Sonoma Housing Bubble

Pulling the cork out of Sonoma's bubbly housing foolishness

Friday, July 27, 2007

it's Not Foreclosure, It's Just A Little Gas!!

Foreclosure as part of the digestive process?? What a novel way of stating things. That's is however just what was said today by one of the RE Economic gurus who's been telling us that there was no bubble.

G.U. Krueger, an Irvine-based economist, said default activity may slow once weak subprime loans work their way through the system. There could be “a quick kind of flushing out, a kind of a storm that passes quickly.”

Dude, ever hear of the concept Binge and Purge. He needs to talk to the Olsen Twins.

The San Diego Union Tribune, is telling "homeowners", not to panic. Sure things, look a little "worrisome" right now but they'll soon clear up. Sort of like that worrisome little hole on the good ship Titanic, or those worrisome little ice caps that're watering down the ocean.

Home foreclosures in San Diego County continued a troublesome climb into record territory in June, but analysts say the number has yet to reach a threshold that creates a drag on real estate prices or the economy.
DataQuick Information Systems reported yesterday that during the first half of 2007, San Diego County had 2,896 foreclosures compared with 445 during the first half of 2006, a 551 percent increase.

That sets a record dating to 1988, when DataQuick began tracking foreclosures, researcher John Karevoll said. “A steadily increasing portion of those who get notices of default now are being foreclosed on.”

If they don't consider a 551% increase in foreclosures a sign that there's gonna be a lot of property to move then I've got a bridge to sell them.....,plus a few thousand condos.

Of course they love to brush all of this off as just a small glitch, nothing to see here folks, just move along .
University of San Diego economist Alan Gin said a recession could make the foreclosure problem much worse, but he said there is less than a 50 percent chance that one will occur. While foreclosures are “still a small part of market,” the spike in defaults is worrisome, he said.

After all, though housing may be hurting everything else is ok.....right?...right? RIGHT??!!

Stocks plunge; Dow down more than 310,

Whoopsiedaisy, guess he didn't see that article.

Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months of worry about the mortgage and corporate lending markets. The Dow Jones industrials closed down more than 310 points after earlier skidding nearly 450.

Investors who had been able for months to largely shrug off discomfort about subprime mortgage problems and a more difficult environment for corporate borrowing finally decided it was time to sell after the Commerce Department issued another disappointing home sales report.

Recession, recession, did anybody order a recession?

Wall Street extended its steep decline Friday, propelling the Dow Jones industrials down more than 500 points over two days after investors gave in to mounting concerns that borrowing costs would climb for both companies and homeowners. It was the worst week for the Dow and the Standard & Poor's 500 index in five years.
Investors cast aside a stronger-than-expected read on the economy and maintained negative sentiment that dominated Thursday when the market shuddered amid worries over the U.S. mortgage and corporate lending markets. Investors globally took flight from equities, shifting cash into safer investments in Treasury bonds.

The pullback Thursday and Friday wiped out $526.1 billion in shareholder wealth from the stocks in the Standard & Poor's 500 index.

But I thought the GDP sounded so good, I mean sturdy, robust, encouraging. What happened? Could it be that maybe people like, just stopped believing them, cause maybe they were, oh I don't know, say....LYING?! After all these were the guys that though housing was so cool, condos were so cool, irrational exhuberance was so coooooooooool.

"I think we're going to have continued sideways movement with 100 point up-and-down days," said Frederick, referring to the Dow's back-and-forth movements.

"The 14,000 level is going to be tough for this market to get back above," Frederick said.

I hate to break it to you Freddie my man but the only thing that moves sideways is a dead fish as it circles the drain...oh yeah, and a snake. But I guess that wouldn't really apply , would it?

More wisdom from Freddie.
"You look at a 300-point Dow day and it seems like a big day but from a percentage viewpoint it's not a big move," Frederick said
Right, like standing on the ledge 5 stories up, is nothing like standing on the ledge 30 stories up, really it's not that big a move.

