Dr. Housing Bubble 07/23/09

[Crewleader]

Real Homes of Genius: Rancho Park and the zero down $775,000 2 Bedroom Home - Deconstructing the Westside of Los Angeles. The 310. Foreclosures moving up to Prime Markets. Notice of Defaults Second Highest Quarter on Record.

There is something surreal in the air in California. With the warm summer weather and gorgeous sunsets it is hard to come to terms that the state has a $26 billion budget deficit that will be solved with massive cuts and borrowing. The state is issuing IOUs which should be a warning sign to most that the state isn’t flush with excess revenues. Yet for some reason, there is this belief that we will once be back to the bubble heyday. I was talking with a person trying to sell their home. They had pulled the home off the market and told me, “I’m going to wait for one or two years when the market bounces back.” Bounce back to what? The manic easy credit induced bubble days? Those days are long gone. In fact, in this particular area the homes are littered with Alt-A and option ARM loans. How can you tell? You see massive additions to the home and remodeling projects that have costs upwards of $100,000 courtesy of a HELOC. This is not Beverly Hills but your mid-tier market.

Today we’ll look at another Westside area in Rancho Park. So far we have looked at:

Santa Monica

Culver City

Palms

In each of these areas we are seeing the early signs of a foundation cracking at the edges like poorly applied makeup. Yet many in these areas believe in the housing bubble like some kind of underground cult. They know something you don’t. In their world, math doesn’t apply and supply and demand are words left to boring analysis. Who needs analysis when you have the almighty power of the granite counter-top? Who cares if the state has an 11.6 percent unemployment rate, the highest in modern BLS record keeping history? That is a minor footnote. Who cares that nearly 50 percent of option ARM loans sit in California anxiously waiting like ticking time bombs to level equity in mid to upper priced areas? These are minor inconveniences and roadblocks to California housing bubble version 2.0 which will come to a theater near you. It won’t be the first time in history we have a jobless recovery but it will be a jobless recovery with a housing boom. At least that is the perception in this parallel universe.

The budget is a mess. The fact that we have a gap the size of one-fourth of our general fund is something beyond comprehension. Notice of default data was released for the second quarter and it was the second highest quarter on record:



http://www.doctorhousingbubble.com/real-homes-of-genius-rancho-park-and-the-zero-down-775000-2-bedroom-home-deconstructing-the-westside-of-los-angeles-the-310-foreclosures-moving-up-to-prime-markets-notice-of-defaults-secon/

[Systematic Chaos]

1. You are to the housing crisis what the Climate Crock Denial of the Week...

...video producer (goes by Greenman on YouTube, not sure what his user name is here) is to global warming and climate change.

I follow both of you with equal eagerness and come out of it learning much more than my sanity can take much of the time. :scared: