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Foreclosure Flood Continues

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Countywide, 5,297 households received at least one foreclosure-related notice in April, RealtyTrac reported this morning.

The filings total was about 8 percent lower than in March, when 5,786 filings were recorded. But the month's filings marked a 103 percent increase over April of last year.

Divided by the number of households in the county, there was one record filed per every 213 homes in San Diego County, RealtyTrac reported.

Columnist Rich Toscano took an interesting look at the comparison between foreclosures occurring now and in the 1990s housing downturn. Click here to read his take in Nerd's Eye View.

-- KELLY BENNETT

Wednesday, May 14 -- 11:33 am

'My Neighbor Walked Away'

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Just heard from reader BG in response to this post yesterday. A couple of national stories this weekend questioned what had been reported as a growing trend, that upside-down homeowners are deciding to walk away from their homes as an economic decision. I asked you for your insight, anecdotal or otherwise.

Here's what reader BG, a homeowner in Paradise Hills, had to say:

My immediate neighbor to the west told me he decided "to rent for $1,000/mo rather than pay off a mortgage at $3,000/mo". He and his wife (both senior citizens), walked away. I don’t miss their noisy dogs, frankly, but having a house next door in foreclosure is not a good thing. At least he has it listed for sale.

BG said they'd lived next door to each other since the mid-1980s, and theorized the neighbors must have withdrawn the equity from their house to end up with a mortgage payment that high. They urged BG to buy their house before they moved to Riverside County.

One anecdote does not a trend make. But as we hear more of these stories, and as the foreclosure rate rises, is the line blurring between voluntary and involuntary foreclosure rates?

Do you have a story like this? Send me an e-mail.

-- KELLY BENNETT

Tuesday, May 13 -- 3:01 pm

Surviving the Mortgage Meltdown

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Grandma! I'm going to be on TV!

Even if you're not my grandma, you're invited to watch 10News tonight at 5:45 p.m. I'm going to be interviewed as part of that station's special today on the mortgage mess, called "Home Sweet Home: Surviving the Mortgage Meltdown."

They've teamed up with the California Association of Mortgage Brokers and the state Department of Real Estate, and have had Spanish and English phone banks set up since 5 this morning to take your questions about your loans. (The phone banks, at 619.237.6309, are open until 7:30 tonight if you have questions.) I'll try to find a clip to post here once the segment airs.

If you're visiting Survival in San Diego for the first time and heard about the blog on TV, welcome! Scroll down to read my most recent post.

When we launched this blog in August 2006, we knew that housing concerns and job issues -- the building blocks of surviving in San Diego -- were grinding away a little bit of our readers' bliss. We thought the blog would be a great chance to share little bits of our longer housing and economics stories. And what a couple of years we've had covering such hot topics.

E.B. White said, "Don't write about Man; write about a man."

I've given White's words this twist to describe what we're doing here: "Don't write about a city; write about how the people of that city live and work there. And give them news updates and interesting stories to help them make better decisions."

It's not as concise as White's adage. But that's a bit more about us. Please, always feel free to send me an e-mail with your thoughts, reactions to what you see here or elsewhere, and ideas and tips for stories.

-- KELLY BENNETT

Monday, May 12 -- 5:32 pm

The 'Walk Away' Myth?

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Remember when the You Walk Away company launched at the beginning of the year and everybody freaked out about the end of an era? Reporters from all over the place (yours truly included) gave voice to analysts and bankers and general worrywarts, who fretted that the years of Americans continuing to make their mortgage payments as a matter of moral principle were over.

But this weekend, a story in each the Los Angeles Times and the The New York Times called into question that trend.

Both pointed to a lack of hard numbers that would evidence a wave of "jingle mail" -- the term coined to evoke the sound of keys in an envelope when homeowners send their keys back to the bank in a kind of voluntary foreclosure, a decision based on the economics of being upside-down. (The LA Land blog was buzzing about these stories today, too.)