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At 7/27/2007 04:50:00 PM , Blogger Lisa said...

The "experts" have been babbling about a quick recovery since last year. RE recoveries are never quick, the last downturn was 4 years to the bottom and ten years to get values back to peak. And that was without voodoo financing and strawberry pickers in $700K houses. It will be way worse this time around.

I'm not at all surprised that the stock market finally got some cold water thrown on it - oil is almost $80 a barrel, inflation is high, wages are pretty flat, and the RE engine is kaput for a long time to come.

At 7/28/2007 11:13:00 AM , Anonymous Anonymous said...

I'm glad you are back....was worried you had simply stopped blogging.

I think that the experts believe that by saying "don't panic" the sheeple will believe them and not rush to the exits -- wonder if the experts are already at the exits. I do know that the partners at GS over a year ago said to people privately know is the time to get out of real estate. Then they are out there saying "don't panic."

But the good news is those of us who did not blindly follow should have great opportunities in the year(s) to come and personally I really don't care about the sheeple who are too stupid to even spend 5 hours on the internet researching real estate before buying into the hype that prices always go up.

At 7/29/2007 04:28:00 PM , Blogger Tyrone said...

Massive amounts of kool-aid in Sebastopol. Here's a featured home from

1220 High School Rd
Sebastopol, CA
2 bed, 2 bath, 4.9 acres
Price: $998K

Sales history:
01/28/2002: $200,000

Z-estimate: $732K

The Z-estimates are always high, but these folks are much "higher" if they think they'll get anything close to that asking price. Easy money and fraudulent appraisals are gonna be harder to find.

At 7/30/2007 12:46:00 PM , Anonymous bob said...

Did anyone see the letter's column in the PD this am?
SWome used house salesman berating the PD for allegedly using false data regarding Napa median prices.
You know when these guys start whining, the end is nigh.

At 7/31/2007 11:45:00 PM , Anonymous Smash Monster said...

My favorite is when some of the nutso bulls say housing isn't crashing, the market is just normalizing! I like to say back, you aren't losing a home, your regaining a rental apartment.

Talk about spin!

Glad to see you back, I was getting tired of looking at George ;-)

At 8/01/2007 02:42:00 PM , Blogger moonvalley said...

I'm glad to be back, we've just been dealing with some deadline issues which have kept me away from posting. I have a bunch of stuff I want to post about here I'm just trying to find the time to do so.

At 8/01/2007 02:43:00 PM , Blogger moonvalley said...

smashmonster you're not kidding! Fur flew yesterday among some generally peaceable friends over a pending housing crash here in "it never goes down" Sonoma.

At 8/02/2007 10:32:00 AM , Anonymous Anonymous said...

Top songs of --

1929: Happy Days Are Here Again
1931: I've Got Five Dollars
1933: Brother, Can You Spare a Dime?

At 8/03/2007 10:06:00 PM , Anonymous tom stone said...

back from a week of camping and no news.Tyrone,i'll have to drop by the place on HS road to see how bad it is,I know that some of the properties along there have had boutique vineyards planted which can give you a nice writeoff and increase the price quite a bit.but...even a real nice place on 5 acres won't bring more than $2k a month and with Prime borrowers now being charged 8% for jumbo loans i think $325-$350 k is about right if the place is immaculate.

At 8/04/2007 05:50:00 PM , Anonymous tom stone said...

I went by peet's coffee at chanate and mendocino ave today in SR,there was a sign twirler there "AUCTION! 23 new townhomes" i watched them build this shit last winter,it got real soggy...if you want a cardboard box to live in that might be a tad moldy and are willing to pay 4 or 5 times what the income will justify.....

At 8/05/2007 02:50:00 PM , Anonymous Anonymous said...

Check out:

for info on the auction for Chanate
Village condos (near corner of
Chanate and Mendocino in Santa Rosa).

The published prices are way off of
the current asking prices, but I
can't tell if there are hidden
"reserve prices".


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