending. If it's not true, then I am, unfortunately, certain that there are true stories around which rhyme with this one. But it was utterly predictable and a natural consequence of capitalistic greed run amok. Whether they suffered or not, everyone who participated in this mass greed is partly to blame. But instead of facing our shame, the IJ presents us with this red herring to distract our attention away from our own complicity. As the wave of foreclosures and forced sellings hits Marin and elsewhere, will the wail of shock and dismay yield to ready excuses or will we admit to our own place in this sad melodrama that didn't have to be and that should never be allowed to repeat?

Update 9-12-07: Thanks to a reader and frequent contributor for the graphic for this post. I'm not sure if I am supposed to be Dudley and the IJ Snidely or the Marin attorney is Dudley and the lenders are Snidely. No matter. It works both ways. But there can be no doubt who plays the part of Nell (although that's not Nell in the pic, oh well). And if I may quote the contributor:
I was entertained [by] the way you skewered the melodrama to the IJ story. All it needs is a "Snidely Whiplash" character, hence that cartoon. After hiding behind a façade of a friendly "community newspaper", while serving local realtors, the[y] deserve all the scorn we can muster. Their pitiful little story makes me nauseous.
I couldn't agree more.


Blogger Akubi said...

I was extraordinarily annoyed with that piece as well!

Sep 10, 2007, 10:36:00 PM  
Blogger mountainwatcher said...

Oh Marin IJ,

You sure know how to help the downtrodden.

You fight for the common man.

You ignore the rich and middle men.

You light the candle for the poor, tired and hungy.

Sep 11, 2007, 1:59:00 AM  
Blogger Matthew said...

My second post on this subject with this link because it's very good... it also would serve as an excellent lesson for the pimps at the IJ on what real reporting should be..

Anyhow, back to this video clip.. I have a new hero, Mr. Rick Santelli of CNBC. He's always been a straight shooting reporter in my opinion (and smart and on the button), but now he's my hero.. he's one of the last reporters to chime in, but it's worth the wait..


Sep 11, 2007, 2:24:00 AM  
Blogger Matthew said...

Well, I do feel for this woman for a number of reasons and hope it works out for her...

As for what the IJ really reported, but was unaware of it I'm sure, is that their golden industry that they have been protecting and pimping for all these years is really one of the ugliest and most greed infested industries that this country has ever seen.

Although some of the sweat shop mortgage brokers are no doubt the worst of the lot, I'd throw the average Marin Realtor in with them as well... sorry, I would, as I'm sure there are hundreds and hundreds of Marin Realtors who would sell a home to an individual like this who could not afford it for the commission.

After all, what is worse in the long run, a situation like this when a homeowner is pushed out of their house by a slick talking sleazy mortgage broker in just a few short months or the years and years of lying, cheating, stealing and greed perpetrated by the rest of the RE machine in juicing home prices out of reach for thousands and hundreds of thousands of potential home owners?

Well, I'm sure the collective pain and agony that has been felt in the market and what is transpiring now across the landscape all over this country with spiking foreclosures and short sales (and all the stress that goes along with it) is actually much worse than any one story like this..

Go ahead IJ, do your job and report what really transpired in this market over the past 6-7 years... then I might renew my subscription to you..

Sep 11, 2007, 2:48:00 AM  
Blogger Matthew said...

As it's news reporting, I figured this was somewhat related, but wanted to comment on the below quote from Ms. Yellen, SF Fed Chair.. here it is..

"In her speech, Ms. Yellen said that a housing downturn and tighter credit were likely to cause “significant downward pressure” on consumer spending and thus on economic growth."

It dawned on me as I read this that one of the leading economists in the SF Bay area is clueless about what really should drive an economy, but, nonetheless, understands what does drive our current economy.. HELOCs.. it's too bad she's trying to protect a debt fueled economy...

I'd like to see a story on that subject by the IJ or any newspaper.. holding fast on interest rates and swallowing some short term pain for some real long term gain..