From the NYT:

Freddie Mac, the big government-sponsored mortgage company, estimates that just 0.14 percent of the defaulted mortgages in its portfolio involved properties that were abandoned by borrowers. Fannie Mae, another mortgage company, puts the figure in the single digits. Both companies deal in relatively conservative loans, so the total rate may be somewhat higher. Industry officials say they have no way of knowing for sure.

And from the LAT:

At Fannie Mae, the government-chartered company that owns or guarantees billions of dollars in home mortgages, Senior Vice President Marianne Sullivan conceded that there was growing "folklore" about residential walkaways but said that the phenomenon was more likely connected to investors than people who live in their homes, or "owner-occupants."

In reading these stories, keep in mind that the loans in question under both of those agencies are conforming loans, or loans for less than $417,000. The majority of loans in the country are those conforming loans. But jumbo loans -- those for more than $417,000 -- became a lot easier to get a few years ago. And people who bought their houses a few years ago are the people who would be more likely to be upside-down.

I'm not saying the jumbo borrowers wouldn't be as unlikely to walk away as those counted in the LAT and NYT numbers. But without an analysis of the bigger loans, it's tough to paint an accurate picture for what's actually happening. And with the difficulty the banks have had telling us much that's useful about how many loans are in default, or how short sales are going, or really anything to do with this whole mortgage mess, there might still be a trend even if it's impossible to quantify.

This morning, I called Jon Maddux, one of the You Walk Away co-founders, to get his take on the coverage this weekend. (The company charges homeowners $995 for a set of legal information and services to help them deal with foreclosure.)

He agreed with the stories' perspectives that the walking away phenomenon has so far been happening mostly among investors with second or third properties. That group makes up the majority of their 1,000 or so paying clients, he said.

But Maddux theorized the worst is yet to come in terms of homeowners, tapped-out and living upside-down in their homes, deciding to walk away. Of course, his business could boom then -- it's already grown from four employees to 30. Maddux obviously has some motivation to hold that belief. Still, here's what he had to say:

The majority of the people that we're talking to on the phone are homeowners. Maybe they can pay it but in the next year they know it's going to go adjustable. Before, they were thinking it's worth it to pay a little extra for housing costs, because it's an investment, I know it's going to pay off. But now they're paying $3,000 a month for a house that they could rent for $1,800, (they're upside-down), and they don't mind going back to renting and letting someone else take care of the roof.

Later in our conversation, he added:

I don't think we've really seen it yet. The breaking point hasn't really hit yet. People are still using their credit cards, borrowing a heck of a lot of money on their credit cards. ... When [the market] drops another five or 10 percent -- which it's going to -- they know they're upside down and they can't refinance. ... I think we're seeing kind of the tip of the iceberg.

What do you think? We all certainly got into a meandering discussion about the issue of honor in homeownership a few months ago (here and here here).

I'm not suggesting we rehash all of that. But I'd love to hear your thoughts on these stories, your personal accounts of the decision to stay or walk away, or anything else. Send me an e-mail.

-- KELLY BENNETT

Monday, May 12 -- 3:25 pm

Survival Gone Fishin'

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I've burrowed into a story that'll keep the blogging sparse here in Survival. In the meantime, feel free to send me your tips and story ideas.

-- KELLY BENNETT

Wednesday, April 30 -- 9:47 pm

In High-Priced Homes, Losses Growing

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In another month of record price declines, San Diego County home prices dropped 19.2 percent year-over-year and 24 percent from the November 2005 peak, according to the closely watched Standard & Poor's/Case-Shiller home price index for February 2008, released this morning.

The index tracks prices on the same homes over the years. It doesn't measure condos or new homes. Broken into three tiers by price, the lowest tier continued to fare the worst but was followed by growing losses in the middle and high tiers, in tier breakpoints as of February 2008.

Lowest tier: (priced under $405,028) Prices were down 27.5 percent from Feb. 2007, down 31.6 percent from peak of June 2006.

Middle tier: (priced between $405,028 and $609,200) Prices dropped 20.4 percent year-over-year and 26.1 percent from the Nov. 2005 peak.

