DataQuick: SoCal housing market 'crippled'

On this collapse of multiple fronts, I would just add that on the DC front, the Fed chairman has no clothes.

And a naked Bernanke is not a pretty sight. "Oh, Calcutta" would be the furthest from my mind.

In sports, they'd invoke 'the mercy' rule and get somebody else in there.

"Sales remained extraordinarily low, and a significant portion of what did sell was in areas beset by foreclosure activity. That's where sellers are the most motivated and price cuts are largest."

The banks are the ones getting money out in this market. Existing home sellers are in denial until reality is forced upon them. The smart ones realize this is the last chance to cash out for a long time, so taking less now is better then getting nothing later.

" Mainly it's in the inland markets, often in newer suburbs, where prices got pumped up artificially with the sort of crazy loans that no longer exist,"

The crazy loans no longer exist ...

It is amazing the Mr. Prentice can't take that statement and bring it to its logical conclusion.

Thornberg is getting warmer. His next revision will be 50-60% which will be the real number. There is a lot of pain to come for sellers.

Richard Thornberg is right to update his predictions. Given that prices in parts of Southern California tripled since 2000, a 20% decline would do little to correct the situation. Even a 40% drop leaves prices far above their historical averages. I suppose only time will truly tell us what is going to come of this.

Peter

how about some of Prentice's bubble denying quotes over the last year?

He belongs in the housing bubble hall of shame!

Actually it's Christopher Thornberg, but I'm sure some people wouldn't mind calling him "Dick!" (although not me, I like the guy and am collaborating with him on some consulting gigs).

But here's an important thing to remember: home values are also related to what they get in monthly rents, and that's something which has not been discussed much by the media or economists. There's a quick and dirty rule of thumb used by investors that says that if you take the monthly rent for a property and multiply it by 200 then that's a decent ballpark figure, although that could vary depending on location, HOA fees, taxes and carrying costs.

So if you're a homeowner and want to know the associated rent, check out craigslist and do your own analysis -- at the point that you have positive cash flow, you can either downsize and rent out your place or start pushing it aggressively to income property investors, who are often more sophisticated than homeowners easily scared by regional statistics.

Actually it's Christopher Thornberg, but I'm sure some people wouldn't mind calling him "Dick!" (although not me, I like the guy and am collaborating with him on some consulting gigs).

But here's an important thing to remember: home values are also related to what they get in monthly rents, and that's something which has not been discussed much by the media or economists. There's a quick and dirty rule of thumb used by investors that says that if you take the monthly rent for a property and multiply it by 200 then that's a decent ballpark figure, although that could vary depending on location, HOA fees, taxes and carrying costs.

So if you're a homeowner and want to know the associated rent, check out craigslist and do your own analysis -- at the point that you have positive cash flow, you can either downsize and rent out your place or start pushing it aggressively to income property investors, who are often more sophisticated than homeowners easily scared by regional statistics.

I sell real estate signs and it has been very slow for the last six months. But, it started picking up again two weeks ago -- I have plenty of work now. So, things are improving. I've been doing this since the mid-50s and this has happened many times. The prices drop for awhile and then they go higher than the previous high -- so, it will get better. Meantime, only the experienced professional agents will be left when things pick up -- then they'll make back some of the money they lost during this downturn. Life is one big cycle -- up and down... up and down...

"We're anxious to see whether the government's recently announced higher conforming loan limits
will have much impact on sales in these areas this spring and summer."
OH, YEAH, THAT'S JUST WHAT WE REAL BUYER ARE WAITING FOR- ANOTHER CHANCE TO GET INTO A REALLY BIG, STILL WAY OVER INFLATED MORTGAGE, SO WE CAN AGAIN WATCH OUR HOME VALUES FALL! HA! ITS SIMPLE ECONOMICS; you want more sales, ((((LOWER YOUR PRICES!!!!!!!!!))))))))))) LOWER THEM TO PRE-ADJUSTABLE RATE/SUB PRIME CRAZE LEVELS, TO WHERE THE PROPERTIES ARE REALLY WORTH. ONLY THEN WILL WE CONSIDER BUYING.

The "uncertainty and credit constraints" are not root causes, but are a reflection of underlying issues. The #1 issue is simple affordability on the basis of price to income. The low affordability is compounded by existing unsustainable levels of household (and system-wide) debt.

We're beginning to have reality recognition. The reality is scary so now you have fear. The fear creates the "uncertainty" and constrains credit. Typical post-bubble behavior will continue to develop as reality recognition combines with psychological factors.

Affordability can only be addressed with lower prices and higher incomes. The latter is created by time - economic growth & inflation. Short term the government will use tax money to bailout various parties to shallow the nominal price bottom. These actions will not impact fundamentals and thus longer term prices.

I'm shocked! Shocked!

LOL

BTW, wasn't Dick Thornburg the reporter character in the first two "Die Hard" moives?

As Jesus said, 'buy low, sell high"

Bless

Chicken little said the sky is falling and the RE agents say it's crashing in SoCal.

The latest foreclosure statistic is that 1 in 242 California home mortgage loans are in foreclosure. So out of 242 households 241 are paying their mortgages.

When you people in SoCal start thinking for yourselves instead of listening to people like certain hysterical RE pundits this thing will fix itself. If I were you all, the first thing I would do is stop reading the paper and watching the news.

I would say you will know it's all over when the prices are where you can afford to buy. Until the middle class can afford to buy a home the prices will continue to drop.

I would guess the mddlee class in SoCal have incomes in the 100k-1250k range. Since Californians live by a different rule than every where else, that means the middle class will pay about half their take home on mortage which means about $3,000 a month, which means about $400,000 price range. I would think that when the median (liveable homes not slums or DMZ neighborhoods) home price gets to be around 350-400 this thing will be over. The banks in the meantme will have to suck up the difference between the loan amount and the sale amount on foreclosures which, in the whole scheme of things, won't be much of a hit in light of the overall assets of most banks. The people who overpaid but have enough integrity to honor thier debts will ultimate recoup their loss when home prices appreciate at the normal rate.

I also predict it won't be long before things snap back. Maybe even this summer. I bet you.

My own personal theory which is crap but it is common sense just the same.

At 40% off the April 06 high, the median income couple in LA County (thats $88K) STILL wouldn't be able to buy a house (except in gangsta-land)

Welcome Drudge linkers to the FANTASY world of LA real estate!

