Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Tuesday, August 01, 2006

The Ouroburos Is In The House!!

Dude, this is getting a little too esoteric for our little old Sonoma Housing Bubble, no? But I just couldn't think of a better image to depict just what the hell is going on out there. So step into Socrates' cave ( yeah he had one too, mortaged to the gills probably) with me for a moment. A little note on snakey-boy and a wiki-def here. Either way it's all housing bubble to me.

They used to talk about Nero fiddling while Rome burned. They didn't talk about him taking piano lessons, trying to write a western novel, catching up on the Bloshevik Revolution or honing his power napping skills all financed by the Housing Bubble. How long can one live just draining out the equity in one's house and ones' family savings? Two, three years? Not too long. Especially if there's a toxic re-fi loan involved and interest rates continue to climb.

Alan Beggerow has stopped looking for work. Laid off as a steelworker at 48, he taught math for a while at a community college. But when that ended, he could not find a job that, in his view, was neither demeaning nor underpaid.

So instead of heading to work, Mr. Beggerow, now 53, fills his days with diversions: playing the piano, reading histories and biographies, writing unpublished Western potboilers in the Louis L’Amour style — all activities once relegated to spare time. He often stays up late and sleeps until 11 a.m.

“I have come to realize that my free time is worth a lot to me,” he said. To make ends meet, he has tapped the equity in his home through a $30,000 second mortgage, and he is drawing down the family’s savings, at the rate of $7,500 a year. About $60,000 is left. His wife’s income helps them scrape by. “If things really get tight,” Mr. Beggerow said, “I might have to take a low-wage job, but I don’t want to do that.”

This has got to be one of the most distressing stories that I've seen in quite a while. House as ATM in extremis. The rapid inflation of the RE bubble has helped to put the noose around these dudes neck and they don't even know they're standing on a trap door on a dead end street yet.

So we have a new group here. Folks who have been squeezed out of the employment market, feeling wealthy because of the increased value of their house, living at a time when credit is easy. What we have here is a recipe for disaster.

While driving into San Francisco yesterday I was listening to the radio and an ad came on for this company.

A fast talking voice peppered out all the possible excuses one might hear while being turned down for a house loan, or re-fi. The main ones being no money, no job and poor credit. Not with these guys however. If you have a pulse, you got the cash. Do it over the phone. Do it online. In this self-esteem RE universe nobody is turned down, everyone's a winner. The ad was followed by some sort of warning equally fast talking. The RE equivalent of the hoarseness, coughing, rectal bleeding and dizziness warnings one hears at the ends of ads for new prescription drugs.

So there we have it, housing going from shelter, to ATM to Ouroburos.


At 8/01/2006 12:55:00 PM , Blogger Marinite said...

That dude deserves debtors prision. But I feel sorry for his wife (who seems to be the only responsible/mature one) and kids. This housing bubble is so bad (dare I say evil?) and so many people are going to be ruined.

At 8/01/2006 02:14:00 PM , Blogger marin_explorer said...

Fitting imagery.
It strikes me this ouroburos needs nonstop growth for the tail-feasting to continue. When appreciation ends, how long can it feed from its own dying tail? I saw a similar capital implosion during the tech bust.

At 8/01/2006 04:09:00 PM , Blogger moonvalley said...

Seeing how this thing is going it appears that after the RE agents have had their day that the new growth industry will be domestic law. All those pissed off spouses of the lunkheads "improving" themselves on their families future presages a Divorce Bubble.

At 8/01/2006 04:15:00 PM , Blogger moonvalley said...

Just thought I'd tack this little story of credit card debt engulfing America. It's from a couple of weeks ago but hey, it's not like it's old news.

At 8/01/2006 07:36:00 PM , Blogger sf jack said...

"If you have a pulse, you got the cash. Do it over the phone. Do it online. In this self-esteem RE universe nobody is turned down, everyone's a winner."



Your last sentence really captures it well.

At 8/01/2006 08:01:00 PM , Blogger Athena said...

Priceless! I still want to know where does this sense of entitlement come from? The "it's all on the house" mentality is still astounding to me. Even now I hear people who believe it is all going to work out fine, that they can keep refinancing their houses and someone will come along and pay more than they owe when they go to sell... it will be different for them... their house is better than everyone else's... has there ever been such a perpetual pyramid scheme culture in this country?

At 8/02/2006 01:42:00 AM , Anonymous pmd said...

"has there ever been such a perpetual pyramid scheme culture in this country"

Uh, in the '20s or so, a Great Somethin-or-other...

At 8/02/2006 10:37:00 AM , Blogger Lisa said...

Gotta love the mantra that mortgage debt = wealth to be spent on whatever you feel like. Like having equity in your house and leaving it alone to build is some quaint, old-fashioned notion. When I bought 10 years ago, it was ALL about building equity - downpayment, sending in a little extra with each mortgage payment, etc. Now folks are saddled with all the responsibility of owning and none of the benefit of the equity nest egg. They'd be better off renting.

At 8/02/2006 02:24:00 PM , Blogger Athena said...

without a doubt they are better off renting. I mean good grief, how can people be so bad at math? yes... the rent is going to someone else, but at least you aren't spending double the cost of rent just to end up underwater because you bought at the height of the bubble like a dumass.

That just doesn't make sense to me when people do that and then say they own... and ignore the realtors touting the new paradigm that gone are the days of mortgage burning parties, nobody intends to pay off their house nowadays...


At 8/03/2006 09:57:00 AM , Anonymous tom stone said...

i love the add that says refinanacing your home should be no harder than ordering a easy phone call and you can eat it for years.

At 8/30/2006 11:47:00 AM , Anonymous Anonymous said...

This guy is pathetic.

The only conclusion I can come to is he just gave up on life and is mooching off his refis and wife. I've seen similar parasitism among anime otaku, Big Name Netizens, and fanboys in general.

When the money finally runs out, the parasite will have to find another host.


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