Inland Empire Real Estate News and Marginalia

New Year, New Laws

2012-01-02T14:24:00.000-08:00

Photo by 4johnny5 via Creative Commons License

With the new year comes new laws

With all of the bickering amongst the California lawmakers it would seem a surprise that any laws were actually passed. According to this LA Times article there were a total of, "760 bills signed by California Gov. Jerry Brown."
Do you know what all of the laws are? If you are looking to the media for the answers you will likely fall short. While the LA Times reports a total of 760 bills, NBC reports, "The legislature passed 750 new laws last year." So which is correct? A quick Google search of "new California laws for 2012" returns about 456,000,000 results as of this writing. None of the sites on the first page include anything from an official government agency. The second page shows a link to a PDF from pharmacy.ca.gov. It isn't until page 4 that another California Government site shows up.
Of the two links found within the first 4 pages, neither of them list all of the laws. Instead they are sites that only list the laws that affect that agency. If you want a complete list of Bills enacted during 2011, you can find them at http://www.leginfo.ca.gov/NewLaws.html. Unless you have a legal degree, you may need someone to interpret them for you.
The new laws cover many areas from real estate, traffic, guns rights, bullying, and more. Using Google you can find various articles that describe the some of the "most important" laws that affect you. Here is our commentary on a few of the laws.<.p>

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Shadow inventory estimated to take four or more years to clear

2011-02-10T11:41:00.000-08:00

According to Standard & Poor's Ratings Services the volume of distressed homes continues to decline. However, the pace at which the inventory is being processed through the foreclosure process is slowing down. The shadow inventory is defined "outstanding properties whose borrowers are (or recently were) 90 days or more delinquent on their mortgage payments, properties currently or recently in foreclosure, or properties that are real estate owned (REO)."

At the end of fourth-quarter 2010, S&P estimated it will take 49 months, or more than four years, to clear the supply of distressed homes on the market in the U.S. as a whole. This is an 11 percent increase over the previous quarter and a 40 percent increase from fourth quarter 2009 for the average time to clear these properties in the U.S.

According to S&P, Los Angeles area has the largest inventory, but New York will take the longest to clear.

Lots more information and pretty graphs in the original article.

Fourth-Quarter Shadow Inventory Update: Drop In Liquidations, Stable Cure Rates Indicate Increased Foreclosure Timelines

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What Do Big Banks, Short Sales and Government Have In Common?

2010-01-19T23:01:00.000-08:00

During the boom years, the big banks were pushing to be allowed to add real estate office to their portfolios. That would have given them control of the market from listing to foreclosure. Lucky for the consumer, this didn't happen. This article from Diana Olick at CNBC: Short Sale 'Fraud' Follow, gives you just a small look into what it might have been had they been allowed to become licensed real estate offices.

Big banks currently control a large portion of the RE market via short sales (which require their approval) and foreclosures. When they are not putting the screws to you via high credit card interest rates they "extort" money from you when you try to buy a home. "Pay us under the table or we won't let you sell your house." I wonder how they report this alleged under the table income on their balance sheets? Is there a line item for "Income - RESPA violations." I would say it is time for the bank regulators to perform an audit of some of these banks. HUD where are you? If a REALTOR® were to take part in any of this alleged fraud and violation of RESPA laws then they would lose their license and the ability to make a living in the real estate industry forever! RESPA applies to the lending world. However, if they refuse, then they lose a client, a transaction, and a paycheck.

If any bank is truly found guilty of this alleged practice, they need to lose their license to lend. They also need to pay penalties to help fund additional regulators to root out these types of abuses. Any Buyer or Seller that has fallen victim should be awarded direct compensation for such abuses.
Here is something to think about. If that house next to you sold for $100,000 plus an undisclosed $1000 under the table, then the true value of homes are not being represented. The true value of the home was $101,000. Doesn't sound like a lot. Every home in the area just lost $1000 in value due to such a sale. The State (if home is in California), just lost $10 in real estate taxes for the first year. Doesn't sound like much, but imagine that this alleged abuse has occurred for 1000 homes across California. That is $10,000 in taxable income per year that the State has lost plus the 2% annual increase.
I could continue with a rant about "I'm from the Government, I'm here to help you," but I will leave that to someone else.

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"Tree House" For Sale

2009-07-06T17:00:00.000-07:00

If a picture is worth a 1000 words, then what does this one say?

Click image for larger view

We all know that a listing without any photos is less likely to be looked at by Buyers. You should always have at least 1 photo on your listings. The more photos you have on the listing the more likely it is that the Buyer will consider it. Your photos should also not hide the ugliness.

I know, you want to show the property in it's best light. I agree. However, you should also not intentionally hide issues. I have no idea what the status of the property in the photo is. I am not sure the listing agent does either. The above photo is the ONLY photo on the listing. I am not sure I would have chosen this as my primary and ONLY photo. What does the inside look like? If it looks like this on the outside perhaps the inside is so bad that it wasn't worth taking interior photos.

Here are the public comments in entirety!

SHORT SALE

What more could you possibly want to know about this property right? How about, WHY IS THE TREE RESTING ON THE HOUSE! I can just imagine the conversation that took place at that listing appointment.

And the agent remarks don't provide much more information. In fact, they just say to be sure and call before you visit. Why, so you can reserve me a hard hat or so that you can take down the caution tape in hopes I won't notice the white elephant. What Buyer would even consider visiting? Give me more information on the home. It doesn't mention that the roof has a tree resting on it. A fairly LARGE tree from the looks of it. I am sure it hasn't occurred to this listing agent or the owner why the property has been on the market longer than 200 days.

My advice to the lender reviewing offers for this home, if any have come forth. Take the first offer over $1 and call it a successful sale! You do not want to own this property!

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The Recession Is Over

2009-07-06T11:21:00.000-07:00

From the WSJ:

The latest to weigh in on the debate is Christopher Rupkey, the New York-based chief financial economist at Bank of Tokyo-Mitsubishi UFJ. In a note this morning, he says a V-shaped recovery — in which the economy not only recovers but rebounds strongly — is “maybe not as far-fetched as you think”.
...
As for claiming the recession may have already ended, he points to a series that in the past has proven a remarkably good indicator of business cycle troughs: weekly claims for unemployment benefits. That series peaked in the week of March 28 when a seasonally adjusted 674,000 new claims were filed; it has since retreated though it remains historically high. If that peak holds, it means the recession likely ended in April or May, he said.

I agree that using the numbers for unemployment are a good leading indicator, but it is only one of the measures. The only thing that I would caution those using it as an indicator would be how the numbers are playing out. Why are the numbers going down? The same reason they shot up so quickly. Unemployment benefits were extended, so many of the unemployed that were not "on the books" because they had exhausted their benefits were suddenly back on the books. Now benefits are starting to expire and those long unemployed are beginning to drop "off the books" again, not because they found work. So while the numbers show unemployment improving, it may be a bit of a false hope and some noise in the data.

What I am watching is job growth, not unemployment shrinking. When the employed can go to work and not fear a pink slip then the recession will be over. I think many are at the point where they have cut the fat so much that they can't cut much more. Those with benefits that have been less than motivated to find a job are going to start looking aggressively. Once the State and Federal Governments figure out how to cut some fat we will be ready to begin building again.

I am in the camp that thinks the recession may be over or soon will be. The thing about recessions is that they aren't officially recognized to begin or end until it has already occurred. They are like the housing market in this respect. If you are waiting for housing prices to "turn around" before you buy, then you have already missed the "sweet spot" that you have been waiting for.

As for a "V" recovery, I just don't see that happening. I think this December will see better numbers than 2008, but only slightly. However, I think that will be the stimulus that consumer confidence needs to begin the upswing. So look for slow to no growth from here to October. In November and December it will begin to pickup as the other side of the "U" recovery begins. By summer 2010 we will definitely be on the upswing, but hopefully with a more moderate angle than the mid 2000's.

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Inferred Housing Cycles

2009-07-06T04:39:00.000-07:00

I was sifting through the data that I have on the local real estate market here in the Inland Empire and I started to wonder when the homes that were on the market were built. So I put together some graphs. It turns out that the homes that are on the market were most commonly (the mode for you statisticians) built in 2005.

This first graph shows the number of listings on 7/30/2008 by the year built. I kept the vertical axis set to 120 so that it was easier to compare the graphs.

Click image for larger view

My data does not indicate anything in particular. However, it does appear that the year that the homes that are on the market were built tend to have peaks and valleys. For example, a sample of data taken on March 30, 2009 with a 30 day window indicates that there is a peak of homes built in 1979, then a relative steady pace from 1985-1989 with a drop in 1987, then a rise again until we peak at 2005.

Keep in mind that all of the years shown are for homes that were on the market during the sample period. So this data does not represent any correlation with the number of homes built during a given year. It represents a sample of listings with a change in status within 30 days of the sample period.

This second graph show the number of listings by year built on 6/29/2009.Click image for larger view

Why would there be such a pattern of peaks and valleys. I sampled the data set for several different months. I went as far back as July 30, 2008. The actual data is a little different, but the peaks and valleys are roughly the same.

So the data begs the question. Why are homes built in 1987 less likely to be listed than homes built in 1988? Why are so many homes that are built in 2005 on the market?

I suspect, but can't seem to find anything to correlate the data, that it may be related to historical housing booms and busts. It is my theory that during the peak of the housing boom that the quality of construction may decline because builders are under pressure to complete projects at an ever increasing pace to keep up with demand. As the boom turns to bust, they are free to spend "quality time" building a structure.

One theory that I also considered was related to financing of the homes. Homes that were purchased in 2005 may be financed with Adjustable Rate Mortgages that are beginning to reset. However, this does not explain the peaks and valleys for the older homes. All of the data represents current listings, not the number of homes listed in that year.

Another theory may be purely related to the number homes built during a particular year. If lots of homes were built during 1986, but not so many in 1987, then it stands to reason that an equal percentage of each year will result in a higher count during boom years and a smaller number during less that active years. Lots of homes were built in 2005. During the period of 2006-2009 less homes were built. So perhaps the data is just a reflection of the building cycle?

Take a look at the two graphs. What is your theory on what the data means?

Note: The data for these graphs were all in the 92336 area code. If a larger geographical area is sampled, then the data may be more uniform.

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Inland Empire Sales 1 in 5

2009-06-21T06:06:00.000-07:00

The Inland Empire continues to have strong sales numbers, relatively speaking. According to report from MDA DataQuick, and estimated 39,051 homes and condos were sold in California during the month of May. During the same period, MDA DataQuick reports that 7,548 homes were sold in the Riverside and San Bernardino Counties. Also known as the Inland Empire.