I wonder how many of those sales weren't sales on the MLS (auction houses moving inventory). As bad as sales are I think it is even worse for realtors, fewer houses sold via their mechanism (MLS) and lower prices mean smaller commissions.

That is what you get when you run your business poorly. If they were true market experts they could find and make the market, but they aren't and they can't. Realtors need to stop trying to hype the buyers and work exclusively on managing seller expectations. But it is most likely they will still be in denial because their brains aren't wired for any "negativity" (some might call it realism). Therefore the revenues for their business will continue to decline and the Realtors & Brokerages fixed costs will just kill the business models.

"This beast was created through intentionally making unsound loans in the belief that the risk could be sold off and therefore quantity was the only metric that mattered, while quality was immaterial. This in turn drove up the price of houses to unsustainable levels. More than 100 years of history tells us that the maximum sustainable home price is approximated by a median home in a given area selling for approximately three times the median income in that same area.

Today, most markets have home prices that are well in excess of this figure with coastal areas frequently running in excess of five times incomes.

Proposals floated by various parties that attempt to prevent the correction of home prices to historical means will not work. Such price levels cannot be sustained, and it does not matter whether this is politically palatable or not.

This is a matter of mathematics, not politics.

Home prices must be allowed, and in fact encouraged, to contract until they reach economic equilibrium with household incomes. Government must not interfere with this process!"

40%....HA!

It needs to go to 55% to come inline with medium income.

Oh course, LA property ALWAYS over-corrects...so a cool 60% is VERY easy.

You have to understand, there just not that many people who has 20% or even 10% of the down payment needed to buy a 300,000 dollar home.

Americans...they don't save, well, the last few generations don't save (Baby Boomers, Xer, I'm looking at you two)...

You also have MILLIONS and MILLIONS of Baby Boomers facing retirement in the next 7 years.

So when peopel retire, do they keep their big house and retire OR do they sell it, get a smaller house or condo and add the equity to their retirement account?

Hmmm, something to think about.

The housing bubble was fueled with loaned money. That money was given sellers in 2004 - 2006 who got more than their house was worth, in the long-term. That profit (probably in excess of $20 billion in LA alone) is never to be recovered by the lenders or the new home owners.

The sooner these losers reconcile themselves, and their balance sheets, to this fact, the sooner the country can move on.

And don't feel to badly for these losers. Believe me, if they'd been a little smarter and bailed out in time to make a profit, they won't have shared it with you!

I think if you melt all the pennies that are actually worth 2 cents each and sell them for their metal content, making almost 100% profit, accounting for the ever escalating energy cost of course, you might make enough to buy a relentlessly depreciating house of your dream.

Do it quickly though, before smart foreigners beat you to it, as I remember reading something about post-Soviet Russians melting down their spoons for their nickel.

Posted by: kat | March 13, 2008 at 12:05 PM
"I also predict it won't be long before things snap back. Maybe even this summer. I bet you.
My own personal theory which is crap but it is common sense just the same."

Kat, you don't read current events much, do you? Over 100k people in the mortgage business have lost their jobs. The Fed has lowered the cost of funds (again and again and again). Inventories of homes in bubble markets is at a record high. The Dow Jones has lost 1000 points in the last month. Yada, yada, yada. You really need to educate yourself and then come back and make a prediction that doesn't sound like something a 5th grader would have said.

A forecaster predicts that the drop will be at least 20 to 25% from peak. It makes sense based on investment math.

A duplex in Echo Park on the market today is asking $500,000. With a 25% drop the asking price SHOULD BE $375,000.

With 20% down and a 6.5% 30 year fix mortgage, the monthly payment + tax (1.25% of purchase) + insurance ($1200 estimated) will be $2,387 a month.

If in Echo Park a 1+1 with parking the rent is about $1200 a month; to break even, an investor would not purchase this duplex for more than $375,000.

The above is not taking return on equity (his 20% downpayment) into consideration.

If an investor would prefer receiving a positive cash flow in order to replenish his downpayment, he probably would not pay $375,000 for that Echo Park duplex. He'd try to get it below $325,000.

The current real estate market will definitely see more price adjustment to come.

A tale of two cities - YTD sales data for Oakville, Ontario, arguably the nicest town in Canada, 25 miles west of Toronto and an easy commute into the city

Avg. price: $533K, Median Price: $420K
Percentage increase in sales Y/Y YTD: 10.5%
Avg. % increase in selling price YTD: 17%
Median % increase in selling price YTD: 11%

The question is: "Are we immune to the U.S. housing crisis or will our housing market remain healthy?" We have not seen anything close to the increase in prices you saw over the past 7 years but the market appears healthy. My home has increased in value by 40% in the past four years, well ahead of inflation but not outlandish. Thoughts??

kat:"The latest foreclosure statistic is that 1 in 242 California home mortgage loans are in foreclosure. So out of 242 households 241 are paying their mortgages."

Things might look a bit darker if you actually looked at the data correctly.

35,731- NOD
6,759 - NTS
11,139 - REO

What that is saying is that 35k homeowers got a NOD in CA last month, you only need to file 1 NOD per trust deed/mortgage .. 6759 got a NTS and 11k went back to the bank.

THAT IS NOT SAYING, "only 241 out of 242 homes are paying their mortgage" , The default rate is much much higher in California and cant be computed directly from these statistics for the 3 following reasons:
1) This shows the filings for 1 month, if a person has 1 loan and has a NOD filed the next month would not show another NOD filed. That isn't how it works. The NOD are not cumulative.
2) The servicers are holding off filing NOD, many wait until people are 90 days late before putting them in the foreclosure process.
3) The borrowers can be defaulted but working with their servicers for things like short sales and forebearance. THESE ARE NOT PERFORMING LOANS.

You are completely trivializing the level of the problem because you completely don't understand what the data is telling you.

The default rate on subprime is about 25%, 5% on Alt-a, 1.5% on prime. California has extremely high concentrations of Alt-A and subprime and those are performing horribly.

Kat,

Why don't you "snap" up an investment property this spring before the big comeback. Don't forget your gloves... those ginsu's are sharp!

The relation between rent and prices is very important. However, what happens when recession hits and rents go down?

I'm also revising my predictions, from 50% decline across the board to AT LEAST 50%.

Cheers!

I have this image in my head of the Tsunami. Remember the guy in the swimming trunks looking out from the shoreline as the water receeded. I think most Americans are like that guy... they have no idea how bad its going to get.

