David Lereah -- R.I.P.

Today is a bitter-sweet day for this blogger. As you may already know, David Lereah, chief "economist" for the National Association of Realtors (NAR), he who has frequently been a target of ridicule and an endless source of entertainment for me, has finally been booted from the NAR. First it was Greenspan and now it's David Lereah to jump ship before the shister hits the fan. Who's next? Leslie Appleton-Young of the California Association of Realtors?

In any event, I should think the US real estate industry has breathed a collective sigh of relief as no single person has done more to discredit the REIC than David Lereah IMO.

And what are we now to do with this pic, created by "reskeptic" (aka "marin_explorer"), a devoted reader of this blog (the pic made its public internet debut in this post):

Responses from Our Elected Officials

When the folks over at patrick.net sent their "no mortgage bail-out" letters, at least they received replies that were on-topic. I got these bland responses (granted, I sent my letters when the bail-out issue first came up in the news so maybe there were not yet any on-topic, pre-written form letters for their aids to send):

From Hillary Clinton:

Dear Friend:

Thank you for taking the time to share your thoughts and concerns with me via e-mail. I hope you will understand that, because of the volume of e-mails I receive from residents of New York State, I cannot at this time respond to messages received from residents of other states. I encourage you to contact your U.S. senators if you have an issue or concern that needs immediate attention. You can access your senators electronically by visiting http://www.senate.gov/contacting/index_by_state.cfm for a listing of their contact information. If you are still interested in learning more about the work I am doing on behalf of New York State, I hope you will continue to monitor my work through my website at http://clinton.senate.gov.

Sincerely,

Senator Hillary Rodham Clinton
New York State

From Barbara Boxer:

Dear Friend:

Thank you for contacting my office to express your views. I believe that all citizens should become involved in the legislative process by letting their voices be heard, and I appreciate the time and effort that you took to share your thoughts with me. One of the most important aspects of my job is keeping informed about the views of my constituents, and I welcome your comments so that I may continue to represent California to the best of my ability. Should I have the opportunity to consider legislation on this or similar issues, I will keep your views in mind.

For additional information about my activities in the U.S. Senate, please visit my website, http://boxer.senate.gov. From this site, you can access statements and press releases that I have issued about current events and pending legislation, request copies of legislation and government reports, and receive detailed information about the many services that I am privileged to provide for my constituents. You may also wish to visit http://thomas.loc.gov to track current and past legislation.

Again, thank you for taking the time to share your thoughts with me. I appreciate hearing from you.

Barbara Boxer
United States Senator

I received no reply from either Dodd or Feinstein. I think I'll send another round of email.

Did you get a response letter? Share them here.

UK Defense Ministry's Prognostications

I found this document (PDF warning), the UK Defense Ministry's DCDC Strategic Trends Programme, extremely interesting. The purpose of this document is nothing short of making quantitative predictions of possible future events and trends:

The Strategic Trends approach starts by identifying the major trends in each of these dimensions [resource, social, political, science/technology, military] and analyses ways in which these trends are likely to develop and interact during the next 30 years, in order to establish a range of Probable Outcomes.

The following are two "discontinuities" that they identify. I picked them out only because, after all my reading and thinking about the housing mess that we find ourselves in, I have sensed that they are becoming a growing force IMO. If I understand their methodology correctly, the following are given an 11-59% probability of being realized:

The middle classes could become a revolutionary class, taking the role envisaged for the proletariat by Marx. The globalization of labour markets and reducing levels of national welfare provision and employment could reduce peoples’ attachment to particular states. The growing gap between themselves and a small number of highly visible super-rich individuals might fuel disillusion with meritocracy, while the growing urban under-classes are likely to pose an increasing threat to social order and stability, as the burden of acquired debt and the failure of pension provision begins to bite. Faced by these twin challenges, the world’s middle-classes might unite, using access to knowledge, resources and skills to shape transnational processes in their own class interest.

And

Declining youth populations in Western societies could become increasingly dissatisfied with their economically burdensome ‘baby-boomer’ elders, among whom much of societies’ wealth would be concentrated. Resentful at a generation whose values appear to be out of step with tightening resource constraints, the young might seek a return to an order provided by more conservative values and structures. This could lead to a civic renaissance, with strict penalties for those failing to fulfil their social obligations. It might also open the way to policies which permit euthanasia as a means to reduce the burden of care for the elderly.