That is about 19% of all homes, or 1 in 5, sold statewide were sold in the Inland Empire. So homes in the Inland Empire are definitely moving. With a median price of $137,000 in San Bernardino County its no wonder homes are selling. First time buyers and investors see that real estate in the Inland Empire is the place to buy. Prices are down and you can find great deals.

For those investors that didn't buy during the boom, this is the time when they are buying some of the best deals. in 3-5 years these homes will have provided decent cash flow from a renter and can be resold for a reasonable profit. If held onto for 10 years, you can expect to make more than $100,000 in profit between monthly rents and an eventual resale without trying very hard. Multiply that by 10 homes and you are averaging $100,000/year income. Most people would consider that a good income.

A quick glance at active listing in San Bernardino County that have been listed in just the last 7 days with 3 or more bedrooms and 2 or more baths gives us 354 listings. Here is just a sample of some of the low price leaders.

Click image for a larger version

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Underwater Home

2009-02-26T05:12:00.000-08:00

This give a whole new meaning to the term "underwater."

http://www.zillowblog.com/under-lake-jocassee-is-attakulla-lodge-still-intact/2009/02/

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Jarvis: The Credit Crisis

2009-02-21T02:10:00.000-08:00

The credit crisis explained by Jonathan Jarvis

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Open Letter To California State Legislature

2009-02-05T22:04:00.001-08:00

I encourage everyone to contact their representative to express your own opinion, whatever those may be. Find out who your representative is here: http://www.legislature.ca.gov/port-zipsearch.html

The following is copy of an open letter that I sent to my representatives.

Dear State Representative:
I am writing to express my deep disappointment that the State Legislature has not yet come to an agreement on the State budget.

I do understand that the State budget is a large and complex issue that should not be taken lightly. I feel that I have been abandoned by the California State Government. The State Legislature should be required to be locked in session until the State budget has been resolved.

I am watching intently and waiting for a resolution. My expectation is that the entire Legislature, yourself included, will take the necessary steps and come to an agreement on the State budget and not play the blame game. Instead, you will work with your colleges to come to a decision and a State budget resolution that moves the State and the lives of the 33.8 million Californians forward.

Unless decisive and final action is taken soon, I will have to conclude that the you and the other members of the California Legislature do not have the ability to govern the Great State of California efficiently and effectively and are not worthy of re-election.

I hope and pray that you and other members of the California State Legislature will be able to prove to me that this is still the Golden State and not just a painted brick of lead.

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NBER Announces Recession

2008-12-01T10:20:00.000-08:00

The National Bureau of Economic Research (NBER) has announced that December of 2007 has the peak of economic activity. This confirms what many already felt. I recall talking with my Brother-in-law in just prior to New Years Eve in December of 2007 about this. I told him that despite the fact that it had not been announced that we were in a recession, we were in a recession.

Calculated Risk has been using December 2007 as the beginning of the recession for some time now in his research.

From NBER: Determination of the December 2007 Peak in Economic Activity

The Business Cycle Dating Committee of the National Bureau of Economic Research met by conference call on Friday, November 28. The committee maintains a chronology of the beginning and ending dates (months and quarters) of U.S. recessions. The committee determined that a peak in economic activity occurred in the U.S. economy in December 2007. The peak marks the end of the expansion that began in November 2001 and the beginning of a recession. The expansion lasted 73 months; the previous expansion of the 1990s lasted 120 months.

A recession is a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in production, employment, real income, and other indicators. A recession begins when the economy reaches a peak of activity and ends when the economy reaches its trough. Between trough and peak, the economy is in an expansion.
...

The committee determined that the decline in economic activity in 2008 met the standard for a recession, as set forth in the second paragraph of this document. All evidence other than the ambiguous movements of the quarterly product-side measure of domestic production confirmed that conclusion. Many of these indicators, including monthly data on the largest component of GDP, consumption, have declined sharply in recent months.

So there it is. We have been in recession for one year now. The only question remaining now is how long will it take for the contraction to end.

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Sad News: Tanta Vive

2008-12-01T09:54:00.000-08:00

It is with great sadness that I learn that Tanta, and influential voice on the mortgage crisis, died early morning on November 30, in Columbus, Ohio.

I never had the opportunity to meet her, but read much of her postings. She taught many with her words and wisdom. She will be missed.

Calculated Risk will be announcing a charity of Doris' soon if you would like to contribute. Please visit Calculated Risk for more information.

From Calculated Risk:

My dear friend and co-blogger Doris “Tanta” Dungey passed away early this morning. I would like to express my deepest condolences to her family and friends.

From The New York Times:

Thanks in large part to Tanta’s contributions, Calculated Risk became a crucial source of prescient analysis as the housing market at first faltered, then collapsed and finally spawned a full-blown credit crisis.
Tanta used her extensive knowledge of the loan industry to comment, castigate and above all instruct. Her fans ranged from the Nobel laureate Paul Krugman, an Op-Ed columnist for The New York Times who cited her in his blog, to analysts at the Federal Reserve, who cited her in a paper on “Understanding the Securitization of Subprime Mortgage Credit.”
She wrote under a pseudonym because she hoped some day to go back to work in the mortgage industry, and the increasing renown of Tanta in that world might have precluded that. Tanta was Ms. Dungey’s longtime family nickname, Ms. Stickelmaier said.

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Patience + Persistence = Perseverance

2008-11-09T14:14:00.000-08:00

Most homes sold in Southern California today are foreclosures. According to recent report from DataQuick, Southland home sales up, prices down; foreclosures now half the market, 50% of home sales in Southern California are foreclosures.

Prices are down and sales activity is up. That doesn't mean finding a home is a walk in the park. Finding a decent home among the chaff is a challenge.

Purchasing a foreclosure can be a great way to purchase a home. However, it can be very daunting as witnessed by Peter Y. Hong in his report in the Times.

Peter witnessed first hand what many Buyers and Agents are experiencing in the market today. Among what Peter experienced, here is what else you can expect to find when searching for that perfect home.

Listing agents that won't allow any showings. Listing agents that won't submit an offer. Loans that fall out despite pre-approval status. Sellers (aka banks) that take weeks or even months to accept an offer. Listing agents that flatly refuse to review an offer unless the Buyer agrees to "cross-qualify with the sellers lender" and provide the most intimate of financial details prior to submitting an offer. Buyer's Agents that steal the keys from properties to prevent other agents from showing the property.

Here is probably the best of them. Listing agents that are selling homes as owner occupied "Short Sales" that are no longer owned by the seller. The bank foreclosed on the property and took it from the owner. Within days of the foreclosure, the seller hires an agent to sell the property. The agent took the listing from the seller despite the fact that they don't own it. They just want to expose listings in hopes of getting clients. In most other areas of business they call this deceptive advertising.

Want to destroy your credit score? Try "pre-qualifying" with a dozen lenders over the period of a couple of months. This is what listing agents of REO properties expect you to do. They "require" you to "cross-qualify" with their special loan officer or your offer will not be submitted.

What to do if you are in the market for a foreclosed home? Be patient and persistent. If you continue to present offers you will find the right home with the right seller. Eventually you will persevere and have that home you have been looking for. In the mean time, do everything possible to increase the strength of your buying position by saving as much cash as you can.

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Trick or Treat?

2008-10-31T03:26:00.000-07:00

There are not that many Buyers out there these days. With all the news about the economy and lack of funding, buyers are waiting this market out as they have been for several years now. My personal opinion is that if you are looking for a home now you might lose a little value in the next year. However, it will not be as significant as the loss was for those that purchased in 2005.

Timing the real estate market is notoriously difficult. Generally the peaks and valleys are known 3-6 months after they have occurred. If you want to buy a home and you have the cash, now is the time to look. However, don't just settle for anything, find the good deal.

I was poking around on the MLS and decided to look for the best deal I could find. To make it easy and a bit less subjective, I am using the Price per Square foot as the yard stick. Certainly this does not a deal make, but serves as a good benchmark.

So using the using the bang for the buck theory, what can you find in North Fontana? I did a search for homes in the 92336 area code that were within the Etiwanda School District boundaries. I found only 2 homes that are under the $100/sq. ft. price range. One of them was an REO and the other was a short-sale. Since the majority of short-sales never happen, I am going to have to give the title to the REO.

At just $95/sq. ft. this 3683 sqft home is the best value. It has been on the market for over 408 days as of this writing. The previous owner paid $405,500 for this home and then took more than $450,000 out of the home. The bank took it over for $448,510.

While the price per sqft is a good deal, the sticker price can be difficult for some buyers to look at. The bank has owned this home since April of 2007. The home was first listed at $504,900. Amazingly it did not sell. (That is sarcasm).

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Vote 2008!

2008-09-09T15:31:00.000-07:00

In case you have been in a cave, there is a Presidential race taking place with the finish line ending this November. Who are you going to vote for? If you are not sure, perhaps this will help you decide.

Try JibJab Sendables® eCards today!

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Ode to Chase

2008-08-27T21:37:00.000-07:00

After the beginning of the real estate meltdown in 2005, banks began to tighten their lending standards. They realized that the housing market wasn't not everything it was cracked up to be. There was no way anyone could convince a bank to lend money on a home that was worth less than the loan. Or could they?

golfer_x at Housing Kaboom is constantly monitoring the housing market in the Inland Empire. He clearly wants to be ready to act when the time is right to buy. The only way to know if the time is right is to watch the market.

* Photo courtesy of Housing Kaboom

golfer_X is known for finding what he calls the Realtard of the month. It is awarded to real estate agents that just don't seem to be playing with all of their faculties. In May of 2008, he wrote about a home at 17362 Woodentree Ln, Riverside that was owned and listed by a real estate agent that was way overpriced for the neighborhood.

Fast forward a few months and guess what golfer_X found. The same listing is amazingly still on the market. Only now the property is listed at $1 million.

It gets richer. The current owner bought it as an REO. The county records show a sale in November of 2007 for the price of $535,000. The lender, Chase Bank, gave a loan amount of $603,250. That is $68,250 more than the purchase price in 2007 when the housing market was in free fall and the credit crisis was in full swing! That is more than 112% of the purchase price. I wonder what all that extra money was used for. My guess is that it was used to install fake grass and pay for a commission. Guess the banks just didn't learn. Here's to the wise underwriters of Chase. Nobody can pull a fast one over on you!