High tier: (priced higher than $609,200) Prices were down 12.5 percent compared to a year earlier and 17 percent from the June 2006 peak. (Last month, this tier saw a 10 percent year-over-year and 15 percent from-peak drop, which were the larger drops yet at that time.)

Also this morning, RealtyTrac reported foreclosure filings, the records filed when a home enters a new stage of foreclosure, for the three-month period ending at the beginning of April.

San Diego County quarter one filings numbered 15,315, which the firm estimated to measure about one home in every 74 in the county. That marked a 48 percent increase from the previous quarter, fourth quarter 2007, and a 252 percent increase from the same quarter last year.

The total was more than eight times as large as the total filings recorded in the same quarter two years ago.

-- KELLY BENNETT

Tuesday, April 29 -- 9:39 am

7-6-Oh!

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U-T reporter Bruce Bigelow reports today that the California Public Utilities Commission appears poised to draw a new boundary for the 760 area code. The parts of North County San Diego that have used 760 would change to 442 in the recommendation under review today.

Last year, when this option and other splits were being floated by the commission, I wrote about the contest between 760-coded chambers of commerce in North County and in the chunks of Imperial, Inyo, Riverside, Mono and San Bernardino counties served by the code. The nature of their rhetoric: to prove whose community would be more burdened by the change, which could involve everything from reprinting stationery to changing business directories south of the border.

And, in my favorite part of the story, I chatted with an Escondido hip-hop artist called Pain who had cobbled together a crew of his fellow North County artists in two compilation albums titled the 760 Connection.

From that story:

Pain didn't know about the proposed change until a reporter asked him Thursday what it might mean for the 760 Connection artists, many of whom performed at San Marcos' The Jumping Turtle venue Friday night. He sounded dejected as he mused aloud on the ramifications of the change.

"Oh, no," he said. "If we were 442? It would change big time."

But later, he admitted what mattered was the geographic tie, not necessarily the numerical one.

And Murray Forman, an expert I talked to about topophilia or 'love of place' in hip-hop said he thought the artists would find a new common identifier.

"I don't think I would worry too much about these cats having a momentary existential crisis," he said. "They'll find something else to hang their identity on."

After the story ran, I also talked to the publisher of an area code trivia website, named Linc Madison, who has quite an affinity for telephony. You can read that post here.

The Simpsons dealt with such a change in an episode called "A Tale of Two Springfields" where Springfield is split into two area codes and "New Springfield" (with the new 939 area code) is pitted against "Olde Springfield" (636). Homer, as mayor of the new side, builds a wall through the city, like Berlin, and eventually persuades the band The Who to perform there instead of on the old side. Members of The Who suggest the residents get speed dial to solve their problems and thus preserve town unity. And a power chord from Pete Townshend proves forceful enough to tear down the wall.

-- KELLY BENNETT

Thursday, April 24 -- 11:01 am

Mills Act

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In my story Friday, I mentioned a study by USD economist Andrew Narwold of the impact of Mills Act designations on the designated house and on surrounding houses.

Narwold's work in this study and another one found a 16 percent increase for the house itself, and benefits for the surrounding houses up to 500 feet away.

Narwold passed along a link to that paper this morning. The paper, "Historic Designation and Residential Property Values," was just published in the International Real Estate Review journal.

-- KELLY BENNETT

Tuesday, April 22 -- 12:17 pm

La Boheme Short Sale Blocked

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The condo at North Park's La Boheme complex that was priced lower than the units restricted "affordable" has fallen out of escrow.

Real estate agent Norma Santa Cruz had listed the one-bedroom, one-bathroom unit as a short sale with an asking price of $166,000 to $168,000, and it went into escrow a couple of weeks later. (A short sale happens when a house is listed for less than is owed on the mortgage.) The "affordable" one-bedroom, one-bathroom units were listed for $183,701.

That disparity formed the basis for two stories (found here and here) and commentary by my colleague Scott Lewis about the competition for lowest price between market-rate and government-restricted prices.