Sep 11, 2007, 3:19:00 AM  
Blogger Lisa said...

And for the IJ to use this story as a foreclosure "centerpiece"...what about all the other NOD's that have been sent out in Marin County?

While the news is getting more frightening by the day, it still feels like the local press won't call a spade a spade. We had a credit bubble of biblical proportions. The loan resets will keep coming for the next few years. How badly will home prices get hit? No one knows, but I was in the Bay Area for the last bust in the early-mid '90s, and I remember friends unable to sell, upside down on their mortgages, having property taxes reduced because their house was worth 20% less than they had paid for wasn't pretty. And that was when more traditional metrics were in place for home purchases....down payments, buy at 3x or 4x gross income, etc.

Now, with so many people having stretched to pay these prices, it's anyone's guess how ugly this will get.

Sep 11, 2007, 7:56:00 AM  
Blogger Max said...

Editorial (First Post): What I find amazing is everytime I go onto CleanOffer to review new listings...people are still listing (Search is San Anselmo, Fairfax , Wood Acre San Geronimo) at a minimum of $750,000 or between $450/SF to $800/SF. As someone who wants to buy, I can say that this is still too rich for me. Scary part is our household income is $200,000 plus and still cant afford. CRAZY! But hey, its a free market and a house is only worth what someone will pay for it. So good luck to them, I hope they get it. But jeez, $450/SF certainly does not buy you what it use to. My Question is: When will we see the downward pricing on new listings as a result of the credit crunch and housing bubble. I am beggining to believe that Mariners are either: delusional or immune. (Probably a little of both)

Sep 11, 2007, 10:53:00 AM  
Blogger marine_explorer said...

"Scary part is our household income is $200,000 plus and still cant afford."

Right...and who in their right minds would take on crushing debt for some dumpy 50 year old Marin tract home? Obviously, you're smarter than that!

Btw, locales like Silicon valley are just as delusional as Marin, another market psychology hot spot. Friends tell me that people are still paying $1M on Centex row houses slapped together in Sunnyvale. That's a cool million for ~1800sqft of questionable build quality!

This will prove to be a huge financial blunder for otherwise smart people who bought the hype from peers, realtors, and the media.

Sep 11, 2007, 11:49:00 AM  
Blogger Matthew said...


I don't know about that particular property or it's location, but I'm seeing price reductions in San Rafael and Novato all over the place..

$800/sq ft is dreaming for almost all properties now in this market unless there is something else to go along with it (like the wife and kids or some land lets say)..

the acceleration of price declines are directly proportional to three factors..

1. The overall condition of the seller's financials and income..

2. The amount of equity the sellers have (or think they have) in the property.

3. The quality and conditon of the property itself.

From what I've seen, if 1 and 3 are bad, then prices move more quickly. Prices also tend to move quicker to the downside if the seller has some equity to play with.

The stickiest properties with repect to asking prices are relatively nice properties (generally speaking) that the sellers are maxed out on regarding financing, but that the sellers are in decent overall financial shape. That might be the condition on the property in question.

Sep 11, 2007, 4:28:00 PM  
Blogger Lisa said...

Max: The really scary thing is that with a household income of $200K, based on "more traditional" lending standards, a lender would want you purchasing at 3x or 3.5x gross income, so somewhere between $600K and $750K, and those places wouldn't get anyone too excited.

Just wait....once voodoo financing finally disappears, so will the crazy income to purchase ratios, and then believe me, we will start to see price drops. Sit tight, save for a downpayment, and don't worry. You'll have a lovely house in a couple of years, and it will be one that you can really afford.

Sep 11, 2007, 6:02:00 PM  
Blogger see me said...

It is 4:20 AM and I can't sleep... I am wonder if this small temporary blip is unfolding into a full blown economic depression? I am sure I am not the only one thinking this...

Sep 12, 2007, 4:21:00 AM  
Blogger nero said...

heat index a 0.35 today

Sep 12, 2007, 9:51:00 AM  
Blogger marine_explorer said...