If that wasn't bad enough, there was apparently a double closing. On the same day that the agent purchased the home for $535,000, the new agent/owner sold the home for $635,000 to someone else. That is a profit of $100,000. Not bad for a days work. I wonder if the agent disclosed his financial gain to his client? I wouldn't pay $100,000 more for a home that just sold on the same day.

A few months later in March of 2008, a private lender provided a $50,000 loan to somebody. It isn't clear if it was the agent or the lucky new owner. Regardless, the county shows that the home was sold back to the agent on the same day. My guess is that the agent provided a parting gift to the guy he sold it to back in November of 2007 for a huge profit. There is no sales price listed for the March sale, just a record of a deed giving the property back to the agent/owner.

Fast forward to June of 2008 and the agent/owner managed to get another loan for $132,500 from a private lender. Bad mistake Mr. Lender. Within one month the new loan was in default. The entire amount is in default! Not one payment was made on the new loan. In fact, the county records show that the loan is in default for the amount of $134,200.

My guess is that the total owed on this property far exceeds the $700,000 mark and that the loan that is in default is a second or third lien. If the agent/owner only owed the $134,200, they could list the property for $300,000 and have it sold yesterday. Instead he is trying to list it at a completely unreasonable price.

Here is the best part. Since the most recent lender is not in first position, they must foreclose on the property to protect their asset. If the first lien holder were to foreclose on the property, then all junior liens (2nd and 3rd mortgages) would be wiped out. That means the junior lien holder must pay all other loans while they are in foreclosure proceedings to protect their asset. Unless of course the agent/owner is paying the mortgage on the first. Somehow I doubt that is occurring.

Wonder why the FDIC is announcing bank failures? This is one example of the many reasons.

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FDIC Friday Failure

2008-08-27T15:53:00.000-07:00

Friday is the most common day for your friendly neighborhood regulator to lock the doors of your the local bank and take it over. The FDIC is keeping busy these days with yet another bank failure. On August 22, 2008 The Columbian Bank and Trust, Topeka, KS was taken over by the FDIC. That brings us to a total of 9 this year. The real question is if the failures of 2008 are the beginning of a 1980-1993 period or more like the period of 1994-2007? The answer to that will be in the numbers for 2008-2009.

Click image for large view of graph

The FDIC has been getting prepared for the coming bank failures for some time now. The FDIC announced on Tuesday, August 22, 2008, that in the second quarter 117 banks and thrifts were considered to be trouble. That is the highest level in 5 years.

From MSNBC.com: Mortgage mess puts more banks at risk

The mortgage mess that has upended millions of homeowners’ finances is now taking a bigger bite out of the nation’s banking system.

And while depositors with insured accounts face little risk of losing their money, the insurance fund’s top regulator said it may have to borrow money from the Treasury to make good on that promise to consumers.
...
So far, only nine lenders have failed this year, the largest of which was Pasadena, Calif.-based IndyMac, which was taken over by the FDIC in July with about $32 billion in assets and $19 billion in deposits. It was the second-largest financial institution to close in U.S. history, after Continental Illinois National Bank in 1984.
Those failures have depleted the insurance fund, which now stands at $45 billion — less than the FDIC is supposed to have on hand, according to Daniel Alpert, an investment banker at Westwood Capital.
...
Bair also told the Wall Street Journal the FDIC couldn’t rule out the possibility that it may have ask the Treasury for capital to tide it over through the coming round of bank failures. The money would be used to pay depositors insurance claims, and then paid back after the assets of the failed bank are sold.

I suspect that 2008 will round out with a total bank failure of 14-17 failures. If you have any uninsured deposits, now may be a good time to shuffle some funds to make sure you are covered. Nothing like finding out your not covered after it is too late. You can visit the FDIC and read about how FDIC insurance works to make sure you are covered. If you have about 20 minutes, you can view this informative video provided by the FDIC which explains what Deposit Insurance is all about. You can skip to the "Common Ownership Categories" section or other relevant sections to hear just the part about how you are covered as an individual.

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Need a Vacation?

2008-08-26T13:17:00.000-07:00

I was browsing the articles on MarketWatch and this one jumped out at me. It made me chuckle.

From MarketWatch: So Cal's Bail-Bonds.com Is Offering a $500 Gas Card With Bail

... Bail-Bonds.com, which has 24 locations throughout the So Cal area including the Inland Empire, Riverside County and San Bernardino County, wants to help its clients get back on their feet. Through September 30th, 2008 Bail-Bonds.com will be offering a $500 gas card to customers in So Cal, Riverside, San Bernardino and Inland Empire who retain Bail-Bonds.com for bail bond services.
...
... some of the more notable clients for Bail-Bonds.com including Michael Jackson, Lindsay Lohan and Shelly Malil. In fact, Bail-Bonds.com even received an endorsement from the infamous Danny Bonaduce.

So they next time you are arrested and need to get out of town fast, call Bail-Bonds.com. They will even pay for the gas.

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I Nominate Thee

2008-08-23T03:01:00.001-07:00

As many are aware, tropical storm Fay hit Florida this week. It wasn't a hurricane, but a tropical storm does have winds that reach 73 miles per hour. Anytime there is severe weather you are encouraged to stay indoors for your own safety. Last I checked the rain, wind, flooding and debris that is associated with a strong tropical storm is a good reason to stay indoors unless there is an absolute need to go outside.

"A storm is coming, that means killer waves and bodacious winds right? I think I will take myself for some radical kite-surfing. Whoo hoo!" Those must have been the thoughts of Kevin Kearney. Where I live, we have had 84 mile per hour winds pound our house. I wouldn't fly a small kite in winds that high let alone a huge sail designed to capture the wind and carry you across the ocean waves. That didn't stop Kevin Kearney of Fort Lauderdale.

Kite Surfing in Tropical Storm.

WKRG.com Video

From the local CBS affiliate WFOR:

A South Florida kite surfer who went for a wild ride during Tropical Storm Fay is doing better.

Wednesday morning 28-year old Kevin Kearney's condition was upgraded from critical to serious.

…

Fort Lauderdale fire rescue crews quickly arrived on the scene and transported him to Broward General Medical Center in critical condition. His friends believe Kearney will make a full recovery.

…
In a statement, Kearney's family said, "Kevin is an experienced kite-boarder and an all around great guy. We ask that you keep Kevin in your prayers and respect our privacy."

Kearney's friends say he was strapped into a harness with emergency releases. However, everything happened so fast, it's possible he had no time to think about unhooking his clasps. The incident is a very surreal reminder of the dangers inherent in Tropical Storm-force winds.

Kiteboarding Surfboard - $399.00
Medical Bills - $10,000 and mounting.
Watching TV with Mom and saying, "Hey mom, I'm on TV!" - Priceless!

That is one of those moments when you trip and fall, then quickly get up and hope nobody saw you hit the pavement because that would be soooo embarrassing. In the words of Bill Engvall, "Here's your sign!"

I nominate Kevin for the Darwin awards.

Will Retirement Ever Come?

2008-08-22T00:08:00.001-07:00

One of the key factors of the presidential campaign this election year is the state of the Economy. Talk about tax cuts, tax increases, the rich, the poor, the middle class are abundant. The Republicans are going to save us and the Democrats are going to ruin us. The Republicans are for the rich and the Democrats are for the poor. I have heard it all before and I am quite frankly not impressed. I guess I am one of those moderates that believes there are good and bad points of each and they spend too much time pointing figures and playing the blame game instead of actually doing any good. Neither of the parties is perfect nor have all the answers. I am tired of having to choose which bad points I am willing to live with. One of the more annoying pieces of rhetoric is taxes and the state of the budget deficit. They all quote their own numbers and declare they have made things better for the American people by doing completely opposite things. The truth of the matter is that the Average Joe has no chance of ever knowing the truth. They never use the same method of determining their answers and they never tell you how they come to their conclusion. If they do give an explanation it is always with graphs and language that most of us just don't speak.

Let me give you my simplified view on life. You can be on one of two. It doesn't matter if you are "rich", "poor" or in the "middle class". Throw out whatever definition you have formed for what qualifies you as one of those three tiers. Everyone is in one of two tiers and here they are. You are either a consumer or an investor.

A consumer spends their money and usually has debt. How much debt a consumer has will determine how far to the left they are on the scale of poverty. A consumer can have assets like a home, stocks, bonds, cars and boats, however, what is owed on these items are often more than what they are worth. A consumer generally has a negative net worth or has very little positive net worth in comparison to an investor. The more negative a consumer's net worth the harder the struggle will be to ever get to the investor side of the scale. Once a consumer reaches a certain point on the consumer scale, they will forever struggle to not be a consumer in debt. Go too far to the left and the best case for a consumer is to stop the slide to the left. Standing still on the slide is the best you may ever do.

An investor owns assets. They generally have a positive net worth. An investor will forever struggle to keep their positive net worth and their assets. The more assets an investor owns the further to the right of the investor scale they are. An investor has assets like homes, stocks, bonds, cars and boats; however, the value of these assets is often higher than what is owed on them. Over time, the equity they have in these assets grows as the debt on the assets is amortized and the values of the assets rise. The further to the right of the scale an investor is the easier it is to stay on the right side of the investor scale. Once you reach a certain point on the scale, you will forever be an investor unless you choose to throw it all away. Stop investing before you reach that point and you can quickly slide to the left and into the consumer in debt scale.

This is an important point. It is fiscally easier to be a consumer and difficult to be an investor. Being a consumer can mean a life of constant struggle. Being an investor can make life easier in the long run. A consumer must constantly struggle to make money so they can pay their debt or purchase the next big toy. While an investor will struggle to stay an investor, the struggle will result in greater rewards. A consumer can do give up and slide further to the left of the scale with little or no effort. An investor must actively labor to stay an investor. If an investor stops working at being an investor, they have the ability to slide quickly into the in debt consumer side. A consumer will never accidently ascend into the investor scale.

So where are you? Where do you want to be? You can be a consumer living with debt and be "happy." If you are close to the center of the scale then you can maintain your position as a consumer by just doing the bare minimum to make it. You will always have debt or little to no net worth, but you can live with it. Or you could be the poor sole that is deeper in debt every day that you wake up. The further from the center you are, the more rapid the movement and steeper the path to the investor side. As your debt grows, the speed at which you move to the left of the economic scale will increase. Move too far to the left of the scale and you will never be able to recover on your own. You can struggle toward the right of the scale, but it is kind of like the 900 pound person losing 200 pounds. They lost a lot of weight and should be congratulated, but they still weigh 700 pounds! You are much better served to go on the diet at 200 pounds.