In an e-mail this weekend, Santa Cruz told me the short sale had been rejected by the lender. She said the lender had changed its short sale guidance a day earlier to bar short sales on units that were not owner-occupied. Santa Cruz said the unit in La Boheme was not her client's primary residence.

We'll follow this unit and keep you posted as it progresses through foreclosure. The price disparity could be even greater if the unit becomes a bank-owned listing.

-- KELLY BENNETT

Monday, April 21 -- 11:28 am

Ummels Roundup

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For another week, my inbox has been sagging under the weight of your feedback on the Ummels story, the Carlsbad couple who sued their real estate agent and lost last week.

When I posted thoughts from a juror in the case on Monday, I'd asked what you thought the case would do for buyer's agents. It seems the case has illuminated the fact that buyer's agents are not the be-all, end-all in the home-buying transaction, as some market themselves to be.

Today I heard from Benjamin Clark, a real estate broker in Salt Lake City, who says he only represents buyers, never any sellers. And he's on the board of directors of a national group of such agents, known as Exclusive Buyer's Agents, who sign a code of conduct that "binds their loyalty to home buyers" and mandates they disclose all comparable sales to their clients.

That was a big issue in the case last week, as the Ummels claimed their agent had caused them to overpay for their house by not telling them about other houses that had recently sold for less. The jury sided with the agent, who was not a member of that organization and as such was not subject to its code of conduct.

Clark passed along that association's response to the Ummel verdict, which concludes "buyers need to be careful in choosing their 'buyer's agent.'"

I also heard this week from reader KK on the question of agent responsibilities, along similar lines:

There are agents who will work in the consumers best interest and who would have shown them comps, but not all agents are created equal. I don't agree that once someone has hired an agent, that they should have to do the homework.  Isn't that what they hired the agent to do? I do agree, though, that the buyers are responsible in doing their homework when hiring an agent. Are they a dual agent? A designated buyer's agent? An exclusive buyer's agent? Are they a member of any organization that holds them to a higher standard than the law requires? The answer to these questions may very well determine the type and amount of service the consumer should expect.

Here's a personal take from RB:

I sold my own condo about eight years ago. I did not use a real estate agent. What I found was this, the buyer and seller agree on a price and fill out a sales agreement form, once this is done, the buyer and seller select an escrow company, all legal forms for the sale are looked out for by the escrow co. In other words the escrow co makes sure all legalities of the sale are on the up and up. ... I had never sold any real estate before or after this sale. The reason I didn't use an agent was the fact that I needed all the money from the sale to purchase my current house, and it would not have been possible to do this if I had to give up three % of my proceeds.

OK, I'm about finished talking about this, unless one of you can think of some square inch of this story we haven't yet covered. If you're that lucky reader, send me an e-mail.

-- KELLY BENNETT

Friday, April 18 -- 4:04 pm

Mills Act Miscellany

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Some extras on my story today about the debate over the future of the city's Mills Act program, the tax break given to homeowners of historic properties to incentivize their maintenance:

Fees: One of the mayor's proposed reforms to the program is an increase in fees to cover the staff costs of reviewing applications and performing inspections. That is now a stance largely supported by critics of the program and by the historical preservation community. But the latter group hasn't always agreed the fees should be higher. My colleague Will Carless, who covered this beat before I did, wrote a story a couple of years ago telling how the prospect of raising fees was tearing apart the historic preservation community:

Some preservationists also argue that the city government has a paternal responsibility to preserve its historical assets, and charging people to preserve their homes is an ignoble concept that should be opposed on moral grounds.

"It would have a chilling effect on designation for people who can't afford to lose that much money," said Beth Montes, president of the Save Our Heritage Organization in San Diego.

I brought that up this week when I was interviewing Cathy Winterrowd and Bill Anderson at City Hall. Winterrowd said the debate over Mills Act changes "seems like it was very recent but it's not."

Grand Jury: Here's a link to the San Diego County Grand Jury's report, titled "History Hysteria."

Reforms and Response: Here's the mayor's proposed reforms to the Mills Act program. And here's the response to that proposal from the Save Our Heritage Organisation.