Nero, wow...I have to wonder what Thanksgiving will bring--.25?

From the MHI discussion:
"Sellers with discretion* to choose the time to sell (in Marin, a larger segment of sellers than in almost any other market area in the country) are increasingly choosing to wait.

Well...good luck with that. Is this the best "expert" advice Marin realtors can muster--hope for a quick recovery? Or, was this informed, critical consensus achieved over dinner party chatter?

*ie Marin RE hobbyists

Sep 12, 2007, 10:14:00 AM  
Blogger sb322 said...

This comment has been removed by a blog administrator.

Sep 12, 2007, 6:42:00 PM  
Blogger Lisa said...

Marin Heat Index still at 0.35 today. Who wants to bet it dips below 0.30 by the end of September?

Can't wait to see August sales numbers, considering how difficult it's become to qualify for a Jumbo.

BTW, the Chronicle ran 2 pretty bearish articles on housing yesterday, and more today. My favorite quote from one of yesterday's articles:

"We had an artificial economy," said Brad Geisen, founder of "There was all this wealth created in real estate, and it wasn't really created."

And this lovely bit from Moody's Mark Zandi, talking about the comparison between the blowout and housing right now...."The parallels are quite similar."

Put a fork in it.

Sep 13, 2007, 10:20:00 AM  
Blogger marinite2 said...


Sounds familiar. It is amazing how the MSM can do a 180deg coming around to our point of view after the fact. Dopes.

Is that the same article where they say the BA will only get "grazed by the bullet" or some such? Yeah, and that bullet is being fired from a Howitzer.

So Lisa, do you want to be allowed to make posts to this blog? I'm always looking for a co-administrator. It would be nice if this blog was more of a community thing.

Sep 13, 2007, 10:26:00 AM  
Blogger marine_explorer said...

...talking about the comparison between the blowout and housing right now...."The parallels are quite similar."'d think someone smarter than me (those in finance) would draw parallels as early as 2003-4? That was my first inkling of a new speculative run. The psychology had that familiar smell. I can only guess the "doomsayers" weren't getting media coverage when it would be actual useful advice because why should we alarm people when there's so much "wealth" to be made? (rolls eyes)

grazed by the bullet

Anywhere with heavy investment is going to be toast--most coastal cities are "ground zero" for leveraging--San Diego, OC, LA, SLO, SB, SF, Seattle, Vancouver...anywhere "special".
"Goodnight, and good luck"

Sep 13, 2007, 11:01:00 AM  
Blogger Matthew said...

Looking at the heat index and thinking about this some more, I think, when it comes to pricing, that we will see periodic large corrections to the downside followed by periods like we have today where nothing is moving. Sort of like the snaping of a rubber band that has been stretched too much to the downside. This has certainly been what has happened in the central valley and other bubble locals like Vegas and Phoenix I think. When the brokers' jobs are at risk (not the average joe salespersons), that's when pricing starts to get serious.

I predicted 30-40% price corrections in Marin before and am sticking to that prediction... It's still in the bank as far as I'm concerned. I say we've already seen 10% (easily) from Q4 2005.

Sep 13, 2007, 1:17:00 PM  
Blogger mountainwatcher said...

I second Marinite's request for Lisa as a co-administrator.

This is an unpaid, thankless job.

Marinite has carried the burden faithfully.

This is not a paying gig for him.
All the more reason to thank him for his work.

To keep this blog active and thriving, he needs some help.

Sep 14, 2007, 12:51:00 AM  
Blogger Lisa said...

Marinite, I'd be happy to help with the blog...the next month or so I'm crazed work wise, but will have time after that.

In the meantime, August sales data was in both the Chronicle and IJ this morning.

It's what we expected. Median $ is up, which both papers clarified is due to the bottom falling off and luxury sales faring better.

Sales in Marin were down 33% versus a year ago, and down 16% versus last month. Sales of homes priced under $1MM were down 40% versus a year ago.

If this trend holds up, who else thinks that 2008 is going to get downright ugly?

Heard on CNBC this morning that one of the builders (Hanovarian?) is doing a 3-day sale with 20% discounts. Which probably puts some (or most) of the earlier homebuyers in those developments underwater on their mortgages.

Happy Friday! Be glad you're not a FB!

Sep 14, 2007, 9:03:00 AM  
Blogger marinite2 said...

I'd be happy to help with the blog...the next month or so I'm crazed work wise, but will have time after that.

Great. I am so busy too. I'll set you up this weekend. You will need to send me your email address. If your email address betrays your identity, then I suggest creating a new one with an anonymous moniker.

I extend the invitation to Ms Hawkes, Marin_Explorer, and Mathew. All people with good writing skills and who maintain an open, non-Koolaid marinated mind.

In the meantime, August sales data was in both the Chronicle and IJ this morning.

It's what we expected.

I saw it. Not sure if it is worth blogging it as, like you said, it is nothing that we here did not already expect. Nice to see the IJ admit that the increase in appreciation is just due to sales in the luxury market. That's a big step for them. But I did get a kick out of the quote at the bottom by the Marin agent who said "but it's a great time to buy". Gotta love their adamant nature.

The only prediction I ever made publically on this blog in a post (I'll dig up the url to that post some day) was that 2008 is when Marin gets the real hit and cannot deny it's bubble is deflating. I still hold to that prediction.

Sep 14, 2007, 10:00:00 AM  
Blogger Lisa said...

With 40% fewer sales under $1MM, I don't see how prices can do anything but start to drop...and I don't mean little 2% or 3% "concessions." Plus we may be at the beginning of the tightening cycle with regards to standards....maybe 10% down will be the minimum by next year. Maybe no doc will go away. Maybe cash reserves will be a requirement.

Hardly anyone will be able to swing a house here, especially those first-timers that keep the rest of the RE chain oiled.

Marinite, I've tried emailing you previously, but get a bounce back....something about a blocked email address...but I'll try again today.

Sep 14, 2007, 10:22:00 AM  
Blogger marinite2 said...

Marinite, I've tried emailing you previously, but get a bounce back....something about a blocked email address...but I'll try again today.

Other people have emailed me succesfully. So I think the problem is on your end.


Make sure you remove the "no_spam" thing inserted into my email address.

Also, you might be using an email address and/or ISP that for whatever reason gmail thinks is worthy of blocking. If so, create a gmail account and then send the email.

Sep 14, 2007, 1:24:00 PM  
Blogger Matthew said...


Thanks for the offer... I'll try and drop you an email this weekend as well. I think I'll be able to contribute a thread now and then, because I think your (excellent) blog is critical to this war to reclaim our homes and communities from the RE machine who have hijacked it for a quick and dirty buck.

Now, as for pricing and price drops, we all need to break open our old econ books again and recognize that prices have adjusted already given the incredible drop off in sales…. Median prices be damned.

The median price means very little in a market that is not moving or moving at a snail's pace. Yes, the market has spoken, loud and clear mind you, as evidenced by the massive inventory and foreclosures etc. Anyone buying now is absolutely nuts, as all the risk remains to the downside. And it’s huge risk when we are talking about 10-20-30% price corrections looming large on the horizon. I personally don’t see anything on the horizon within our economy that will stem this downward trend anytime soon.. and I’m talking a few years easily.

5-6-7,$800,000 homes lose their luster and sense of stability and security quickly when that mammoth mortgage payment comes due each month with the owner knowing full well that the home’s market value (and their net worth) is crumbling every day as this thing unwinds.

Sep 15, 2007, 12:09:00 AM  
Blogger mountainwatcher said...

Matthew, I agree.

They keep hyping the median.
Those "low" priced homes are going down and will bring the top down too.

I wish no harm to anyone.
I just want to be able to buy a home here where I have lived for 20 years.