Then there is the investor or right side of the scale. If you have a positive net worth you have much more opportunity to raise it. The more assets you own the more you can invest and the more your assets can grow. The more the assets grow the larger your net worth will be. It compounds just like that savings account with the insulting interest rate from the bank. Every time you increase your net worth, those assets compound to create more net worth. As your assets grow you move further to the right. Move far enough to the right and you can ensure you stay on the right side of the scale with minimal effort.

So are you the one with all the newest fancy gadgets that has enough money to get you to the next paycheck, or are you like Mr. McCain and can't keep track of how many houses you own? If you don't know what your net worth is then you are on the left half of the scale. I suggest that you do everything in your power to start out on the right half of the scale. When you are on right half of the scale, you can waste a little of your net worth and still be on the right half. However, if you start on the left, you will forever struggle to reach the middle. You will most likely never pass into the right half for any significant length of time.

A mistake a lot of consumers make is to spend their pay raise before they get it. This can be dangerous. According to the Federal Reserve Board, Survey of Consumer Finances the mean of family incomes fell by 2.3% actually decreased during the periods of 2001-2004. It must be those tax cuts that saved us.

Click image for larger view

So what does the top 0.5% wealthiest in the nation invest in that the others don't? According to a paper Estimation of Household Net Worth Using Model-Based and Design-Based Weights: Evidence from the 1989 Survey of Consumer Finances by Arthur B. Kennickell and R. Louise Woodburn the wealthy invest in businesses, bonds and real estate. The top 0.5% own 51.6% of the businesses, 66.1% of the bonds and 33.4% of all real estate (not including their principal residence). So if you want to be in the top 0.5% of the nations wealthy you will need to invest in businesses, bonds and real estate that you do not live in.

What do the lower 90% of consumers spend their money on? Automobiles (75.5%), their principal residence (65.1%) and life insurance (60.5%).

If you want to move toward the right, then I suggest you start spending less and investing more. Putting money into a savings account does not count as investing. Savings accounts with lots of cash in them are nothing but nest eggs. They can crack and rot at any time. You need to buy assets to be an investor and cash is not an asset. Assets will appreciate and create additional net worth. When you have enough assets to generate income to support you without working then you have moved far enough to the right to stay there. If you are depending on a pension, job, or Social Security then you are at the mercy of others. That is not a position you want to be in. Your pension, job or Social Security should be extra money that you use as play money.

So how does the Average Joe reach retirement? I would suggest you try one or a combination of what the wealthy are doing. Own a business, purchase some bonds, and/or purchase some investment real estate. Not everyone has what it takes to own and/or run a business. Building or purchasing a business can take a lot of capital that man do not have. Bonds can be purchase a little at a time, but most of us don't have enough capital or time to purchase the number of bonds required to generate a sustainable income if we retire. That leaves us with real estate. Real estate is one of the few investments where you can purchase with very little of your own money and use leverage to your advantage. Personally, I think that real estate is the best chance that the Average Joe has of becoming wealthy enough to retire. A home is something that an Average Joe can understand and actually purchase with relatively small amounts of capital and receive huge returns on that investment. The key is to purchase real estate that you do not live in. Get somebody else to pay the mortgage on it.

Yes, I am aware that the housing market is in the middle of a melt-down. Must I remind you that the stock market has gone through a few melt-downs in the past? That is part of the economic cycle. Housing will return. The problem is that nobody knows when. The cost of food is increasing but you haven't stopped eating. As housing goes boom or bust you don't stop investing in it. You simply make sure that when you purchase the house that you have made a good investment. If you make a good investment then where the housing market goes is irrelevant.

Click image for larger view

Consider this. The median family net worth of homeowners in 2004 was $184,400. The median family net worth of a renter was $4,000. As you can see, the median net worth of homeowners increased from 1995-2004 while the network of renters decreased. Why is that? There are number of factors, but the primary factors is the ownership of real estate.

If you’re a renter, now might be the time to sit down and take a good look at your finances. Get in touch with a Realtor who can help you get prequalified for a home mortgage. Stop paying your landlords mortgage and start investing in yourself, and your future.

If you have considered buying real estate as an investment, be sure to contact a Realtor that understands your specific goals and understands how to evaluate an investment opportunity. Not all Realtors are investors.

One last item of note. What is the number one reason stated for saving money? Retirement. Here is to the pursuit of retirement, however it may come.

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I Hope My Bank Goes Bust

2008-08-21T02:21:00.001-07:00

The FDIC took over IndyMac Bank on July 11, 2008. It was the 5th bank failure in 2008. Shortly after taking over Indymac, the FDIC temporarily halted all IndyMac foreclosures on July 14, 2008 as reported by Reuters. FDIC chairwoman Sheila Bair has been critical of banks and lenders for not doing enough to modify loans to help customers that are in trouble. Based upon the conversations that I have had with various people, I would have to agree. The banks would rather take the property and lose money than to modify a loan. The FDIC has finally announced what they are going to do about the 25,000 or so IndyMac owned loans that are in default.

Click graph for larger view.

From the LATimes.com:

The regulators operating failed IndyMac Bank said Wednesday that they would try to modify about 25,000 troubled mortgages by slashing interest rates to as low as 3% for five years, extending payments over 40 years and in some cases charging interest on only part of the loan balance.

From the New York Times:

The regulator that seized IndyMac last month said Wednesday it would help thousands of the failed thrift institution's cash-short borrowers repay their mortgages and stay in their homes, a model it hoped other banks and collection companies would adopt to stem a wave of new foreclosures in the nation's weakened housing market.

…Ms. Bair said she strongly believed that keeping borrowers in their homes was the optimal low-cost choice.

"By turning troubled loans into performing loans, we enhance their overall value," she said. Recent F.D.I.C. research has shown that sales of nonperforming loans to outside investors recover 32 cents on every $1 of book value, while sales of performing loans recover about 87 cents.

From CNBC interview:

"Modified loans will be worth more than foreclosed loans," she said in an interview on CNBC television.

I can't agree more. As banks foreclose on more homes, they are simply adding to the already historically large inventory. This is good for home-buyers, but bad for the banks that will lose money on the loans and the properties.

Something to note, this is for borrowers that are behind on their mortgage payments. If you can afford your mortgage, regardless of how egregious the terms are, you will not be helped. I would hope that this does not encourage existing borrowers to stop paying in order to get a better deal.

I wish more banks would take the time to work with their borrowers. In the long run, we will all be better if those that are struggling in this economy to stay in their homes are enabled to. I certainly do not think that the banks should take it in the shorts, but neither should the general public. Providing the customer a lower rate while the market recovers will allow home to appreciate to the point where the borrower will be able to refinance or sell and pay the full value of the loan. In the long run, the banks will make more money by working with borrowers. In the long run, this will help the general public. Rest assured, these losses will be made up by the banks in the form of higher fees, higher loan interest rates, and lower savings interest rates.

Let's give a simple example. If you purchased a home for $300,000 at a rate of 4.5% and had that rate for 2 years and it then adjusted to 9.5% your payment would jump from $1520 per month to $2468 per month. The average middle class borrower would consider the jump in monthly payment impossible to pay. That is a jump of almost $1000 per month. That amount seems just simply insurmountable. I can understand why a borrower would simply mail the keys to the bank and let the bank have the house. It is just overwhelming imagining that for the next 336 months you will have to find an extra $1000. If the borrower is able to pay this, then they will pay an additional $539,452 in interest on the remaining balance. However, as we can see by the abysmal statistics of over 1500 foreclosures a day occurring in California, the borrower isn't going to do this. They are going to let the bank take the loss.

To keep borrowers in their home, they need a payment that is affordable. If the bank were to fix the rate at 6.5%, which is a reasonable rate for both the bank and the borrower today, and extend the existing balance out to 40 years the payment on the remaining balance would be $1696 per month. This is a more modest $176 increase. The borrower is not punished or rewarded for purchasing a home with a bad loan. If the borrower were to keep this loan and pay it in full, the bank will receive approximately $524,351 in interest on the balance. This isn't that much less than the original loan.

The alternative is for the bank to foreclose on the loan. They will have received approximately $36,482 in payments. After paying for expenses to foreclose and actually selling it at probably a $200k they will end up with about $200k. That is a loss of $100k. So they can lose $100k or make over $500k in interest.

Unfortunately these banks can't seem to think. Their greed has clouded their judgment and blinded them. Instead of waiting for their borrowers to give up and mail in the keys, they should be actively offering to modify the terms of their adjustable loans in their portfolios that are most likely to default. In the long run, it will increase the values of the portfolios enabling them to sell them to investors. This will increase their capital and keep them from being taken over by the FDIC.

I suspect that the banks will not do this. I hope the FDIC takes my bank over. I could certainly benefit from a fair modification of my loan.

Hometown Olympians

2008-08-18T22:10:00.001-07:00

Leslie Pandey from Zillow wrote a post about the number of Olympians from each State. California has the highest number of Olympians that call it their hometown. I figured California would have a lot. After all, we are the largest state in population. I made the suggestion that a count might be a bit equalized if you were to look at it on a per-capita basis.

Since Leslie provided the stats for the Olympians in her post, I decided to do a bit of research. I went to www.census.gov and pulled the population numbers for 2007. I then did a quick comparison of Olympians per 1000 population.

The population of Croatia was mentioned by one of the commenter. I the figures provided as an example.

Olympians	Population / 1000	Ratio (Expressed as Percent)
27	200	13.5%

Using the same formula, I took the populations of the states and the number of Olympians that called that State as their hometown.

It turns out that the top five (5) states on a per capita basis are:

Rank	State	Ratio
5	Wyoming	0.38%
4	California	0.45%
3	Vermont	0.48%
2	Maine	0.53%
1	Hawaii	0.62%

Texas was the second highest count of Olympians with 43 after California which had 166. Texas came in at number 18 with 0.18%. I was surprised to see who the top 5 were. Not so surprised that California was in the list, but definitely did not see Hawaii being #1 or Vermont being on the list.

Click on image for larger view.