It makes me mad too because I (like my friends and many others),saw this coming 5 - 6 years ago. It was about that time that I wanted to buy a house, but by the time I had saved enough for a down payment the prices had doubled. Anyone with any REAL common sense would have known that house prices can not go up 20% year over year, especially since salaries were not. Realestate had always been a good investment because it didn't go up that much, it tracked inflation, it was good because you could get out what you put in. Housing was never a good investment because you could retire off your house in 4 years. GIVE ME A BREAK.... Now the economy is destroyed.. thanks.

To Amir:

Rents are not likely to go down.

I work in Real Estate and have talked to various apartment managers to know it for a fact.

People need a roof over their head. If they can't buy, they rent. If they let go of their house due to foreclosure, they rent. If they move to LA, they rent. The demand for rental units is high and will be high for the time being.

The rents may not go up like what a median price of a house had gone up in the past 10 years, it is unlikely to go down.

Even when the landlords had tried to entice potential renters back in the mid 90's; they'd use first month free but never lower rent.

Bots,

That's exactly what's wrong with the housing market out there. You all look at it like the stock market.

You don't "snap up" property hoping it will go up. You buy a home to live in and raise your children in and fill it with your life. Then you hope it goes up eventually, you can cash in, down size, and retire after you get rid of those expensive little darlings we call children.

Two issues:
1) Forget about CPI, headline inflation,.etc.. Everybody with brains here, that uses self service gas station, pays child daycare, and goes to Vons/Ralphs/WholeFood/Costco/etc knows that true inflation is now running 10-20% annually. (Heck the dollar lost 20% of it value in the last 10 months versus some currencies...).
Now we also know that houses are pretty much 20% lower than their peaks. Do you guys UNDERSTAND the actual REAL drop in prices???? Nobody talks about this, nominal price declines are easily seen by most people, but real prices (inflation adjusted) are much harder to see and feel. Just combine the 20% nominal decline with the 10-20% true inflation....and you can see the actual drop to date, Also see how incredibly inflated was this market....

2)By the law of unintended consequences, when the government intervenes something bad will happen. It is very easy to see the equation: The MORE the government intervenes in trying to prop up prices, the MORE of an undershoot in prices will occur.
Watch and see.

JW,

Wow, guess you told me.

And I would recommend to you that you try really hard to pinch out an original thought but don't give yourself a nosebleed doing it.

The unemployment rate is at an all time low. the vast majority of people in this country (99%) are paying their mortgages. The people who've lost thier jobs in the financial industry are overpaid, commissioned based pimps for these predatory lenders. The rest are other sundry over paid, middle management types that always go first when things get tight.

I too have money in the stock market like everyone else and not only have I not lost money, I've gotten 5.5 this year - not great but I haven't lost.

If you want to blame something for the economy blame the Bush administration and the national debt. The fed just printed 2 trillion in new money to flood the market and bring down the dollar even more and send gold and fuel up even more.

Before you point your finger and hold yourself up to be some sort of financial whiz, look inside. I own one home outright and have a vacation home I owe $50,000 on. I have NO other debt. I'm 46. I live within my means.

But then I have some fool like you who's floundering in debt and paying half your disposable income in housing point your finger at me.

So who's the fifth grader?

"Rents are not likely to go down."

I assume you are not including that big swath of land called "The Inland Empire". Rents are down...big time. If we were to lose the renter in one of our houses out there, we'd have to drop the rent about 10% to remain competitive. We treat her like gold.

"I work in Real Estate and have talked to various apartment managers to know it for a fact."

I work in real estate as well, and am the de facto rental manager. Rents can and do go down. It's all supply and demand.

- arroyogrande

Cal,

You want it to be bad for some reason. Why?

IT IS NO LONGER ABOUT REAL ESTATE.There are so many factors that have entered the equation now. The stock market is off, the banks are out of money, we may be facing a crisis the like we have never seen before. Nouriel Roubini is always right, just like Patrick.net. As TomG said above do not be the guy in his shorts watching the shoreline receeds,take action now with whatever investments you have, buy metal, euros, have some cash, just don't stand there waiting to be swept away. Stay out of Re, rent and wait. Save your money.

Kat, you can come on this blog (and others) and claim anything that you want but it doesn't mean that it's true. Frankly, anyone who as mad some of the comments that you made couldn't be very financially savvy and IF (notice I said if) you ever made any money from investments, you simply got lucky during the boom years. The facts are the facts and your statistics are full of it. 99% of the people in the country are NOT paying their mortgages is just one of your glaring mis-truths.
I think that the majority of people commenting on this blog are well aware of whose comments are bull-s***t.

My rent is going up....to $2500 for a 1 BR in Hollywood. I might as well just buy for those crazy rent prices.

Well, there he goes again!

Representative Frank, in his ceaseless assault on free market correction, just proposed another $300 billion FHA loan guarantee.

kat : "You want it to be bad for some reason. Why?"

Nice that you don't admit that you are wrong lol.

The data is the data, people are skewing it for whatever their purpose is. I think intellectual honesty is important, you are clearly looking for the positives.There are many positives in life. But none are to be found in looking at the delinquency rates and foreclosure data except to say "at least it is not worse".

The credit markets are freezing up, delinquencies are at an all time high (people aren't paying their mortgage as you so glibly thought they were) and foreclosures are getting to a boiling point. These are all negatives for housing in California.

The positives are that prices are coming down and more people will be able to afford a home without destroying their financial future. I am not negative I am just taken where the data leads me. Instead of people like you (and there are many like you on the other side) who put read what they want to into the data.

We can argue all day long about the data but you haven't even got the numbers right yet. Lets start by you getting to that point then we can move forward and have a real argument based on the data.

Jw,

I didn't get lucky, my financial advisor did.

And you can say what you want about me. I don't much car. What you believe will not change the facts.

The world is not going to collapse becaus people have overpaid for houses in Southern California, USA. You will survive it, the country will survive it, and the Earth will continue to spin. No matter what you think - or hope.

To ArroyoGrande:

Clarification: what I meant was only for Los Angeles county, not Riverside or San Bernardino. My area of expertise is Los Angeles County therefore I am not qualify to comment on Riverside or San Bernardino.

One big benefit with renting is mobility.

Most renters (who are not married with 2 or 3 kids) prefer to live closer to the job location. Why drive 50 miles each way daily if I can move closer to my work place, right?

Cal,

The median house price in So. Cal has dropped by about $100,00 - is that right?