Here Come the Politicians: As the debate has grown in recent months, mayoral candidate Steve Francis has vowed support for the city's Mills Act program, as has candidate for City Council Todd Gloria.

-- KELLY BENNETT

Friday, April 18 -- 12:25 pm

A Bit of Progress on the Immigration Headache

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I've been hearing from a couple readers eager for an update to Bill Curtis's story that I shared with you Monday.

I actually have two updates from Curtis. First, an update on Curtis's plans to move to Wichita if the San Diego housing market doesn't crash before January 2009. He says he's "a bit ahead of schedule" on the move to the Midwest; he's planning to start a new job in Kansas at the end of June.

And on the story I told you this week, on the difficulty the Curtises have faced in getting Bill's mother-in-law a temporary visa so she can travel from China to be with his wife when she delivers her baby, here's what I heard:

The second update is that I did hear back from our Congressman's assistant today. He said we have to reapply from the beginning again (and pay another $300!), and then we can send all the information to him and he will write a letter to try to help us.

We'll keep you posted on this.In the meantime, if you have similar stories or thoughts about this one, send me an e-mail.

-- KELLY BENNETT

Thursday, April 17 -- 3:27 pm

Price Discovery IV

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For a few weeks here in Survival-land, we've been discussing the own-vs.-rent riddle of the San Diego housing market. You can read those threads here and here and here. And it's all in an effort to get to the bottom of the question: How much are you willing to pay for a house?

Here was a look back at the long history of real estate optimistic spin in San Diego, from reader VG:

My wife and I were barely old enough to vote and dirt poor when we married during the Reagan Recession in the early '80s. The country was still paying the price in savings-sapping inflation from the huge national debt run up to pay for President Johnson's War on Poverty and the protracted quagmire of Vietnam. Good jobs were scarce in San Diego and interest rates on home loans were above 15 percent. A real estate and investment "expert" counseled us to "buy now" because Americans would never see single-digit interest rates again. Instead, we saved and waited. In 1994, at the bottom of the last crash, we put down 10 percent to buy a four-bedroom, two-bath home for $135,000 at a fixed rate under 6 percent. The unlucky previous owner had paid $180,000 for the same house. Just 12 years later our home's value has "declined" below $500,000. Yet many of our neighbors are upside down again. History does repeat itself, and there is much to be said for the old-fashioned virtues of saving and patience.

And here's another perspective: investing in real estate doesn't necessarily mean you have to live in it.

Earlier this week, I heard from Robert Vallera, principal of Commercial Realty Advisers. He's a commercial real estate veteran here, and I often call him when I'm working on stories about the market for buying apartment buildings or other commercial real estate.

Here's some of what Vallera had to add to the debate:

After reading some of the recent comments regarding renting vs. owning your own residence, it once again struck me that people easily confuse the advantages of owning their own home with the advantages of owning real estate. Most people don't consider de-coupling the issue, but many should. They mistakenly assume that any real estate they own should also serve as their residence.

 

Yes, there can be tremendous financial benefits to owning real estate if you make wise acquisitions. Likewise, owning your own home can provide tremendous intangible benefits, such as far greater control of your living environment. Go ahead, paint the walls purple if you like. Your spouse may be the only one who complains or attempts to evict you for your eccentric behavior.

 

The market price of a house or condo is usually more than a purely financial analysis will justify (unless one assumes that the alternative cost, rent, will sharply escalate). Yes, a wisely purchased home might prove to be a profitable acquisition. However, your own home will not necessarily out-perform alternative investments that could have been made with all of the dollars required to purchase, maintain, and finance a house over an extended period of time.

Vallera concludes with this: if you want to own a home so you can paint your walls purple or because you have particular family needs, buy one. But he says the potential for cash-flow from another kind of investment, like an apartment complex, is hard to beat.

What do you think of VG's take? Vallera's endorsement of the commercial market? Send me your thoughts.