With so many Olympians calling California home, I figured there must be some that are local. Of the 166 Olympians calling California their hometown, 9 are in the Inland Empire. There are quite a few from San Diego and Los Angeles too. Congratulations to the local Olympians. We look forward to seeing you compete

Sarah Hammer	Temecula, CA	Track & Field
Brenda Shinn	Riverside, CA	Shooting
Charlotte Craig	Riverside, CA	Taekwondo
Torri Edwards	Pomona, CA	Track & Field
Ryan Hall	Big Bear Lake, CA	Track & Field
Diana Taurasi	Chino, CA	Basketball
Marcie Van Dusen	Lake Arrowhead, CA	Wrestling
Chaunte Howard	Riverside, CA	Track & Field
Maurice Edu	Fontana, CA	Soccer

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Cost of Fuel Saves Miles

2008-08-13T13:46:00.001-07:00

Have you noticed that less people are driving around these days in the Inland Empire? The freeway traffic is much lighter as well as the surface street traffic. With school starting, the traffic will definitely be increasing, but overall, the traffic is down. People are eating out less, they are taking that leisure trip to the mall less and just generally not driving if it isn't necessary. I personally believe that it is the cost of fuel that has caused this reduction. I am not happy about the cost of fuel, but I can see that it definitely impacts the behavior of people. I enjoy the reduction in traffic.

As supporting evidence, I present this release from the Department of Transportation: American Driving Reaches Eighth Month of Steady Decline

New data released today by the U.S. Department of Transportation show that, since last November, Americans have driven 53.2 billion miles less than they did over the same period a year earlier – topping the 1970s' total decline of 49.3 billion miles.

…

Americans drove 4.7 percent less, or 12.2 billion miles fewer, in June 2008 than June 2007. The decline is most evident in rural travel, which has fallen by 4 percent – compared to the 1.2 percent decline in urban miles traveled – since the trend began last November.

Retire the Trophy

2008-08-09T00:17:00.001-07:00

As Bob Costas put it, "Retire the Trophy." If you missed the opening ceremony to the XXIX Olympic Games then you missed THE opening ceremony of the Olympic Games. London, where the 2012 Games will be held, has one of the greatest challenges that have ever been made. They must create an opening ceremony that is are on par with those presented by China. I say on par because I don't think they can top China. The only thing that will allow an opening ceremony of future games to be better is that the memory of the XXIX opening ceremony must fade. The ceremonies were a stunning and spectacular display.

No Stopping

2008-08-08T15:16:00.001-07:00

Apparently somebody must have sensed my vexation. When I drive, I have a 90% probability of catching that red light. If I am in your car, be prepared to stop. Maybe my luck is about to change. The San Bernardino Associated Governments has funded a major traffic signal synchronization project totaling about $8.5 million and it is nearing completion. The project synchronizes about 800 signals across the County and was federally funded. Cities that have had their signals synchronized include Rancho Cucamonga, Montclair, Rialto, Redlands, and Highland. Chino and Fontana will be turning on their synchronized lights within a few weeks and San Bernardino, Upland and Loma Linda will be synchronized by the end of summer.

This should help save you some idling time and fuel during your daily commute. Now if we could just explain to the drivers in Rancho Cucamonga that the light on top means stop, not step on it.

Fat Cat in Foreclosure

2008-07-31T13:55:00.000-07:00

Peter Viles over at L.A. Land wrote about a 44-pound fat cat found wondering a New Jersey neighborhood after its owner became unable to feed it anymore. I had to see a picture of this huge fat cat. With a little research, I was able to find it.

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Family Emergency Plan Review

2008-07-29T22:01:00.000-07:00

Now would be a great time to review and update your Emergency Preparedness Plan. If you don't have one, get one. If you would like more information on how to create a Emergency Preparedness Plan refer to the links at the bottom.

A strong earthquake shook the Inland Empire today that measured a magnatude 5.4. No immediate reports of major injury or damage were reported. The inital quake was followed by at least 70 aftershocks ranging from as little as magnatude 0.9 to as large as magnatude 3.8.

For those of you that have lived in the Inland Empire for anything longer than 10 years, this was just another day in the life. For those of you that are new, WELCOME! You just had your first large quake. The initial realization that it is shaking is a bit startling, but once it is over you realize it can easily be prepared for. Despite the inability to predict them, I will take a quake risk over the yearly hurricane and tornado warnings that are a regular and recurring threat every year in other parts of the country.

The last major quake of similar magnitude was the Hector Mine quake on October 16, 1999 at a magnitude of 7.1. It was in the middle of the desert. It caused quite a bit of rumbling and shaking, but despite the large magnatude, it cause little to no damage because it occurred where most people do not live. That is really close to the largest quake ever felt in California which was in 1857 and measured a magnatude 7.9.

Today's quake was a big contrast to the quake felt in Northridge on January 17, 1994 with a magnatude of 6.7. That earthquake resulted in 60 fatalities and millions in property damage. Many of the insurance companies exited the earthquake insurance market after that quake because of the massive losses. So why was it so different this time? Was is it just the size of the quake that kept it such a "non-event."

There are many reasons this quake was a non-event, the most important one is building codes. This is probably the most important factor that leads to reduced damage. It does help that the quake was only a 5.4 too.

Relatively new construction (i.e. stronger earthquake resistant building codes) and lower population density. Those two things are why the damage is limited to basically some broken shelf items. Much of the construction in the Inland Empire is relatively new. There are homes that date back to the 1940's, but they are becoming fewer as owners update the older properties and bring them up to code with newer earthquake standards. This is something to consider when you are looking for a home. When was it built? What type of foundation does it have? Very old homes may not even have a foundation. My parents house was built in 1954 and sits on concrete footings and has a crawl space under the house. Most new construction now has a concrete slab for a foundation with the walls bolted to it. This helps the structure to withstand the shaking even if your nerves can't.

As usual, the major news networks struggled to get video footage of the epicenter which was located in Chino Hills, CA. While the public that lives in the Inland Empire was tuning into the major news networks to learn what they could about the quake all of the networks were busy showing pictures of Griffith Observatory, the Hollywood sign and the 405 freeway explaining how resiliant the public was and how there were no signs of any damage in LA. OF COURSE NOT! All of the pictures being shown were 25+ miles from the epicenter. Guess what, when you are 60 miles from downtown LA a magnitude 5.4 is going to provide little to no damage! I was living about 80 miles from the epicenter of the Hector Mine quake and it was in the top 15 largest quakes in California history. I have felt more shaking from 3.0 quakes that were closer than the Hector Mine quake. The media may as well have gone to Las Vegas and interviewed everyone. It would have provided just as much insight to those most affected by the quake. Within 4 minutes I knew exactly where the quake was and what the magnatude was by using the Internet. That provided me more up-to-date and useful information than ANY media coverage. Showing me pictures of LA freeways and other areas where most people were not even aware there was an earthquake is pointless. And I know that many didn't know an earthquake happened because I have been in a car during major quakes. You don't feel it unless you are sitting still. Most of the people being interviewed in LA were contradicting the reporters recounting of events and stating they were not aware of the quake and didn't feel it. It always amazes me how oblivious the major media outlets are to the existence of millions of people that don't live at the beach or in Hollywood. Everyday I am more convinced that the media engages in the creation of drama, fear, and the perception of crisis simply to keep you glued to the tube. Here is some advice. Turn off your television and live life. If you are spending more than 30 minutes a day on getting news, you are wasting time and living your life in fear of the next crisis. There are better things to do.

If your community offers a CERT program, I suggest you sign up. This will give you some basic emergency response training and help to prepare you to care for yourself and your family in the event of an emergency. Knowing what to do can go a long way to helping ease your nerves and ensure your safety.

Sure, it shakes you to the core and puts you on edge for a few days. Many people which are not native to California will realize they are out of their comfort zone and don't like it here. Rest assured, in a few days, this will just be a distant memory. Be sure that while the memory is fresh in your mind you review and update your Emergency Preparedness Plan or create one if you do not have one.

I do not endorse any of the links below, nor am I responsible for their content. They are provided here for your convienience.

Web Resources:
Federal Emergency Management Administration
Ready America - Family Emergency Plan
Emergency Essentials

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Weekly Median Asking Price July 28, 2008

2008-07-28T17:41:00.000-07:00

The weekly numbers from HousingTracker.net are out again and the trend continues down. This week the median asking price is at $254,900, a reduction of -1.0%. Inventory decreased -2.6% to 45,999. Inventory levels are hovering around the same amount give or take a few thousand. One week they are up, the next they are down.

The median and upper end prices continue to decline at around an average $3300/week over the last 10 weeks. Lower end homes continue their slide but are averaging only about $1700 over the last 10 weeks. Home inventory is declining at an average of about 130 homes per week over the last 10 weeks.

These statistics are for areas that include the major cities of Corona, Fontana, Moreno Valley, Ontario, Palm Desert, Palm Springs, Rancho Cucamonga, Riverside, San Bernardino, Temecula and many others.

Trend	07/28/2008	1 month	3 month	6 month	12 month
Median Price	$254,900	-5.6%	-14.7%	-25.0%	-36.1%
Inventory	45,999	+0.1%	-4.7%	-9.0%	-12.2%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
07/28/2008	45,999	$184,500	$254,900	$369,900
07/21/2008	47,243	$185,000	$257,600	$371,175
07/14/2008	45,778	$189,900	$259,999	$379,000
07/07/2008	46,531	$189,905	$264,900	$379,900
06/30/2008	45,947	$194,900	$269,900	$387,500
06/23/2008	47,519	$195,225	$270,000	$389,000
06/16/2008	46,962	$199,000	$275,000	$395,000
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000

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DataQuick: June 2008 Sales by City

2008-07-22T19:38:00.000-07:00

Median Sales prices from DataQuick for June 2008.

County/City/Area

# Sold

June 2008

June 2007

% Chg
Yr-to-Yr

CHINO	78	$360,409	$500,000	-27.92%
CHINO HILLS	64	$446,500	$630,000	-29.13%
FONTANA	252	$289,000	$435,000	-33.56%
ONTARIO	96	$290,000	$411,000	-29.44%
RANCHO CUCAMONGA	163	$385,000	$523,500	-26.46%
SAN BERNARDINO	170	$168,500	$287,000	-41.29%
UPLAND	55	$375,000	$555,000	-32.43%

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Weekly Median Asking Price: July 21 2007

2008-07-22T18:56:00.000-07:00

The weekly median asking price continues to fall. The latest dip was to $257,600, a change of -0.9%, or $2400, that is keeping to within the current normal range. Inventory climbed 3.2% to 47,243. Until the inventory begins to decline significantly the median price will continue to fall.

The area includes the major cities of Corona, Fontana, Moreno Valley, Ontario, Palm Desert, Palm Springs, Rancho Cucamonga, Riverside, San Bernardino, Temecula and many others.