So what the hell is wrong with that? It sucks for people who have overpaid but they are the minority. If those people got stuck on this game of real estate musical chairs then so be it. The rest of you should be glad.

This had to happen. There wasn't a day that it wasn't going to and you don't have to be Adam Smith to know that.

So let it go. Get rid of the deadbeats, free up the homes and flood the market, let the prices go down, and get your house to live your life in. You might pay out the a*s now but if you stay in your home for a number of years you eventually grow into your payment (as long as you don't have an ARM).

That's just the way it works and you don't have to be a financial wizard to figure it out. You all are just distorted from being abused by this madness. You live in a real estate rabbit hole out there.

DD where are you renting???? my son has a lovely one bedroom penthouse for 1300/month on top of a really hip street in Hollywood,great views, not far from the 101 cafe'. $2500, are you in an artist condo/loft on the boulevard? MOVE out. There is plenty more to rent at great prices...

Oh, SoCal will survive but from peak prices to low....prices will drop 50-60%.
FYI: We sold our residence and our rental home (both paid for) in North County Coastal San Diego in the spring of 2005 and cashed out of CA after living there for 35 years. We haven't had any debt in years so your hypothesis about me is all wet. My wife and I saw this mess coming like a huge freight train coming down the tracks so we elected not to stand on the tracks. We left the state and moved where prices were normal.
Since you are convinced that this is just a small storm and will pass soon, why don't you come back here in one year and eat some crow? I'll do the same if I'm wrong................but I'm not. Prices are going to get much, much smaller and once they hit the bottom around 2012, they will sit there and stagnate for a looooooong time. Wait and see.

foreclosures are definitely where the activity is. because that's where the deals are. people selling their own homes are not dropping their prices to the degree that lenders are dropping theirs.

prices were stable from jan to feb.

in jan, there were 2299 sales per day (71256/31).

in feb, there were 2359 sales per day (68424/29).

a spring bounce or a long term trend? with all this talk about bailouts, i think credit is going to become available again soon.

Cal,

Read this story and tell me what I'm missing. But first, read it without looking at any percentages. This is how the media has created this hysteria. They say XYZ foreclosure rate has risen 57%, blah, blah. Well, they don't follow up with a little fact like, even if the foreclosure rate doubles it's still less that 1% NATIONWIDE - hear me - NATIONWIDE. Vermont had one foreclsoure in Jauary 2008. That meant that Vermont's foreclosure rate went from two foreclsoure to one.

Even the city with the highest foreclosure rate in the country is only 5% (95% paying) and the story actually says "some stage of foreclosure" which could mean a late notice.

http://money.cnn.com/2008/02/26/real_estate/
foreclosures_rise_again/

Dollar not welcomed in Lower Manhatten!

At Taj Mahal, they prefer rupees...courtesy of overpriced Southern California real estate, among other things.

http://news.yahoo.com/s/ap/20080313/ap_on_bi_ge/
diving_dollar

JW,

If you cashed out an retired you should be thrilled. You must be a damn millionaire!

So why so bitter JW? If you cashed out and took the money and ran while all the fools got left on the deck of the California real estate Titanic you should be a little more gracious.

And if your homes and property were paid for then you shouldn't have been in the path of any freight train but instead sitting on your front porch, sipping ice tea and watching the tracks. You would have been safe in your home of 35 years and property values wouldn't have meant one whit.

Kat,

Prices coming down are great for those wanting to buy, no argument there.

But the problem stems from leverage, both joe homeower and Wall Street.

Joe Homeower extracts equity and that equity disapears.. Joe Homeower is in debt for a long time and his spending is affected.

Joe Homeower who pays too much is overleveraged and his spending is affected.

Those two types of homeowers, will directly effect the US economy going forward due to their lack of consumption.

Wall Street is a different game entirely. They have many complex vehicles tremendously leveraged and even small changes in default rates (and default rates are very closely related to price declines) can have produce tremendous losses.. which then affect the banks who let them borrow the money who are themselves leveraged. The Carlyle fund that blew was leveraged THIRTY TWO times. Many CDOs are leveraged 15-20 times.

The losses in these type of vehicles will reduce credit in 2 ways, A) They are no longer a factor in demand since they are no longer buying so fewer people are buying mortgages. Yields will have to rise as result. B) They have to deleverage through selling meaning more mortgage supply on the market, meaning yields will rise. Or the banks will have to keep the mortgages on their balance sheet which means they have less money to lend (affecting demand, yields will rise).

The housing market is only limping along as it is now because rates are low, if yields start rising (and they will eventually it is just a matter of when) then everything will get worse.

I'm not chicken little and this isn't hyperbole. Ben Bernanke isn't slashing rates 225 bps and dumping 400 billion into the marketplace because there ISN'T a problem. There is no question that we will get past it but there is a question of how bad it will be. Right now the data looks bad.

kat, do you own investment properties in southern california? because you seem unusually interested in and stubbornly bullish on los angeles real estate for someone who doesn't even live here.

My god I cannot believe the PR machine the NAR has going here.... I wonder how dear Lawrence Yun RE leader from Mars will spin this one ?? Peter you should have a sign, blog dangerous for RE agents, too much reality and datas.

Some houses went into foreclosure not because they were bought at the high of the market (2006/2007) but because they were treated like piggy banks by homeowners.

Too many people took advantage of the real estate boom and easy credit to take cash out of equity to pay for cars, vacations, and credit card debt.

Now that it is harder to get a loan and the value of the property is going down, many such homeowners owe more money than their property's worth.

With each low, more people may decide to walk out than bail out.

In my office, I saw a homeowner who paid $250,000 for a Palisade condo in 1999 and let the bank have it back at the end of last year. At that time that condo was worth $900,000+.

"We're anxious to see whether the government's recently announced higher conforming loan limits will have much impact on sales in these areas this spring and summer."

More importantly, what is going to happen when the conforming loan limit resets to it's lower amount? The pool of buyers that need the higher limit will be depleted. Who is going to buy their homes if they need to sell? How can prices possibly stabilize when what is effectively a subsidy is removed?

Kat,

We've already covered that you don't understand the realtytrac numbers (and refuse to start learning apparently), lets move onto the whole picture.

http://mbaa.org/NewsandMedia/PressCenter/60619.htm

"The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 5.82 percent of all loans outstanding in the fourth quarter of 2007"

"The delinquency rate does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process was 2.04 percent of all loans outstanding at the end of the fourth quarter"

To me that is 7.86% of all loans outstanding are either having trouble paying or in the foreclosure process.