Re: Opening to more post-people...

Marinite, Lisa and Matthew would be a formidable team.

We need you!

Sep 15, 2007, 1:22:00 AM  
Blogger Matthew said...

Morning all,

Nice to start the day with a little anecdotal discussion..

Had dinner with some friends (three other couples) last night.. as the story goes..

Couple #1 (early 60's) nice hard working couple.. second or third marriages for both.. several kids and a bunch of grand kids..

Couple #2 (mid 50's).. similar to couple #1 but no kids.. great people..

Couple #3 (late 30's).. their first marriage for both (how nice) with a few young kids.. up and comers and very socially conscious.. nice folks though..

Yours truly plus my lady friend (middle aged).. both with several kids.. both already married once... middle income hard working .. blah, blah, blah.

Well, the subject of RE and kids and professions makes it's way across the dinner table.. oh boy..

Couple #3 lobs in that kids today only need to get their degree and get into RE to secure their future..

Couple #2, who know me better, senses a hand grenade has been tossed into the room and volunteers to clear the dinner table.

My lady friend glances over at me with a smile knowing how much I enjoy helping to pop bubbles, but I slowly shake my head to signal to let this conversation run a bit..

Couple #1 (surprisingly) added some fuel to the fire by offering observations about people they know who made a lot of money in RE, including several of their kids. Of course, this baited Couple #1 to continue on about how easy it seems to make money off of RE and where home prices would be going for the future generations but that they were nervous for their younger kids and desperate to get into the game now.

Well, this discussion went on a while and I was noticeably quiet.. Both couples sort of turned to my lady friend and I and asked what we thought.

Of course, I could have gone on for quite some time, but I let my questions and their answers do all the speaking..

I asked Couple #1 how many properties their kids owned that were not their primary residence.. Answer, oldest son owns 12, with 9 in Arizona alone. He quit is Corporate life to manage them and play poker. I asked if they had spoken to him lately.. Answer, yes in fact.. “He called because he needed a couple of bucks to help close on a few properties”.. Oh really I responded.. Is he still buying ? No they answer, he’s trying to sell some of his properties. In fact, he moved back down to Arizona to sell them. Oh I responded, I thought sellers typically receive money and not pay money at closings. That conversation died down quickly as I wished their son well..

Then I asked Couple #3 if they think technology and the changes in the lending markets will affect the RE profession in the future? Not sure is their answer.. I asked if they know any out of work Realtors or Mortgage Brokers.. “yes”.. is the answer. I ask if they have spoken to any of these individuals ? “yes” again is the answer.. they add that most think this is a temporary anomaly in the market that is poised to recover soon... Oh really, I add.. why? Well, RE is a great investment and no more land and population growth etc etc is their answer.. I merely offered that perhaps a young man or woman entering the workforce should have other skills to fall back on as the market (left unchecked) and technology has a way of fixing inbalances which I say we have today and which is evident by the huge increase in foreclosures and bankrupt homeowners and businesses.

Then both couples ask me my thoughts regarding "why not real estate really?". I answer very matter of factly that I think we’ll see at least a 30% price correction in the good markets and a 50-60% (or more) price correction in the not-so-good markets. over the next several years. I also added that I consider RE probably the worst investment or profession that any young man or woman can enter for the next 10 years or so. After jaws were back lodged in their head, I offered my 2 cents on why.. nothing too elaborate, just the facts and some historic perspective and the relationship between rents/incomes and home prices, and, of course, lending and the mortgage market and liquidity problems we are seeing today. Of course, Marinite’s and Ben’s blogs were added for documentation purposes..

The conversation drifted elsewhere, but funny, every once in a while I’d get another question off topic and back on RE regarding my thoughts and factual observations.. For Couple #3, it was like I removed the punch bowl and they just realized it, but that life still could go on without it and I could tell their thoughts regarding their kids futures were changed somewhat (for the better).

Sep 15, 2007, 7:29:00 AM  

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