Trend	07/21/2008	1 month	3 month	6 month	12 month
Median Price	$257,600	-4.6%	-14.1%	-25.1%	-35.4%
Inventory	47,243	-0.6%	-1.4%	-1.6%	-9.0%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
07/21/2008	47,243	$185,000	$257,600	$371,175
07/14/2008	45,778	$189,900	$259,999	$379,000
07/07/2008	46,531	$189,905	$264,900	$379,900
06/30/2008	45,947	$194,900	$269,900	$387,500
06/23/2008	47,519	$195,225	$270,000	$389,000
06/16/2008	46,962	$199,000	$275,000	$395,000
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000
05/19/2008	46,779	$208,900	$289,000	$399,900

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Dataquick: June 2008 Sales Report

2008-07-22T18:08:00.000-07:00

DataQuick has released the Southern California Home Resale Activity report for June 2008. How is your zip code faring? I have included a few of them from San Bernardino County below.

Some interesting items. Fontana 92336 had the most sales of SFR homes in all zip codes with 119. This was followed by Victorville and Hesperia which are just up the hill with 96 and 86 respectively.

The highest median sales price was Rancho Cucamonga with $508,000 followed by Upland at $503,000.

The majority of resale activity was significantly lower throughout San Bernardino County. Countywide prices were down by 37.50%. A few areas bucked the trend. Pioneertown had an increase in median price of 291% and San Bernardino posted the largest decline of -66.9%.

Percent change is from June 2007

Community Name	ZIP Code	Sales of Single Family Homes	Price Median SFR ($1,000)	Price % Chg from June 2007
SAN BERNARDINO COUNTY		SFR	Price	% chg
Countywide		1,787	$225	-37.50%
Chino	91710	42	$360	-28.00%
Fontana	92336	119	$321	-25.50%
R Cucamonga	91701	29	$403	-23.60%
R Cucamonga	91730	28	$335	-28.60%
R Cucamonga	91737	29	$455	-17.10%
R Cucamonga	91739	32	$508	-25.60%

Max	119.00	$508.00	291.00%
Min	1.00	$38.00	-66.90%
25th Percentile	5.75	$157.25	-44.40%
50th Percentile	23.50	$203.50	-33.65%
75th Percentile	35.25	$282.50	-25.58%
Average	26.24	$228.72	-26.22%

Home sales in Southern California are a their lowest levels in two decades. Foreclosures continue to be a large influence on the market with 41.1% of all resales in June. John Walsh, president of DataQuick, points out one of the other problems plaguing this market, the lack of money to lend. Even those that are well qualified find it difficult to get financing.

From DataQuick: Southland home sales drag along bottom

Home sales in Southern California continued at their slowest pace in more than two decades last month as many potential buyers and sellers held off if they could, or struggled with mortgage financing if they couldn't, a real estate information service reported.
A total of 17,424 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 3.0 percent from 16,917 the previous month and down 13.6 percent from 20,166 for June a year ago, according to DataQuick Information Systems.
While last month's sales were the highest in ten months, it was still the slowest June in DataQuick's statistics, which go back to 1988. The June average is 28,488 sales, the peak was reached in 2005 when 40,156 homes sold.
...

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A Reflection in the Pond

2008-07-20T23:10:00.000-07:00

The United States is not the only economy that is having challenges. China's growth has "slowed" to just over 10%. The U.K. has had issues with bank failures, public confidence, high energy prices and other common problems.

From MarketWatch: Bank of England dove urges quick rate cuts

"I think we are going into recession and we are probably in one right now," Blanchflower told the Guardian newspaper. "It's not too late to stop it but we have to act right now. Monetary policy has been far too tight for too long."

Blanchflower was the only member of the nine-person MPC to vote for rate cuts in May and June. Details of the MPC's July policy meeting will be released Wednesday.

Also Monday, the Ernst & Young Item Club, a closely-watched forecasting group, said the British economy will struggle to avoid recession in 2009, likely growing by just 1%.

Surging inflation pressures leave the Bank of England unable to move interest rates despite the coming slowdown, spelling trouble for household consumption and making for further falls in the housing market, said Peter Spencer, the group's chief economist.

"We have already seen a housing crisis that has morphed from a credit crunch to a general collapse in confidence as prices have tumbled," Spencer said. "Our worry is that without the usual medication from the Bank of England -- which would have nasty inflationary side effects in this environment -- the consumer will follow suit, moving from their current state of denial into a state of despair."
...
Already-overstretched households will likely see real disposable income growth of 1% in 2008 and 1.5% in 2009, the forecast said. Tougher credit repayments will limit consumer spending growth to just 0.2% in 2009. Rising inflation, tighter lending standards and sharp reversals in housing and equity markets will keep consumers under pressure, the forecast said.

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It's the Stupid Economy

2008-07-20T12:13:00.000-07:00

I saw this posted at a couple of blogs and couldn't resist passing it on.

From the Daily Show with Jon Stewart:

http://www.comedycentral.com/videos/index.jhtml?videoId=176740

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Who Caused The Housing Collapse

2008-07-20T00:18:00.000-07:00

With the housing market in a tail-spin and no end in sight everyone wants to point the finger at someone and be able to say, "It's all your fault!" The finger has been pointed at just about any group you can think of from the banks to the average home buyer.

Finally, someone has found the right group to point the finger at. Morgan at Blown Mortgage has come up with the Pyramid of Greed. On this pyramid he succinctly tells you who is to blame for the collapse of the housing market. Thanks Morgan for taking the time to lay it all out. Your the first one that I have seen that has point the finger in the right direction.

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How About A Raise

2008-07-19T23:54:00.000-07:00

When is the last time your manager came to you and said, "You have just done the worst job I have ever seen. You didn't meet any of your goals. In fact, because of you our company is losing value and our stock has plummeted to all time lows. We may have to go out of business. Please save us US Government, you're our only hope. Here is that $20 million we owe you."

That is what Freddie Mac Chairman Dick Syron got paid for guiding his company to the brink of failure. I guess this is why so many of us "common folk" work for normal pay on normal jobs and we are not all highly paid executives of large corporations. We just can't fathom being paid $20 million to tell everyone else what to do and then expect to be rewarded with a bonus when we make bad decisions. Most of use get fired long before that occurs.

From CNN:

Freddie Mac Chairman and Chief Executive Richard Syron pocketed nearly $19.8 million in compensation last year, according to a Securities and Exchange Commission filing Friday, even though the mortgage company’s stock lost half its value in 2007.

If Syron stays at the helm of Freddie Mac (FRE, Fortune 500) through the end of next year, he will receive nearly $20 million in stock awards if the board says he has met certain goals. This year, he is guaranteed to get $8.8 million in stock grants regardless of performance.

For 2007, Syron received a $1.2 million salary, a $3.45 million bonus, including $1.25 million to remain at the company, and $771,585 in other compensation. He also received stock and options valued by the company at $14.3 million at the time they were awarded.

The company last year picked up the tab for Syron’s financial planning expenses, car and driver for commuting, home security system, business-related dining and travel costs for his wife and $100,000 in legal fees from negotiating his employment contract.

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Does Your Credit Card Play Fair

2008-07-19T01:54:00.000-07:00

The Federal Reserve Board is proposing changes to the way that credit card companies charge interest and charge fees. For some time now many credit cards have been using methods to squeeze every little penny out of you that is possible. As the economy has slowed, incomes have stagnated, and inflation has risen many consumers are using their credit cards to make ends meet. Many don't realize how expensive this can be. If you think that the changes proposed are a good thing be sure to let your representatives know and encourage them to make sure these changes are implemented.

From the Federal Reserve Press Release July 15, 2008: Highlights of Proposed Rules Regarding Credit Cards and Overdraft Services

Time to Make Payments. The proposal would prohibit banks from treating a payment as late unless the consumer has been provided a reasonable amount of time to make that payment. There would be a safe harbor for banks that send periodic statements at least 21 days prior to the payment due date.

Allocation of Payments. When different annual percentage rates (APRs) apply to different balances on a credit card account (for example, purchases and cash advances), banks would have to allocate payments exceeding the minimum payment using one of three methods or a method equally beneficial to consumers. They could not allocate the entire amount to the balance with the lowest rate. A bank could, for example, split the amount equally between two balances. In addition, to enable consumers to receive the full benefit of discounted promotional rates (for example, on balance transfers), during the promotional period payments in excess of the minimum would have to be allocated first to balances on which the rate is not discounted.

Applying Rate Increases to Existing Balances. The proposal would prohibit banks from increasing the interest rate on outstanding balances unless the increase is due to: (i) the operation of an index (in other words, the rate is a variable rate); (ii) the expiration or loss of a promotional rate (provided the rate is not increased to a penalty rate); or (iii) the minimum payment not being received within 30 days of the due date.

Two-Cycle Billing. The proposal would prohibit banks from imposing finance charges based on balances on days in billing cycles preceding the most recent billing cycle, a practice that is sometimes referred to as two-cycle billing.

Financing of Security Deposits and Fees. The proposal would address concerns regarding subprime credit cards by prohibiting banks from financing security deposits and fees for credit availability (such as account-opening fees or membership fees) if charges assessed during the first twelve months would exceed 50 percent of the initial credit limit. The proposal would also require financed security deposits and fees exceeding 25 percent of the initial credit limit to be spread over the first year.

Credit Card Holds. The proposal would prohibit banks from imposing a fee when the credit limit is exceeded solely because a hold was placed on available credit. This can occur where the final dollar amount of a transaction was not known in advance (for example, when a consumer checks into a hotel, a hold is placed for the expected cost of the stay).

Firm Offers of Credit. The proposal would require banks making firm offers of credit advertising multiple APRs or credit limits to disclose the factors that determine whether a consumer will qualify for the lowest APR and highest credit limit advertised (for example, the consumer’s credit history, income, and debts). A safe harbor disclosure is provided.

All of these in my opinion are practices that are just annoying and I am glad to see that pending approval of the changes many of them will be prohibited. There are a few that annoy me in particular.

Mailing a statement with only 14 days to the due date seems ridiculous. Some mail takes up to 7 days to get to its destination. This is of course providing it doesn't get lost in the mail. Allowing 21 days gives people time to receive the mail, let it sit for a day or two until the weekend comes so they can pay bills all on one day and then make sure it gets mailed out to arrive on time. Of course, if you use on-line bill payments you can initiate payments with only a day to spare and still get it there on time.

The practice of allocating payments to the lower APR balances is one of the practices that just perturbs me. You thought you were doing the smart thing by transferring your balance to a card offering 0% interest for 12 months on transferred balances. Think of the money you are saving. As a bonus, the interest rate on the card is only 9.9%.