Do you get the feeling its bad yet or are you just mad you are wrong and looking for other data to support your POV? If its the latter you really make sure you understand the data before you bring it here because so far you aren't doing to well.

The published data magnifies the drop in prices. Because rates on non-conforming mortgages (I mean those above what FHA and Fannie May will buy, not subprime mortages which were made available to many noncredit-worthy buyers) are much higher than they should be, even where there are large donwpayments, there a very few sales in the higher price ranges. However, the median price is based on actual sales. So, if larger percentage of the sales than normal are foreclosures and/or at the low end, the drop in values is bound to be exaggerated. if the focus is on meidan price data. Value is a function of both a willing buyer and a willing seller. Most sellers in stronger neighborhoods, like on LA's West Side, are not about to sell into this market. When mortgage availability returns, there will be more middle and higher end sales and the median prices will not look as bad.

The comments here talking about affordabiliy by reference to national norms have no meaning in SoCal. Peopl ewill pay more of their income for housing here if they can afford to. Many can. With price reductions and mortgage availability, buyers will return to the market. After all, many buyers' incomes are rising, even if not quickly.

um. kat's a troll. don't feed the trolls.

sjen, you bring up a really good, and very important, point.

i have friends in loudoun county (virginia, very bubbled) who are currently underwater - but only because they took out a second.

now, it was a necessary second - no toys or boob jobs - but without it, they'd be okay. at least for now.

This is a good time to buy!

"My rent is going up....to $2500 for a 1 BR in Hollywood. I might as well just buy for those crazy rent prices."

Either you are a realtor or just "challenged".

Learn how to use Craigslist and learn how to negotiate.

And to the people who think rents will go up...verse yourself on economics and the past recessions/depression.

Rents go down.

michael lang wrote: "The comments here talking about affordabiliy by reference to national norms have no meaning in SoCal...."

Really michael, so what was in 1993,1994,1995,1996,1997,1998,1999,2000, and maybe 2001 ????
SO CAL prices were in line with incomes!!!, Then, they departed. You are basically claiming that there was no bubble....
You are in a dream, wake up! Smell the coffee, The chickens came home to roost.

Wow, someone get the popcorn so I can watch Kat and Cal go at it!

Kat, I am glad to hear that your investment strategy has planned out and I can only hope that I can do as well as you have during the next cycle, but although I agree that things on a NATIONAL level may not be as dire as it seems, it does me no good to know that Vermont only had 1 foreclosure. I am not moving out of Socal anytime soon, so I HAVE to focus on what is happening in THIS market. I admit that I gleefully cheer as prices go down as it brings them closer to my affordability, but it is worrisome that the RE market is also having an adverse affect on our economy as a whole. As certain bloggers have already stated, data and statistics can be skewed to validate one's argument, so while you may have data that shows that on a NATIONAL level over 90% of mortgage holders are paying, on a LOCAL level the foreclosure rate is rising, and though it may be a little (maybe even a lot!) myopic, that is really the only data that we in SoCal are interested in.

I would hope against all hope that the banks (and the RE business as a whole) would decide to cut their losses NOW, drop the prices to what they KNOW is affordable, and let the market correct itself. I am pretty sure that there are quite a few people out there like myself who are doing without the new car and plasma tv and instead holding on for the purchase of a house. Once I can get my family that (of course WITHOUT overextending our finances) I will be more than happy to become a "good little consumer" again and help the economy, but until then I will pass the time by logging on to this blog and watching the "show."

Of course rents will drop, even in Los Angeles.

To understand why, you have to make the connections between the job market and the rental market.

As employment opportunities contract, and as people work fewer hours, they bring in less income.

They can try to make ends meet by cutting back on luxuries, but many households have few luxuries to excise from their budgets.

Soon such distressed households come to the realization that they are better off doing one of three things: Moving to cheaper neighborhoods, or doubling up -- i.e., moving back home with parents, subletting bedrooms and converting dens and home offices into separate bedrooms (even closets at times), or moving out of the area, where job prospects are better, or where at least one's income extends further.

The allure of Southern California's weather only goes so deep, you know.

In the meantime, desperate landlords are now competing with distressed flipper-investors, stuck with houses they can't sell, now transformed into would-be landlords, undercutting traditional landlords by renting out their SFR properties for competitive amounts.

I've seen it happen before, in Hollywood (in the early 90s, during the last housing slump and recession), when you could drive through neighborhoods whose apartment buildings were festooned with banners announcing "move in" specials like, "First month's rent Free!" or "No Deposit required!"

People, learn history; What goes up can come down, and that includes rents.

to sjen and arroyogrande,

I see rents going down in SF valley. One very fancy house I was looking at went down from $5400 to $4700 and now asking $4300. That's quite a drop.

Many rental properties are new homes, recently built, that are not selling, so now they become rental property. There are also mammoth apartment buildings in all stages of construction that will add tremendous inventory. Take a drive through Studio City and Noho and you'll see what I mean. I sense that in the valley there is more rental inventory since the beginning of the year.

The city might be different, but then the city did not experience yet the asset price drops that are now taking place here.

I think that Riverside and San Bernadino are SFV in six to nine months from now, and the city eighteen months from now. Especially if a recession comes. If thousands of jobs are lost, rents will come down. Today's free month is equivalent to the free cars and flat screens builders used to offer. Now they simply cut the price.

"Well, they don't follow up with a little fact like, even if the foreclosure rate doubles it's still less that 1% NATIONWIDE"

Question - what was the nationwide figure when we had the last housing slump (early 1990s?) Better or worse than right now?

Given that we have "record" foreclosures, I'd have to say that it is worse this time...and therefore, wouldn't you think that the price declines would be worse as well?

And if foreclosures are *really* in the "it ain't so bad" category, why is the federal government getting more and more desperate about "doing something about it"? Maybe we should write to our congresspeople and let them know that we want no more talk about a bail-out of foreclosures...after all, "even if the foreclosure rate doubles it's still less that 1% NATIONWIDE".

Have you started writing to them to tell them that?

- arroyogrande

To Peter I:

I believe that you have a misconception about residential income properties.

Real estate Investors don't buy single family residnece (SFR) for income producing purposes.

Apartment building investors/owners don't typically "flip" a property for a quick profit. Some have a holding period they observe. Some hold on to their buildings for the cash flows. And almost all of them look at the book before even considering a property to buy.

The only time apartment building investors worry about the bottom line is when the vacancy rate goes up. Right now LA apartment market has a 1% to 3% vacancy rate. It has been low for almost a decade.

In the early 90's, a 1+1 in Hollywood was about $500 to $550 asking. At that time LA had a 3% rent control for buildings older than 1982 or not being rehabilitated up to codes.

Today, a typical 1+1 in Hollywood asks between $1000 to $1500 and the rent control is 5% annually.

Even if landlords would stop raising the rents 5% a year, it's unlikely for landlords or property managers to reduce the monthly according how the real estate sales would drop. Like you said, they'd do first month free or waived deposit.

I am commenting mostly about apartment rental units in the City of LA where I've been working for a decade. Many cities don't have rent control. The rent increase in those cities have been notoriously brutal for renters in the past 10 years. Although I don't normally deal with non rent control rental units, I would predict that there'd be a slight dip in 2009 and 2010. The very least, landlords may refrain from raising the rents every two months or so.

For people who'd consider renting a single family res, I'd recommend checking to see if the landlord is behind on his mortage. It's terrible to move into a house and have to move out soon due to the house being foreclosed upon.

I see some people on this site saying that prices are going to drop 50% across the board, how does that impact nicer areas, like Loz Feliz and Silverlake or the hollywood hills. you can find a very nice home in Silverlake for 800K, what's the imapct of the price drop in these types of neighborhoods. If I coud get my hands on 400k home in Silverlake, I'd snap it up in a second, but I honestly don't see a price drop coming in these nicer neighborhoods.

The myth of rent and income is easy to explain.

Let's not to mention luxury rental units. It is a different market than the norms.

The norm is: most people pay $800 to $1500 a month for a 1+1 apartment unit and most of these people make between $30,000 to $60,000 a year. (many 2+1 or 2+2 units are shared with a roommate or rented by families with kids)

However, $800 to $1500 + electricity and gas is all renters have to shell out monthly to keep a roof over their head.

Unless they lose the job, they have no need to move out of the region, move in with parents, or camp out at friend's den.

Losing a job can make a lot of things dispear, be it housing or a marriage.

Compare the montly housing expense living in a $250,000 2+1 condo. First of all, to qualify for a long today, one must have 20% down ($50,000 ready cash). $200000 loan monthly payment at 6.5% 30 year fix will be $1264. Tax is about $260 amonth. HOA due can be between $200 to $500 (let's just say $300).

To own your own condo, the proud owner must shell out close to $1900 monthly. This doesn't include water, hot water, and trash (where apartment landlord pay for). The gas bill will be hight (to heat up shower water). The electricity may be higher as well.

All other expenditures being equal (cable, internet, cell phone, etc.), renting may make better financial sense for many people who dont' make over $60,000 a year or have debt/car loan/student loan to pay off.

Rents dropped even on the Westside during the last crash but it took a while for that to happen; by the mid 90's, there was a 10% vacancy rate that kept rents pretty decent. Now, of course, it's a different matter, but I assume that at some point it will balance out again. If you're willing to drive a bit, there are rental bargains in Valencia and Stevenson Ranch, really nice developments that are dropping their prices. But an acquaintance who works for Coldwell Banker in the greater Westside/Hollywood area tells me that nice places are still getting pretty high rents (1800 for a 1 bedroom in Santa Monica or West Hollywood).

BTW, where's Lefty? I need a good laugh today...

DQ reported bay area numbers as well.

February total homes sold ~ 15k

February total homes gone back to the lender ~ 11k

And if you consider of the part of the 15k that are short sales and REO (1/3 of the resales were the previously foreclosed homes being sold) you'll see how difficult it is and will become for existing home sellers to cash out. I think the smart homeowners who are thinking of moving will see that things will not recover price wise here for at least 10-15 years (last bust took about 11 years locally for prices to recover) and get out while they can. The REO/Short sales will bring prices back to reality and if someone is living in an "immune" area they will be fine until they need to sell, then they have to deal with reality like everyone else.

The property ladder is broken, the low end is not cashing out people to move up and REOs are affecting higher up the ladder. The move up market will remain extremely slow until prices adjust, Or the move up homeowners will sit and enjoy their beautiful homes, not such a bad thing.

"For people who'd consider renting a single family res, I'd recommend checking to see if the landlord is behind on his mortage. It's terrible to move into a house and have to move out soon due to the house being foreclosed upon."

Let's look at this from a different POV.

If you are considering renting from a private "flop-lord"...here is your "to-do list".

1. Find out as much as you can about the house you are renting (sales date/amount etc.)

2. Find out as much as you can about your LL. Google, Zabasearch...whatever. If the person is a realtor...I personally wouldn't reccomend renting from them as their income is most likely going down now.

3. Sign up with Foreclosure.com and check back periodically to see if there was an NOD filed.

4. If there was an NOD filed...call your LL and raise hell telling them that if they are going to put you in a potentially precarious position due to the NOD then tell them that If they aren't paying the bank...you aren't paying THEM! If they can't pay their mortgage, they most likely can't pay for an attorney to try to sue you.

5. If the house goes back to the bank...do like the rest of the FB's are doing...live there for free for a year or negotiate "cash for keys" with the bank.

If you are really good and want to "game the system" you would actually *try* to find a nice FB to *rent* from.

Why?

Because free rent is good...and ARM wielding FB's can kiss my A$$!

An important factor is real inflation is 8% or more per year, and at least in my experience wages are rising.

That means real estate, like other commodities such as gold, will be forced to go up.

Gold has already skyrocketed, and while real estate may not rise as spectacularly, it has to begin rising in the near future.

sjen writes: "Real estate Investors don't buy single family residnece (SFR) for income producing purposes.

Apartment building investors/owners don't typically "flip" a property for a quick profit. Some have a holding period they observe. Some hold on to their buildings for the cash flows. And almost all of them look at the book before even considering a property to buy."

I don't disagree with either assertion, nor did I argue to the contrary above. My point was that flipper-investors are forced to become landlords when they can't sell their SFR properties, thus end up drawing tenants from the market that would otherwise look mostly at units in high density buildings. The pool of renters isn't growing, relative to the number of vacancies, in other words, hence no net increase in demand. Further, doubling up and moving out of state are increasingly likely to occur, resulting in a net decline in demand.