For the most part the following predictions are given a >95% chance ("near certainty") of occurring:

[Re climate change:] On land, some regions will experience desertification, others will experience permanent inundation, and tundra and permafrost are likely to melt and release methane, possibly in large amounts. Global climate change will reduce land for habitation and will result in changing patterns of agriculture and fertility, while tropical diseases, like malaria, are also likely to move North and into temperate zones. There will be an increased risk of extreme weather events, threatening densely populated littoral, urban and farming regions with eccentric growing seasons, flooding and storm damage. Climate change will remain highly politicized: although the relationship between causes and effects is likely to be increasingly understood as more evidence and computing power becomes available, responses will be contested and affected by selfinterest.

Affordable Housing Bond <> Bail-out

I know this is old news and other bloggers have already covered it, but I find it so dang ironic and so it's been nagging at me.

Basically, because California is unlikely to receive any Federal money to bail out screwed borrowers due to our extremely high housing costs, Ted Lieu and others on the California Banking and Finance committee have decided it would be a swell idea to use part of the Affordable Housing Bond (Proposition 1C, approved by voters last November) to fund a bail-out.

You already know my opinion, for what it's worth, about a bail-out in general (here, here, and here). But I seriously doubt that such a bail-out is what the voters had in mind vis "affordability" when they approved the bond measure. If California assembly members are really interested in affordable housing in California, then bailing out debtors is exactly the wrong thing to do as it will only help to keep prices ridiculously high; more affordable housing would be created if there were no bail-outs at all. Just give the market time to re-establish balance and force prices back down to levels justified by the fundamentals, and then we will have a more affordable housing situation again which would be good for families, communities, businesses, and the state as a whole.

I much prefer Senator Machado's alternative idea (SB385), at least if it has teeth:

...require state agencies that license lenders to operate in California to follow more-stringent loan approval guidelines issued by federal agencies in autumn.

Machado said subprime lending practices should be scrutinized in the future, but stopped short of agreeing with Lieu that the state should create funds to help restructure mortgage loans.

I'm all in favor of doing everything that can be done to prevent a repeat of the insanely loose and, in some cases, "predatory" lending. But bail-outs are not how you fix the problem; they just keep the problem in existence and encourage it to recur in the future.

And I am not alone. Here is a comment left over at the very good Southern California Real Estate Bubble Crash blog that includes a phone number that you can call to express your opinion (I called it and it does indeed lead to Ted Lieu's office):

“TED LIU (CA assemblyman) and others on the California banking and finance committee passed a proposal Monday to use money from the Affordable Housing Bond to bail out homeowners who were “victims” of “predatory” financing and can’t make their mortgage payments. CALL Ted Liu’s office, talk to Tiffany or Mark, 916-319-2053, and call every assemblyman on the appropriations committee (that’s where it goes to a vote next), and call your local state assemblyman, tell them you don’t want your hard-earned tax dollars going to bail out buyers who overpaid and didn’t read their loan documents, tell them the affordable housing bond money was to be used for affordable housing not for bailouts, call or don’t complain when it happens!”

Or write a letter and send it to these people. Better yet, do both.

Screw the Kids, I Want a Mortgage and I Want it Now!

Continuing on with the theme of how greed and the housing bubble in Marin has torn apart families, I give you the following story emailed to me the other day (and reproduced with permission):

Thanks for starting your blog back up, it was my favorite of all the RE blogs (by wide margin), but when it went quiet, I stopped dropping by.

Anyway, here is my situation, yes it is personal, but here are some of the real life victims of the housing bubble here in marin. It seems like there would be something here for your blog.

Essentially, my spouse of ten years divorced me, and moved with my 6 and 4 year old children, into a cohabitation situation in a house that was "owned" by her "friend". But that was only after her friend divorced his wife of 13 years and evicted the other spouse from the house (while keeping 50% custody of their child).

Apparently, my biggest fault was being a renter. And a saver/investor. No matter that I rented first a small house in San Rafael, then a larger house in southern marin as our little family grew, both chosen by my non-working, stay at home, professionally educated spouse. Renting for about 1/2 the monthly cost versus owning doesn't matter.