On your way home from work, you realize you are low on fuel. You stop at a station and decide to use your new low interest card to pay for that fuel. (Your wife won't let you carry enough cash to actually pay for fuel so you have no choice but to use credit). You figure you will just send in an extra $100 to pay off that charge when you make your next payment. To your surprise your 0% rate appears to be false when you are charged interest charges. A closer look reveals that your entire payment was applied to the 0% balance transfer. Your original plan was to pay off the card in 10 months. So for the next 10 months your single $100 purchase is going to accrue interest at 9.9% until you pay off the lower 0% balance. Your fuel just cost you twice what you paid for it. It will be nice if they would apply your payments equally to the various interest rate levels.

The other practice that gets me going is the offer of credit. You already get more credit card offers in your mailbox each week than you do bills. If we were to make it illegal to mail out unsolicited credit card offers we could save thousands of trees and reduce identity fraud, but that is another matter. On your offer you are told that you can transfer balances from other credit cards and get a great rate. All looks great as you read the terms. When you read the fine print it states that you were sent the offer because a review of your credit profile showed that you met the requirements of the offer. I guess the credit card companies got tired of printing so many different offers and decided to just add some fine print that states that your interest rate and credit limit may differ than the offer advertised. They require you to apply for the credit with the expectation of a lower interest rate than your current card. Again you pat yourself on the back because you are saving money on interest. A few weeks later you find that you didn't qualify for that great rate after all. Instead the balance transfer is completed and your rate is a full 2% higher than your old card. Thanks! I look forward to being able to read the terms of a credit offer and almost understand it and actually get what I expect and not feel like I was swindled.

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Inland Empire Sales Pick Up

2008-07-19T01:27:00.000-07:00

Recent statistics from DataQuick show that the sales volume in the Inland Empire picked up in June. San Bernardino County saw a rise of 1.1% Year-over-Year and Riverside County saw a rise of 11.8% Year-over-Year.

What is driving these sales are primarily foreclosures and dropping home prices. The median prices for the Inland Empire are about 100k less than any other nearby counties with as much as a -34.2% decline in median prices since June 2007.

From DataQuick: Southland home sales drag along bottom

...
A total of 17,424 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 3.0 percent from 16,917 the previous month and down 13.6 percent from 20,166 for June a year ago, according to DataQuick Information Systems.
While last month's sales were the highest in ten months, it was still the slowest June in DataQuick's statistics, which go back to 1988. The June average is 28,488 sales, the peak was reached in 2005 when 40,156 homes sold.
"The mortgage market turbulence is putting quite a bit of activity on hold. Policy decisions about underwriting don't really mean much if there's little or no money to lend. Even some very well-qualified households aren't getting mortgages these days, although this could all change fast if liquidity comes back," said John Walsh, DataQuick president.
The median price paid for a Southland home was $355,000 last month, down 4.1 percent from $370,000 in May and down 29.3 percent from $502,000 for June 2007. The peak of $505,000 was reached in March, April, May and July of last year.
The median has fallen because of depreciation, especially in inland markets, and because of the steep dropoff in home financing in the so-called jumbo category, which until recently was defined as loans above $417,000.
Before the credit crunch hit in August 2007, nearly 40 percent of Southland sales were financed with jumbo loans. Jumbos last month accounted for 16.3 percent of Southland sales are up from 15.7 percent in May.
Foreclosure resales continue to be a dominant factor in today's Southern California market accounting for 41.1 percent of all resales. That was up from 39.2 percent in May, and up from 7.3 percent in June a year ago. Foreclosure resales ranged from 18.9 percent in Orange County last month to 62.3 percent in Riverside County.

The cause of the up-tick, lower prices, may not be the best news, but at least the inventory is moving. Until the inventory of foreclosed homes are cleared out prices will continue to fall. I don't see this happening anytime this year.

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FHA Eases Flipping Rules

2008-07-19T01:03:00.000-07:00

From the FHA Press Release: FHA EXTENDS FINANCING FOR IMMEDIATE PURCHASE OF FORECLOSED HOMES

In an effort to stabilize declining home values in certain neighborhoods, the Bush Administration today announced a temporary policy that will extend government-backed mortgage insurance and allow for the immediate sale of vacant foreclosed properties.

For one year, the Federal Housing Administration (FHA) will insure foreclosed properties marketed and sold by property disposition firms on behalf of lenders. The properties, which must purchased by owner-occupants, will no longer be subject to the customary 90-day waiting period.
"A glut of foreclosed and abandoned homes harms neighborhoods, frustrates homebuyers and delays a community's recovery," said Brian D. Montgomery, Assistant Secretary of Housing-Federal Housing Commissioner. "The action we take today will allow homebuyers to purchase these homes in much greater numbers and ease the excess supply of unsold homes in neighborhoods across the country."

FHA's new temporary policy will help stabilize neighborhoods experiencing high rates of foreclosure by reducing the inventory of unsold properties. Many foreclosed properties remain vacant for months, inviting vandalism and reducing values of surrounding homes. To address that sizeable inventory, lenders have hired companies that specialize in the marketing and disposition of foreclosed homes. It's reasonable and appropriate that these firms have the ability to sell the properties to borrowers using FHA financing.

For more information visit www.fha.gov

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California Leads Starbucks List

2008-07-18T23:42:00.000-07:00

Starbucks has released its full list of store closures. During the quest to have a Starbucks on each corner many were opened in areas that showed large growth in residential homes. I suspect that the areas being closed had large numbers of building permits during the real estate boom. Starbucks probably used the number of permits as a gauge for the amount of growth in population expected. As we all know now, many of these numbers were deceptive. Much of the homes were actually vacant and being purchased by speculators (notice I did not say investors) and flipped for profit to more speculators. Homes that were being flipped to other speculators often were never lived in. This occurred a lot booming areas such as Temecula and other Inland Empire cities which are now suffering most of the real estate slump.

Click on graph for larger image

A total of 617 stores are on the list with California closing the most followed by Florida and Texas. 88 (14%) stores in California, 59 (10%) in Florida and 57 (9%) in Texas.

Visit the full list of store closures and to see if your favorite store is being decaffeinated.

Some of the local cities that are getting store closures are:

CORONA

FONTANA

ONTARIO

RANCHO CUCAMONGA

RIVERSIDE

UPLAND

The list includes stores near the neighborhoods of Sierra Lakes in Fontana and Dos Lagos in Corona.

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A Little Perspective

2008-07-16T15:46:00.000-07:00

For those of you that are worried about all the banks failing and not having any money I thought I would provide you a little bit of perspective. The following graph provides some perspective on the bank failures that have occurred since 1934. This data is directly from the FDIC.

Click on graph for larger image

As you can see today's bank failures pale in comparison to the 80's S&L crisis. Despite the shaky economy, the banking system is a long way from a crisis.

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This Too Shall Pass

2008-07-16T14:02:00.000-07:00

Forget all the statistics put out by the Government and other private sector reports. Confidence in the banking system stinks! It stinks more than anyone can imagine. Government reports are just now starting to inidicate that the economy is not as hot as they would like. I have known this since October of last year. Many will recall in private conversation that I have been predicting recession. It has been here since December in my opinion. The stats just take a while before they can call it a recession.

Some might want to argue what a recession is. There is an offical definition of what a recession is. According to widespread definition, a recession occurs when real growth of the nations Gross Domestic Product (GDP) is negative for two or more successive quarters of a year. Humbug! The people of America have been in recession for some time now!

We have all seen the headlines. IndyMac was taken over by the FDIC. Just another bank failure in 2008. Banks fail. It happens! IndyMac is just the latest of 5 bank failures this year. It certainly won't be the last bank failure. For a list of bank failures since October 1, 2000 visit the FDIC.

So banks have failed in the past. What is the problem. The problem is that hundreds of customers are rushing to IndyMac to get their money and they can't get to it. According to Peter Viles at L.A. Land customers are waiting in lines for hours and are fainting in the heat.

The FDIC was established in 1934 in response to the bank failures that occurred in the depression. As banks failed, customers rushed to get their money. This resulted in runs on the banks. Sound familiar? To instill confidence in the banking system and to prop up the banking system, the FDIC was created and insures all deposits up to $100,000 per depositor.

What happens when a bank fails? Check out the Frequently Asked Questions about Deposit Insurance.

Why are so many customers rushing to get their money? In my opinion, they have no confidence in the FDIC or the banking system. They feel more comfortable losing money to inflation with their cash in their mattress where they can see it and touch it than they do losing money to inflation with it in the bank where it can be tied up by locked doors. So many have been swindled into bad loans, are losing their home, losing their job, and paying so much for fuel and food that they can barely survive. Pile on top of that the uncertainty of when the housing market will recover, how bad inflation will get, how long fuel prices will cost you more than a house payment, and what direction the next president will be taking the nation.

Many have theories and ideas as to what the answers to those questions are. All I will offer is this too shall pass. There now, don't you feel better.

The president tells you to "take a deep breath." Not much confidence instilled there. That is the problem. The government is not able to restore confidence. Instead of telling everyone to just relax, try to do something or at least pretend to do something that will make us FEEL better. Until you do that nothing will get better. When you figure out the magic words that makes us think it will get better, then this too shall pass.

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Fancy Hood Ornament

2008-07-15T18:54:00.000-07:00

From MSNBC: Koala survives 60-mph impact, 7 miles in grille

A koala that cheated death after being hit by a car at about 60 mph and dragged with his head jammed through the vehicle grille for about 7 miles is being dubbed Australia's luckiest marsupial.
...
Lucky will stay at the hospital, set up by the late television wildlife and crocodile crusader Steve Irwin, for 45 days to recover from his experience and receive treatment for a chlamydial infection.

Ok. That had to hurt. So your driving along and you hear a "thud." What was that. You look at the gauges and nothing seems out of the ordinary so you just keep going. Turns out that a koala had its head up your grille.

And apparently it got a chlamydial infection. Hmm. I wonder how the koala REALLY got stuck on the front of that car. Perhaps the driver should be tested too.

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Weekly Median Asking Price July 14, 2008

2008-07-14T19:36:00.000-07:00

The latest data from Housingtracker.net shows that the median price continues to fall. The recent slide is a $4,901 or -1.85%. Inventory fell -1.6% or 753. The recent data shows an increase in the average decline. It is still decreasing in the $3k range, but it is now about $3600.

If you are in the unenviable postion of finding it necessary to sell, be sure you start the process sooner than later. Every week you wait, you lose around $3000-$3500.

The data includes the the major cities of Corona, Fontana, Moreno Valley, Ontario, Palm Desert, Palm Springs, Rancho Cucamonga, Riverside, San Bernardino, Temecula and many others.

Trend	07/14/2008	1 month	3 month	6 month	12 month
Median Price	$259,999	-5.5%	-13.3%	-25.5%	-34.8%
Inventory	45,778	-2.5%	-5.9%	-10.5%	-11.0%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
07/14/2008	45,778	$189,900	$259,999	$379,000
07/07/2008	46,531	$189,905	$264,900	$379,900
06/30/2008	45,947	$194,900	$269,900	$387,500
06/23/2008	47,519	$195,225	$270,000	$389,000
06/16/2008	46,962	$199,000	$275,000	$395,000
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000
05/19/2008	46,779	$208,900	$289,000	$399,900
05/12/2008	47,403	$210,000	$292,500	$402,500

Starbucks begins store closures

2008-07-13T11:17:00.000-07:00

Starbucks has release a list of the first of 600 stores it will be closing. Starbucks has become known for having a store on every corner. Sometimes more than one in the same shopping center. They were opening stores in areas that had areas of growing real estate values. The prevalence of Starbucks in such neighborhoods caused some to drive their buying and investment activities based upon the presence of a Starbucks. If there was a Starbucks in the neighborhood it was considered to be growing in value and a good place to buy. With sagging home prices and a faltering economy, Starbucks is becoming a less needed luxury. They are becoming a victim of the "latte factor." People are finding that they can save $100-$400 a month by just not going to Starbucks. Is your local Starbucks closing?

For a complete list, visit the Starbucks list announcement. Arizona appears to have been spared.

#9583 - NATIONAL & 36TH
3506 NATIONAL AVE
SAN DIEGO, CA

#10630 - HWY 111 & RANCHO LAS PALMAS
71743 HWY 111
RANCHO MIRAGE, CA

#10710 - FLORIDA & SANDERSON
2801 W FLORIDA AVE
HEMET, CA

#10813 - CANYON SPRINGS & CORPORATE
2692 CANYON SPRINGS PKWY
RIVERSIDE, CA

#10888 - RAMONA & MISSION
4467 E MISSION BLVD
MONTCLAIR, CA

#11029 - LA PAZ & VALLEY CENTER
14689 LA PAZ DR
VICTORVILLE, CA

#11896 - SAN JUAN & MILLER
1280 SAN JUAN RD
HOLLISTER, CA

#13745 - PCH & BOAT CANYON
636 N PACIFIC COAST HWY
LAGUNA BEACH, CA

Weekly Median Asking Price June 30, 2008

2008-07-01T11:20:00.000-07:00

The median asking price according to HousingTracker.net continues to fall at an average rate of $3k per week. This weeks decline was only $100 which is only a -0.04% change. This is in contrast to last weeks decline of $5k, a change of -1.8%. Inventory levels are down to 45,947, a change of -3.3%.

I wouldn't get too excited about this weeks apparent slow down in price declines. The weekly average has been pretty consistent. Until inventories take a significant decline, price declines will continue. With the coming wave of loan resets I expect thave inventories may rise. It all depends on how quickly the banks can unload their current properties.

The area being tracked includes the major cities of Corona, Fontana, Moreno Valley, Ontario, Palm Desert, Palm Springs, Rancho Cucamonga, Riverside, San Bernardino, Temecula and many others.

Trend	06/30/2008	1 month	3 month	6 month	12 month
Median Price	$269,900	-5.3%	-12.9%	-22.9%	-32.5%
Inventory	45,947	-2.6%	-5.2%	-7.9%	-11.4%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
06/30/2008	45,947	$194,900	$269,900	$387,500
06/23/2008	47,519	$195,225	$270,000	$389,000
06/16/2008	46,962	$199,000	$275,000	$395,000
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000
05/19/2008	46,779	$208,900	$289,000	$399,900
05/12/2008	47,403	$210,000	$292,500	$402,500
05/05/2008	47,960	$215,000	$299,000	$410,000
04/28/2008	48,253	$219,900	$299,000	$415,000

Morningside Real Estate Sales

2008-06-30T19:13:00.000-07:00

Homes in the Morningside neighborhood in North Fontana continue to have an average sell price that is higher than the average list price. From June 9, 2008 through June 30, 2008 homes sold have had an average listing of $297,500. For the same period, the average selling price has been for $308,000.

For those of you in the Morningside neighborhood this number might sound very low. It is low compared to your August 2005 value. These recent sales reflect the sale of REO homes and a short sale. These are distress sales and they generally sale for less. Since the majority of listings are REO or short sale listings that then become REO, the value of homes are declining rapidly. If you do not need to sell your home, I suggest you wait until the record high inventory of foreclosures at least stops rising. Until this happens, you will not get what you want.

To find out what your home is really worth, visit our website at www.iejustlisted.net or www.iehomevalues.net.

Pick-A-Refinance

2008-06-30T15:39:00.000-07:00

Do you have one of those Option ARM products that goes from a great payment to a "how is anyone going to pay that?" Is it with Wachovia? If it is, then you might want to refinance now. It is possible that you have an Option ARM that you will be able to afford when it does adjust, but 99% of those loans are not in that category. That is why people got the Option ARM loans. They could not afford the fully amortized loan amount.

Good news. From Wachovia press release:

Effectively immediately, Wachovia is waiving all prepayment fees associated with its Pick-A-Pay mortgage to allow customers complete flexibility in their home financing decisions. This includes all Pick-A-Pay mortgages on 1-4 unit residences.

Additionally, for all new loan originations, Wachovia is discontinuing offering products that include payment options resulting in negative amortization.

These Negative Amortization loans are really hurting Wachovia and they clearly want to get them off of their books now before they become more of a problem. If you have been waiting for your pre-payment penalty to go away hoping the rates were not going to skyrocket past your ability to pay then you should act now.

Weekly Median Asking Price June 16, 2008

2008-06-16T19:20:00.000-07:00

The median asking price according to HousingTracker.net continues to fall for the Riverside-San Bernardino area. The cities tracked include the cities of Corona, Fontana, Rancho Cucamonga, Ontario, and others. The median asking price fell by $4k this week and averages about $3k per week over the last 10 weeks. The weekly median asking price fell -1.4% to $275,000. The weekly inventory dropped -0.7% to a total of 46,962 units. This is only slightly higher than it was two weeks ago.

Trend	06/16/2008	1 month	3 month	6 month	12 month
Median Price	$275,000	-4.8%	-13.9%	-21.4%	-31.2%
Inventory	46,962	+0.4%	-4.4%	-7.5%	-7.8%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
06/16/2008	46,962	$199,000	$275,000	$395,000
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000
05/19/2008	46,779	$208,900	$289,000	$399,900
05/12/2008	47,403	$210,000	$292,500	$402,500
05/05/2008	47,960	$215,000	$299,000	$410,000
04/28/2008	48,253	$219,900	$299,000	$415,000
04/21/2008	47,920	$224,000	$299,900	$419,999
04/14/2008	48,625	$225,000	$299,999	$423,990

Weekly Median Asking Price

2008-06-09T23:29:00.000-07:00

The median asking price according to HousingTracker.net continues to fall for the Riverside-San Bernardino area, but at a slower pace this week. The cities tracked include the cities of Corona, Fontana, Rancho Cucamonga, Ontario, and others. The weekly median asking price fell -0.4% to $279,000. This week, the weekly inventory also increase dropped +0.7% to a total of 47,297 units.

Trend	06/09/2008	1 month	3 month	6 month	12 month
Median Price	$279,000	-4.6%	-12.8%	-21.6%	-30.9%
Inventory	47,297	-0.2%	-3.9%	-9.9%	-6.4%

Date	Inventory (SFH + Condo)	25th Percentile	50th Percentile (Median)	75th Percentile
06/09/2008	47,297	$199,900	$279,000	$399,000
06/02/2008	46,949	$200,000	$280,000	$399,000
05/26/2008	47,187	$200,000	$285,000	$399,000
05/19/2008	46,779	$208,900	$289,000	$399,900
05/12/2008	47,403	$210,000	$292,500	$402,500
05/05/2008	47,960	$215,000	$299,000	$410,000
04/28/2008	48,253	$219,900	$299,000	$415,000
04/21/2008	47,920	$224,000	$299,900	$419,999
04/14/2008	48,625	$225,000	$299,999	$423,990
04/07/2008	49,226	$229,000	$304,900	$425,000

Dow Plummets

2008-06-06T15:45:00.000-07:00

The DOW took a dump today of almost 400 points. Oil was up more than $11 before settling at just under $140/barrel. If you have a 401(k) or an IRA, I suggest you make sure you know where your money is invested. If you have been smart and already made sure your investments are placed in "safe" and diversified investments, then I suggest you just don't look at all!

Recent headlines have been concentrated on how much the market has dropped over the last several months. Some places dropping double digits. Many think a 30% drop in housing is the worst that could happen. I submit that a 30% drop in housing was needed and not nearly as bad as it sounds.

The DOW dropped 3.13% in one day. On the surface, 3.13% doesn't sound that bad. When you annualize it, the figure becomes a bit more daunting. A 3.13% drop in one day annualized is approximately 48,482%. I am rounding, but I think my rounding error can be forgiven.

Just don't look at your portfolio and you will be ok. If this drop had occurred over 5 days, it wouldn't sound nearly as bad. It is only about 8.5%. Unless you need your money today or in the next 10 years, you should be fine. If you plan on retiring in the next 10 years you should already have determined your retirement strategy and how you are going to preserve what capital you have left for retirement. Working part-time to pay the bills doesn't qualify as retirement.

Fed approves BofA Purchase of Countrywide

2008-06-06T15:25:00.000-07:00

The Federal Reserve has officially approved the purchase of Countrywide by Bank of America. I am not surprised by this event. BofA and Countrywide have been working on this for months. I suspect that this purchase would have never been allowed if the fear of "Bank Failures" in the papers were not looming.

The purchase has been approved, but that does not mean by any means that it is complete. I suspect that some serious negotiations are occurring, but I would be surprised if the sale is not completed. The only question now is what is Countrywide really worth? Countrywide is the holder of thousands of foreclosures in California alone. One high profile foreclosure includes that of Ed McMahon.

From MarketWatch:

The Fed said Bank of America pledged to operate the combined mortgage operations under the bank's "polices, internal controls, and other risk-management systems."

House prices have fallen further since January, while mortgage markets and other credit markets have been severely jarred by the near collapse of Bear Stearns and downgrades of bond insurers.

That's increased concern about whether Bank of America will complete its purchase of Countrywide at the original terms. However, the bank has repeatedly stressed that it stands behind the deal.