Prices still have a long way to drop. This is only because prices have been SO INFLATED.

This is simply an overdue price corrrection. The unwinding of the housing market will not be completed in 2008. Sorry folks.

The president of Freddie Mac said just yesterday - home prices have declined only 1/3 of their distance.

This is hyped-up hysteria to engineer a bailout for the banks and mortgage companies. In 2000-2001 the securities markets failed so drastically because of flawed "accounting rules", which hid losses from scrutiny. You might be surprised if you reviewed the accounting rules banks and mortgage companies are operating under. These current rules, like the ones abolished and changed back then for the securities market, have enabled this crisis to occur. The red herring of "subprime crisis" has worked to date to cover up the true nature of the flaws in the market, but "value", like in 2000-2001 is about to be "adjusted", which is the problem, not "subprime" anything.
The Truth Shall Set You Free

Daniel Lee writes: "An important factor is real inflation is 8% or more per year, and at least in my experience wages are rising."

Daniel, I'm happy to hear that your wages are rising (presumably keeping up with that 8 percent figure too?)

Unfortunately, this is not the case with most Americans. Not at all. Study after study has shown that real wages haven't kept pace with wages from the early 1970s, adjusted for inflation, much less have they really grown.

Ayhe, aye, aye....all this hand-wringing. Folks, in southern California -- especially LA County and City -- you're prone to a real estae slump in any three year period, but in any ten year period you're going to make money. Homeonwers who have to sell urgently when caught in a downdraft are going to suffer, but the majority of folks will stay current on their mortgages, even if their porperties are sinking under water. Deal with it! We're in the most naturally buoyant real estate market in the world, and that won't change, notwithstanding any setbacks you'll see in a three year span.

The slump is as media-driven as anything. Ignore the news on this slice of life, pay your bills and outlast the sag. It will pass, and you'll make money waiting it out.

I don't have nearly the concrete data for rentals that I do for resales. But I watch them weekly, rentals have exploded in my area, very high on the MLS and the local rental newsletter hotspot. I think the sellers are getting the word to not sell now and are trying to ride it out.

Big problem is that many who are in that boat are asking very high rents and not renting. I have seen rental prices come down in some segments but the people that appear to be grudging first time landlords want a big premium. The rest of the market (income properties, experienced investors) actually have come down, the corporate owned rentals rents haven't come down. I think corporate owned allows smaller security and worse credit meeting the demand of a bigger segment of the market.

MLTPB: Thanks for the 2 cents.

Pennies minted since 1982 have a mass of 2.5 Grams.
They are currently copper plated zinc: 97.5 percent zinc and 2.5 percent copper.

Zinc is being sold at about $1.16 per pound. Copper at $3.84. Ipso Facto, QED, and twiddle-dee-dee... the metals in the modern penny are worth about 7/10ths of a cent. Factor in the cost of shmelting, and we're probably down to about the value of the ones and zeroes that shoot out the business end of the treasury computers. They're not very pretty, but they do entertain silly people for hours on end.

Ah fuggedabou precious metals. If you want to really have some fun, melt down an entire economy. It's all the rage. I hear there's a great future in plastics, too.

Chicken Little 1 Pollyanna 1

I hope that we don't find out that Cal and kat are really the same person -- that Cal has had a psychotic break resulting from staring too long at the endless stream of horrifying numbers -- and kat, his suppressed optimist has finally emerged as a completely separate personality in another state.

"Wow, someone get the popcorn so I can watch Kat and Cal go at it!"

This is interesting. Way back in the early days of the blog I berated Cal and asked him to drop the popcorn *he* was eating while recording the early tremors of our economic Mt. St. Helens. Not only did he seem to drop the popcorn eventually, but his numbers just got sharper and sharper over time as he began to question them more and look deeper.

I don't think kat is a troll. Maybe a "huldre," but not a troll. kat, one final poignant note: 5% return, when real inflation is running far beyond that, is actually a loss.

BankMan: I rate your comment AAA, but humbly request specifics. Elliot Spitzer is gone. Ken Langone all but took direct credit for that. So who's the next sucker charged with "investigating, but not too deeply" the ratings and "research" and accounting and compensation?

Is it bad? Yes. Really Really bad? Yes. Will it get much worse? Yes, much. Can we get through it? With lots of pain, yes. Even in middle america? Yes. What can we do to prevent it in the future? Get smart. Very smart. And teach our kids to be good to each other.

1. When you say so many of the sales are foreclosure sales do you mean the bank bought the property, or that there were bidders/buyers/speculators/families/ that ended up buying the property? It makes a world of difference

Thanks,
SanParker

I'll be interesting to see if the beach cities get a bong hit from the new conforming loan limits. DataQuick analysts said they were "anxious" to see if this would happen.

I didn't get lucky, my financial advisor did.

So this is what is making Kat lash out all the time. Evidently the advisor took her for a ride.

Since when are sign sales an indicator that prices will pick up?

I look more at things like inventory relative to actual sales.

sjen: Wrong. I know plenty of investors -- me included -- with hefty portfolios of SFR cash flow rentals throughout the country.

I am Not Dead,

I don't know if I exactly have an "investment strategy". If you knew me you would know why it's funny to hear that phrase applied to me.

My stategy is that wenever I have an increase in salary for some reason - raise, pay off a debt, get married again . . . . I remove the money from my hot little hands and make sure it is taken either out of my paycheck or my bank account and handed over to people who remove it from my possession and don't tell me where it is. When I have a loan I pay extra to save interest and I barely leave myself enough to live on. When I bring in more money I don't take on more debt.

I'm also glad to hear your not getting caught up in all this hysteria. You know you will get your house. Then, after watching all this madness, you will hang on to that house and own it one day.

And Cal, seems I'm not the only one on this board who thinks this whole "crisis" is 90% media fueled hysteria. Of course it's a big issue in California. Real Estate has always been a big issue in CA. When I lived there 20 years ago I too paid half my take home in rent. I don't remember it being much different then. My boyfriend at the time live in an absolute dump I wouldn't go to and he paid $100,000 for it in the early 80.s It was in the ugliest part of SF (somewhere around Candlestick), it was about 1200 sq. ft and it looked like Green Acres. He bought it with a roommate. I remember thinking that I'd never been in a $100,000 house before.

It blew a country girl's mind I can tell you that.

But you can show me all the links you want. The foreclosure "crisis" is a media event for 99% of this country. Part of the price of living in paradise (CA) is going through this sort of thing. If you didn't love it there so much you wouldn't put up with it.