-- KELLY BENNETT

Wednesday, April 16 -- 6:39 pm

March Figures

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San Diego County foreclosure filings -- the records filed when a house enters a new stage of foreclosure -- reached a total of 5,786 in March, up 22 percent from February and up 127 percent from March 2007, according to data from RealtyTrac released this morning.

The median price paid for a home of any type in San Diego County last month was $395,000, 19.4 percent lower than in March 2007, and the lowest seen since November 2003, DataQuick Information Systems reported today.

In March, 36.6 percent of the San Diego County homes that resold had been foreclosed on at some point in the prior year, DataQuick reported.

From DataQuick's release about the Southern California housing markets:

In recent months, foreclosure resales typically sold for about 15 percent less than other homes in the surrounding area. When these foreclosure resales dominate a market, accounting for more than half of all sales, they tend to tug home prices down by an extra 5 to 10 percent when compared with communities where foreclosure resales are less common.

The most recent Case-Shiller index, for January, showed that prices for resale detached homes were about 17 percent lower than they were in the January 2007 index. It was the lowest reading for the index since March 2004. Here's a reminder of the differences between the Case-Shiller and DataQuick measures of the housing market.

The next Case-Shiller index will be the February edition and will be released on April 29.

-- KELLY BENNETT

Tuesday, April 15 -- 10:48 am

A Juror Speaks

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I got a fascinating e-mail this weekend from Shelly Anghera, who said she was a juror on the Ummels v. Re/Max case.

She said she liked my story but took issue with the characterization that "juror after juror gushed praise" on Mike Little, the Realtor with whom the jury sided last week.

Yes, [Little] showed them lots of houses, yes, he made a lot of money and yes, he made a few mistakes. There just wasn't enough strong evidence to show that he did not meet his fiduciary responsibilities. I have spent many heavy hours thinking on this case, though it wasn't to set a [precedent], it does require us to consider the role of the various players in the real estate market. I have paid much less for medical, financial, and legal services, and those services came with a clearly defined set of expectations. After my seven days of realtor training (sitting in a court room), I may consider not using a realtor in my next purchase of property.

When I asked her if I could share these thoughts in Survival, she added to her contemplation of the necessity of a buyer's agent:

A further discussion, I think selling with a realtor is very different than buying with a realtor. I probably would sell a house with a realtor because of the advertising, showing, and negotiations, etc.

I am sure the jurors were happy for the defendant, as was I.

I think this is really interesting. What do you think this case does (or doesn't do) for buyers agents? In proving last week that the Ummels were ultimately responsible to do their own background research, to know what the comps were in the neighborhood, it seems this case has illuminated the fact that buyer's agents are not the be-all, end-all in the home-buying transaction, as some market themselves to be.

Agree? Disagree? Send me your thoughts.

-- KELLY BENNETT

Monday, April 14 -- 3:30 pm

Where Immigration Headaches and Babies Collide

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Here's a story about survival in San Diego.

I heard last week from Bill Curtis. He was the one in that story I wrote last fall called "The Lure of Wichita." Curtis is an engineer who finished his degree at UCSD right as the housing market had reached a feverish pace, and decided not to jump into what he found to be an overheated market.

Curtis fit what I called the six-figure renters -- San Diegans who earn a comfortable income, but have decided to rent and wait as housing values deflate. Curtis issued the San Diego housing market an ultimatum: if prices don't crash by January 2009, he's going to Wichita, Kan.

"You know how much a house costs in Wichita?" Curtis said. "I could get three houses for what I'd pay for one here."

This time when I heard from Curtis, it wasn't about the housing market. I thought his story was fascinating, and wanted to share it with you. Here's what he had to say:

My wife is from China, she is an English teacher. Now we are married and living in San Diego, as you already know from your story you wrote about us a few months ago. Well, now she is due to have a baby this summer and we are going through the process to have her mother come here to visit and take care of my wife after the baby is born. See, my wife has already endured three (yes 3!) miscarriages, so you can imagine how concerned she is as this most recent pregnancy progresses. We even have a note from her doctor requesting assistance from the mother. 

