California to free 40,000 prisoners

[Gaspar]

Like most of the rest of the country, California has a few mountains of liberal enclaves dependency surrounded by pockets of red state self-destructiveness productivity.

FIFY

[Conan71]

On a personal level they live beyond their means, note the high foreclosure rates.  California has gone through a binge and purge in their real estate markets every 10-20 years since the 1970's. 

[TulsaMoon]

Cheesy? In poor taste perhaps. But the point being that the criminal justice system sucks and one of the GOP candidates for President won't be helping it any if elected. Not that O'Bama has done anything about it.....

First thing you ever said that I agree with.

[nathanm]

FIFY

Well, if you want to talk about dependency, maybe you should be more concerned with which states get more federal money back than they put in in taxes and which ones don't. You seem to like all the pork herded our way, though.

Conan, the high foreclosure rate is more correlated with high unemployment than anything else. You'll note that all of the seriously bad housing markets are in areas that got hit with the worst unemployment. Or are Arizona and Nevada also full of pinko commie bastards?

[Conan71]

Well, if you want to talk about dependency, maybe you should be more concerned with which states get more federal money back than they put in in taxes and which ones don't. You seem to like all the pork herded our way, though.

Conan, the high foreclosure rate is more correlated with high unemployment than anything else. You'll note that all of the seriously bad housing markets are in areas that got hit with the worst unemployment. Or are Arizona and Nevada also full of pinko commie bastards?

You missed my point entirely.  There were a lot of homes foreclosed on where people are still working the same job they always had.  As well, if one has proper savings, plans prudently, and doesn't buy more house than they can handle should the fecal matter hit the oscillating ventilation device, they should be able to make payments for six months to a year.  As well, it's the usual hyper-inflation of home prices in California which has caused several booms and busts in their housing market since the 1970's.

Some people bought homes thinking the upward trend was infinite, some bought because they were buying a lifestyle and didn't know better, and there were yet others forced into purchasing at the limits of or beyond their means out of necessity. 

[Red Arrow]

Depending on inflation and inflation base pay raises to account for the decreasing mortgage interest deduction as the note is paid off is probably a contributing element.

[nathanm]

You missed my point entirely.  There were a lot of homes foreclosed on where people are still working the same job they always had.  As well, if one has proper savings, plans prudently, and doesn't buy more house than they can handle should the fecal matter hit the oscillating ventilation device, they should be able to make payments for six months to a year.  As well, it's the usual hyper-inflation of home prices in California which has caused several booms and busts in their housing market since the 1970's.

Some people bought homes thinking the upward trend was infinite, some bought because they were buying a lifestyle and didn't know better, and there were yet others forced into purchasing at the limits of or beyond their means out of necessity. 

Yeah, you missed my point entirely. The same smile happened in other places that have completely different politics and even completely different housing markets. It's mostly driven by unemployment, despite what the criminal banks want you to believe.

[dbacks fan]

Conan, the high foreclosure rate is more correlated with high unemployment than anything else. You'll note that all of the seriously bad housing markets are in areas that got hit with the worst unemployment. Or are Arizona and Nevada also full of pinko commie bastards?

Unemployment is a part of the foreclosure issue here, you can blame the borrowers, the appraisers, speculators and the banks. A new house here, 2000 sqft 3 bed 2 bath 2 car garage was selling for $140k to $190k from '98 to about '02. The housing market exploded here and buy '04 that same house was selling for $300k and up. This artificially inflated the value of homes across the Phoenix area, and people rushed out and refied their homes at an inflated value that wasn't real, took out 5 year interest only or adjustables. My house that was purchased in '98 for $158k suddenly had an appraised value of $450k if I wanted to refi for it. From '07 the assessed value went from $370k to $190k in '10. One of my neighbors is $240k upside down, because he took all the false equity out in a refi. So yes, unemployment hurt things but it was not the root cause.

[nathanm]

Unemployment is a part of the foreclosure issue here, you can blame the borrowers, the appraisers, speculators and the banks. A new house here, 2000 sqft 3 bed 2 bath 2 car garage was selling for $140k to $190k from '98 to about '02. The housing market exploded here and buy '04 that same house was selling for $300k and up. This artificially inflated the value of homes across the Phoenix area, and people rushed out and refied their homes at an inflated value that wasn't real, took out 5 year interest only or adjustables. My house that was purchased in '98 for $158k suddenly had an appraised value of $450k if I wanted to refi for it. From '07 the assessed value went from $370k to $190k in '10. One of my neighbors is $240k upside down, because he took all the false equity out in a refi. So yes, unemployment hurt things but it was not the root cause.

Were it not for the unemployment situation, those values would be real. People will pay whatever they can for housing in a good school district. It's all dependent on how much they make and thus how much the banks will give them.

The real value of something is whatever someone else is willing to pay for it at a given time. That's capitalism.

[Gaspar]

The real value of something is whatever someone else is willing to pay for it at a given time. That's capitalism.

Nate. . .Nate. . .Nate, you are starting to sound a little freemarketish.  Did you not take your pills this morning?

Just kidding. 

[Conan71]

Were it not for the unemployment situation, those values would be real. People will pay whatever they can for housing in a good school district. It's all dependent on how much they make and thus how much the banks will give them.

The real value of something is whatever someone else is willing to pay for it at a given time. That's capitalism.

No one is arguing that unemployment had nothing to do with it, but you seem to be ignoring that greed can only manipulate capitalism for so long before prices get out of the reach of enough people to create any more meaningful upward pressure on prices or to even maintain them at their peak.  Even at full employment, overheated housing markets will eventually exceed what people can pay for them.  The rates at which values were increasing like Dbacks explained was common in California, the front range of Colorado, etc.  For home prices to double in 2-3 years is not sustainable value, it's gambling and the house always wins.  

Certainly there has to be income to support upward home values.  Consider all the retirement condos being built in the Dade/Broward county areas of Florida in the early/mid '00s and the rapidly escalating values there.  Their price went into the shitter and those were targeted at people who ostensibly were no longer depending on a job for income.

[nathanm]

Obviously prices can only go as high as people can leverage. The thing is that in the bubble of late the banks were more complicit than usual. It wasn't mainly their money on the line, so they were just doing whatever they could to generate fees that the MBS buyers would have to pay.

The borrower isn't really the expert on home values or even to some degree what they can comfortably afford. Most people have a fairly rosy outlook and presume they're this (--><--) close to getting that raise or getting that new job and becoming a one percenter. Part of the bank's job has historically been to throw cold water on people and make them face reality before lending them such a large sum of money.

(I'm arguing a couple of different points here, one of which is that politics has little to do with the housing market in a given area and the other that home prices are sustainable at whatever level banks will lend at, since almost everyone takes a mortgage)

[Conan71]

Obviously prices can only go as high as people can leverage. The thing is that in the bubble of late the banks were more complicit than usual. It wasn't mainly their money on the line, so they were just doing whatever they could to generate fees that the MBS buyers would have to pay.

The borrower isn't really the expert on home values or even to some degree what they can comfortably afford. Most people have a fairly rosy outlook and presume they're this (--><--) close to getting that raise or getting that new job and becoming a one percenter. Part of the bank's job has historically been to throw cold water on people and make them face reality before lending them such a large sum of money.

(I'm arguing a couple of different points here, one of which is that politics has little to do with the housing market in a given area and the other that home prices are sustainable at whatever level banks will lend at, since almost everyone takes a mortgage)

You mean because of derivatives or government guarantees?

That part was puzzling to me because that actually was not far from what happened in the late 1980's when HUD wound up with record numbers of properties to re-market from failed FHA loans (I think that was where the "HUD homes" came from).

A guy who used to work for me was building a $1.2mm Taj Mahal out in Wagoner County.  He lost a contract which represented 1/2 his income.  Still had the same job, but he had a few large contracts making him huge bonuses.  Lose any one of the three and he'd no longer be a 1%'er.  He was building it on a balloon note and also assuming that by the time he was done building, he could sell it for $300K or more than what it cost him to build.  When I hired him in 1996, he'd just walked out of bankruptcy court.  This second episode happened about 2008.  He got overconfident and also repeated some behaviors of the past.  Oh, and there aren't that many people looking for Taj Mahals in Wagoner County, Oklahoma it turns out.  Certainly not suggesting this is what happened throughout the market, but when you made the 1% comment, this situation came to mind.

[Red Arrow]

 Still had the same job, but he had a few large contracts making him huge bonuses.  Lose any one of the three and he'd no longer be a 1%'er.  

Same concept happens to the "little guy".  I've seen guys buy a car, making payments based on time-and-a-half overtime.  The overtime goes away and they lose the car. 

[nathanm]

You mean because of derivatives or government guarantees?

Mortgage backed securities. (the CDO is the derivative) Almost nobody was writing FHA loans during the bubble. It was more profitable for the banks and brokers to herd people into 80/20s, so that's what they did, even though the FHA loan would have had a better interest rate (at the cost of 3% down) and a lower PMI/MIP.