Now I continue to rent, but this time a small studio, while I work to provide "family support" to a former marin resident (now sonoma resident) who finally is able to reside in a house that isn't rented.

The three innocent victims of this bizarre marin situation are the three children that had the misfortune to have real estate obsessed parents who would literally do anything to "own" a home.

This bizarre behavior is symptomatic of the social structure in marin. At a certain point, people will do whatever they think they have to in order to pursue the lifestyle in god's country. It is pretty sad.

(for what it is worth, both the adulterous spouses are european imports that don't seem to have the need to work to provide a roof over their heads...Ironically, neither of them are trust funders. They just appear to like to live off other peoples work and equity.)

If you can use any parts of this for inspiration on you blog, be my guest. There is a serious human toll being extracted from the residents of this area due to RE.

Oh, the vanity! The self-absorption! The inflated sense of self-worth! Welcome to Marin.

Do you have Marin RE horror stories of your own that you would like to share? Send 'em in.

Yep, The Devil Is Definitely Skiing

XTRA, XTRA, READ AAAALL ABOUT IT...

Existing house sales plummet across the nation for the first time since 1989 (and here). The Western US is hurt the worst with a -16.8% drop (year-over-year; care of the BubbleMeter blog). The NAR is quick to avoid the truth and blames the weather and makes month-to-month comparisons (Feb to March) instead of the more honest season-adjusted year-over-year comparisons. And never mind the fact that we here in the West enjoyed some of the best weather ever.

XTRA, XTRA, READ AAAALL ABOUT IT

But seriously, this announcement really got me thinking... why the hell can't the real estate industry goons just tell the fricken truth for once in their lives? Would it really kill them? Why can't our own local agents? How bad does it need to get before these goof-ups finally admit they were wrong? I mean, this is a total non-event to us bloggers and to most other intelligent, perceptive, critically-thinking people as it was foreseen. Is this don't-think-for-yourself-just-believe-what-we-tell-you culture of ours so far gone that denial is now an officially sanctioned state of mind?

And why is the main stream media so lame? I mean, why aren't they all over this? Why don't they engage in any critical investigative journalism? Why don't they question the practice of interviewing/quoting only paid shills and those with a vested interest in your believing one particular point of view? Why don't they ever run a story where a more critical analysis is performed and experts with opinions that possibly differ from those of the rent-a-RE-economists? Why doesn't our soporific media encourage readers to think? Are we so frightened as a people that the media believe that they must spoon feed us only feel-good, fuzzy-warm news and promote a makebelieve kindergarten world of rubberized playgrounds and colorfull, oversized, difficult to choke on environmentally friendly blocks?

Ah, but Charles Hugh Smith, as usual, is one step ahead of me and has already, and quite elegantly, answered the question (refer to the April 24, 2007 entry).

We need a new local news paper here in Marin. One that is not afraid to engage reality and tell the truth. One that doesn't discover honesty until after the fact. One that is not bought and owned by the local real estate industry. There's a business proposal for you. I know it's not high tech, does not involve Web 2.0 or social networking or whatever, and so is not hip and likely won't make you an over night stock gazillionaire. But I bet that such a paper would be extremely popular and sufficiently profitable and you would be doing an immense public service.

Stupid Is as Stupid Does

A little vignette into how greed and the housing bubble in Marin can tear apart a family:

Q: Eighteen months ago I and several other cousins inherited my aunt's home when she died. The cousin she named as executor has had the house listed with three real estate agents, and all of them have told him the house isn't selling because his price is too high. What do you say?

A: I say if I had the cure for stupidity, I'd be a zillionaire. A home is worth whatever someone will pay for it. Prices have softened in the months that your aunt's house has sat on the market. If your cousin had dropped his price by, say, 10 percent in 2005, he wouldn't be looking at dropping it by 20 percent to sell in 2007. Moreover, all of the cousins have lost 18 months of opportunity to invest the proceeds they would have received if the house had already sold.

I would not at all be surprised if the house in question is this one in Mill Valley. It is still for sale. Originally listed at $1.1 million (goofus), reduced to $999,000 (ludicrous) in July, 2006, now listed at $729,000 (absurd) -- a 34% price reduction from the original wishing price and still no buyers.