Here is the issue. We are going through the visa process, completely legally, to get her mother here to help, and it was denied!  ... We paid the fees to the US government, we paid for her mother to travel all the way to the US Embassy in Guangzhou (the worst city in the world FYI), her mother took 10 days off to make the trip, she finally got into the interview where they asked her only two questions, and then said DENIED! 

Let me assure you that traveling in China is no easy task. Also keep in mind that her mother has her husband, 3 other children, two houses with constituent farms, and the rest of the extended family (~20 other members) all there in China. There is no way she will abandon all that to become some sort of fugitive, illegal immigrant, here in USA.  Combine this with the fact that we make more than $100K / year, so her mother would not be a ward of the State by any means. What sort of country would deny a grandmother from seeing her grandchild, and helping her daughter with medical issues? Just imagine you in her mothers shoes, and some embassy told you NO you can't visit your daughter and grandchild. See what I mean?

 

So my question is, if all this does not qualify her mother to come here for a 6 month visit for medical reasons, then what on earth does qualify?

 

Curtis said the ordeal has already cost him $300. And the fee would have to been paid again if he tried again, which frustrates Curtis even more:

For what, to be denied again? I expect this sort of incompetence and corruption when I deal with the Chinese government, but from our own US embassy? The US embassy in Guangzhou is really a disgrace.

Curtis said he'd written to Rep. Brian Bilbray for help last week.

Thoughts? Similar stories? Send me an e-mail.

-- KELLY BENNETT

Monday, April 14 -- 2:07 pm

Responses from Far and Near

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I've been hearing from readers throughout the day on today's story that the jury sided with North County real estate broker Mike Little in court in Vista yesterday:

Reader SH found us from Madison, Conn.:

The fact that the realtor worked very hard in trying to satisfy their wants and needs when it came to housing, they had to know the values of the surrounding houses without question, if they looked at 80 houses they must have previewed double that online via the web, advertising, websites. ...

They got caught up in the housing craze and paid the price, sorry to say houses are not investments, they are houses, a home, a place to live.

Reader BD added:

The buyers looked at 80 homes. Couldn’t they form their own opinion of value?

And, here's reader ST from Austin, Texas:

Justice was done. A different resolution might have opened the legal floodgates for other irresponsible and/or careless borrowers and buyers. Good precedent. Didn't the agent show them 80 homes? Get real. My wife and I had discussed this at length. How hard would it have been to check with the Appraisal District in the city or county and check the recent transactions in their neighborhood? It's simple due diligence. I can't speak for CA, but in TX these documents can be viewed at the Appraisal District or the county courthouse. If I were about to spend $1.2 million  for a house, I'd definitely hire a legal beagle to go and research this for me, or even do it myself. As an aside, I've noticed that many of the people with mortgage problems, across all economic spectrums, signed mortgages without consulting an attorney. Largest purchase of their life and they didn't talk to an attorney?

From the other side, Marty Ummel, the plaintiff, left me a voicemail this afternoon. She'd read the story and called it a fair account of what happened yesterday, but she had this to add:

I thought it was fascinating the fact that the jurors would think that Mike had done such a fabulous job because he'd shown us houses! We could've had limo service and saved ourselves a lot of money on commission. Actually, I know the seller pays it. ... I don't know what my next step is but again, no regrets.

And housing bubble blogger Ben Jones posted a link to the story today, and I found a couple of his readers' comments quite interesting:

Comment by Deon
I’m actually surprised the realtors’ association didn’t side with the plaintiffs for one reason -- they’re essentially conceding that a realtor doesn’t do anything but jack up the price to make a commission. No legwork, no honesty, no investigation, no assistance. That’s been painfully obvious, but aren’t these people trying to sell a service on the belief you’ll do better buying or selling through them than doing it yourself? And yet here they are saying you’re supposed to do it yourself, anyway, and pay them 6% of an inflated price for it. So what, exactly, are they supposed to offer?

(And, yes, I know the answer is "nothing." It’s more of a marketing question.)