What's going to get this country is the national debt, the depleted dollar, oil prices and the river of debt Americans are swimming in. Not the foreclosure "crisis".

Anonymous , we should all listen to your wisdom,

Do NOT feed the trolls!!!

GeekSeek:"This is interesting. Way back in the early days of the blog I berated Cal and asked him to drop the popcorn *he* was eating while recording the early tremors of our economic Mt. St. Helens. Not only did he seem to drop the popcorn eventually, but his numbers just got sharper and sharper over time as he began to question them more and look deeper."

Yes, clearly you've done just oh so much in helping me form who I am today.

Now who the heck are you?

p.s. The type of data I have tracked since I started my spreadsheets in January 2006 hasn't changed, so it isn't my analysis that has gotten better it is probably more the fact that your acceptance of the data. Because I guarantee, whoever you are, you've had no bearing whatsoever on what data I track or read.

Inland Empire,

Oh, it's you again. My nephew-in-law is managing my vast estate, actually. Since my son is graduating with a business finance degree in spring he will probably be my co-financial advisor when he gets a job.

I'm not rich by any means. I give money to other people so I can't get at it everytime I have one of those "you only live once" impulses.

I have put one child through college and the second is going this fall. That and retirement are my biggest "investments" since up until about eight years ago I was alone with two kids barely living above the government's definition of poverty - although I was never in poverty the way I think of poverty, not even close.

Plus, everytime someone in my family starts selling investment plans or insurance or stocks or whatever, I buy something from them. It's turned out pretty good though. I'm 46. If I live for five more years I won't owe anyone on the planet one thin dime and both my children will be out of college.

That's my big plan.

Kat,

You said.. YOU SAID :

1- "Well, they don't follow up with a little fact like, even if the foreclosure rate doubles it's still less that 1% NATIONWIDE - hear me - NATIONWIDE. "

2- ":"The latest foreclosure statistic is that 1 in 242 California home mortgage loans are in foreclosure. So out of 242 households 241 are paying their mortgages.""

Both which are completely false, I have showed data.. straight from the Mortgage Bankers Association of how almost ~6% are not paying mortgages and the homes in foreclosure are 2% nationwide, 8% of all loans not performing... 1 of every 12.5 loans! This is the data straight from the source, no reporters, no interpertation.

You either just want the data to be good or just have horrible comprehension skills. Either way, don't come on here saying things are ok except for CA. You simply don't understand and REFUSE TO LEARN ("But you can show me all the links you want."). You are the very definition of a pollyanna.

Cal,

I'm not a pollyanna. I'm a realist.

I'm just telling you what I read yesterday in an article quoting RealtyTrac. which seems to be fairly reputable as I've seen in quoted in several credible articles - CNN, Wall St. Journal, New York Times.

You can attack me all you want. I don't much care as I've said before. Not quite sure what your problem is. Besides, so what if a bunch of deadbeats are defaulting on their loans. Like I again said, it's a good thing. The economy is like the human body, it fixes itself when it's sick or injured and that's what happening with your housing correction. It's not the end of the world.

Like another poster said, the banking industry is leveraging this whole thing to get a government bail out for thier greed and irresponsibility.

http://www.allheadlinenews.com/articles/7010323535

kat: "I'm just telling you what I read yesterday in an article quoting RealtyTrac"

Show me anywhere where someone said 241 of 242 households are paying their mortgage or that the foreclosure rate is .5% (you said if the foreclosure rate doubles nationwide it would only equal 1%).

You are completely misinterperting the numbers, you simply do not understand them in any way shape or form.

p.s. The only person who mentioned leverage... was me.. you again don't understand what you are reading. You only hear what you want to hear.

Fine Cal, you're right. The foreclosure "crisis" is a damn tragedy. People might even die in the streets. I can see the New York Times headline "Foreclosure Crisis: Women and Minorites Hit Hardest."

You too will probably die. Your grandchildren will be reading about this in thier history books. The Earth will stop spinnin on its axes becasuse a buch of semi literate fast food workers were jettisoned from half million dollar sh*t holes.

The rest of the country will collapse too before it's all over. So I think you should just cut your throat now and get it over with. Or maybe all the people in California should to a Peoples Temple. You could be Jim Jones.

Get grape. It's the best.

kat: "seems I'm not the only one on this board who thinks this whole "crisis" is 90% media fueled hysteria."
"The foreclosure "crisis" is a media event for 99% of this country."

...uh... so if the media just stopped all coverage of foreclosures, they'll magically go away and we'll all be happy in LALA Land???? No more mortgage bank failures? No more stagnant sales? No more people getting the boot out of their homes? WOOHOO!!!

As Cal said, you only hear what you want to hear... and I can't BELIEVE you would actually claim that "I'm a realist". What *%^@# reality are you in?

I heard you also know where the WMD are, Kat... care to share?

"Because I guarantee, whoever you are, you've had no bearing whatsoever on what data I track or read"

Does this mean you didn't check out the DerbyDolls.com website?

C'mon, take a compliment, however backhanded. The numbers were good, they've gotten better (unless you had a perfect understanding of them when you first opened your spreadsheets).

Kat,

Sorry If I can't be as glib as you as the biggest financial market failure in history. And I'm sorry you can't comprehend the data you are reading and apparently can't handle the truth. But your lashing back is pure hyperbole, my reporting of the F A C T S of the situation are anything but.

My nephew-in-law is managing my vast estate,

Kat, this is a real estate blog about the Southern California area. Mostly LA but a few surrounding areas as well. I am sorry you misunderstood. This blog is not about you and your trailer.

"The property ladder is broken, the low end is not cashing out people to move up and REOs are affecting higher up the ladder. The move up market will remain extremely slow until prices adjust"

That sums up the entire situation nicely in a couple of sentences.

Kat, I'm nowhere near California, and the real estate market here is merely anemic--not crashing, but not exactly moving along briskly, either.

Like you, I'm a single mom with kids in college and a financial struggle behind me--and probably ahead of me as well.

But I have to say that you--and even many of the others on this board--are greatly underestimating this thing. IMHO.

What am I telling my kids? I'm telling them that we're in the midst of the biggest economic debacle of the century. They'll be telling their grandchildren about living through what's coming.

Not that I know what's coming--only that there are some hair-raising tales in the making. May your optimism and mellow temperament serve you well! Those may be the best assets any of us will have.