Comment by aimeejd
I think that was the point the appraiser was making about this case being "lose-lose" for realtors in sense. Obviously, siding with the plaintiffs would have meant selling their fellow realor (sic) down the river; but by making the argument that he had no obligation to provide comps or guidance, they beg the question of exactly what purpose they DO serve. If I have to do all the research myself, what exactly am I paying this 3rd party that has interposed himself in the transaction for?

Add your voice to the debate; what's your sense of what happened here? Send me an e-mail with your thoughts.

-- KELLY BENNETT

Friday, April 11 -- 5:03 pm

Realtor Prevails

E-MAIL POST

A jury sided today with Carlsbad real estate broker Mike Little in a closely watched lawsuit that pitted a local couple against the agent that helped them buy a home. The couple, Vern and Marty Ummel, claimed that Little breached his fiduciary duty, leading them to overpay by about $150,000 in a July 2005 home purchase.

Here's a link to some background on the case. We'll have more later.

-- KELLY BENNETT

Date: 4/10/08

Price Discovery III

E-MAIL POST

Reader CD wrote me today, incredulous at the perspective of another reader last week who'd observed younger co-workers content to rent until they can "buy next to the beach on their 80k incomes." CD said he's still a real estate investor, here and elsewhere.

Here's what CD said:

Wow-what planet is that guy on? I'm a 58 year old born and raised in San Diego. My father was a private investor in multi-family rentals. ...

How could a rational person expect to buy next to the beach for $2,000 per month? Is the problem the incredible lack of knowledge of economics? If prices (not values), fell to that point there would be an amazing rush to buy which in turn would push prices back up.

As you know everything is interconnected; other than very short term housing prices must have a relationship to replacement costs. Aside from that, IF prices declined that much there would be significant economic costs to all of us with a declining standard of living.

Maybe the thought wasn't clear; if housing prices fell below replacement cost for a long period of time then there wouldn't be any more construction or construction-related manufacturing or jobs.

As I recall your original question was at what point would a person jump in to buy. I don't have an answer to that.

Here's a different take. Reader PD thinks I should change the question altogether. After counting upfront costs -- down payment, closing costs, taxes, insurance, escrow -- and monthly costs, and interest over the term of the mortgage, PD argues renting is a no-brainer.

The question should be:  How much money can I save by not purchasing a home in San Diego? ...

  

The myth of housing inflation and savings on taxes was dreamed up by realtors. It is just

that, a myth.

 

Today or any day. If you need living quarters, lease. If you ever need a new bathroom,

you'll not have to pay the $3600.00, as I did not have to do because my dear landlord had to foot that bill and I was able to add to my bank account.

 

-- KELLY BENNETT

Date: 4/9/08

'Cleans Peanut Butter from Shoestrings'

E-MAIL POST

I became a bit of a WD-40 nerd for a few days while I was researching and writing today's People at Work story about Garry O. Ridge, CEO of the San Diego-based manufacturer of the popular do-all product in the blue-and-yellow can.

Here's a link to a snopes.com article debunking one of those pesky forwarded e-mails you get from your Aunt Sue. The original e-mail includes a numbered list of things WD-40 can do. Snopes asked WD-40 company reps to check the list, and they "removed the tips we do not recommend."

Among those removed: No. 7, "Keeps flies off cows" and No. 36, "Folks even spray it on their arms, hands and knees to relieve arthritis pain."

Here's the official, WD-40 Fan Club list of 2,000 uses for the product. A few of my favorites:

Cleans peanut butter from shoestrings

Removes melted scotch tape from dining room table

Removes dog slobber from dash and seats in vehicle.

And here's a bit that didn't fit in my story about Ridge. He told me he lives every day with this thought in mind: Whatever I'm doing, it'd better be worth it, because I'm giving up a day in my life for it.

To that end, here's how Ridge signs his e-mails:

- Believe in yourself
- Never give up
- Take one day at a time

 

We all have something significant yet to do !!!

-- KELLY BENNETT

Monday, April 7 -- 1:32 pm