Declining Sales and Exploding Rats

"Sales of both new and existing homes have fallen steadily in Sonoma County in the past year after the market and prices reached a peak in August 2005. The median price for resale homes has dropped 7.7 percent over the past year, falling to $567,500 in September. Several forecasts predict the region's housing market will remain weak for at least the next two years."

"Housing starts also have declined because homes are taking longer to sell. Both Christopherson and Rivendale have cut production 25 percent, compared with a year ago."

"Sonoma County builders have cut prices approximately 10 percent, compared with a year ago, in response to the housing slowdown. The county's largest builder, Christopherson Homes, has reduced its prices 5 percent to 10 percent over the last year. Rivendale Homes, the second-largest builder, has cut its prices 10 percent in the past year."

By the way....

"Pest control experts say rat populations have been on the rise in the North Bay for three to four years."

"There is a major rodent explosion going on, from Sausalito to Cloverdale. It's major all through Marin. There is no area that doesn't have some level of it going on," said Ed Meehan, a specialist with the Marin/Sonoma Mosquito & Vector Control District.

"He said the cause of the rat boom isn't clear, but one theory is that raccoons, which prey on the rodents, had been dying off.Whatever the reason, he said, no one wants to talk about rats because they are associated with filth. But all income levels and homes can have a problem, he said, and normally it has nothing to do with garbage."

'"I've been in pretty fancy homes in Marin where rats are running across the living room," he said."A lot of time in neighborhoods, pet food is left out at night, or it's bird feeders," Meehan said of the attractions for the rodents."

"Roof rats bring the most trouble, say exterminators, because they are like squirrels in their ability to climb fences and branches and find their way into attics and other spots.But there are also problems with Norway rats, also known as a brown, sewer or wharf rat. In the fall and winter they have a tendency to look indoors for a nice, warm place to raise a family, he said."

Trainwreck of Fraud...

From SFGATE.com - "...a real estate agent called me. "I think I have a scoop for you," he told me, his voice vibrating with gumshoe grit. He'd heard that a prominent East Bay company was training its agents to inflate properties by $50,000 to $150,000, then have sellers return the cash after the close of the deal. Unlike the arrangement with the developer, these deals were concealed from lenders by adding the cash-back arrangement onto an addendum apart from the purchase contract."

"How did my friend hear about this practice? A local manager of a prominent real estate company had tipped off my friend's broker over lunch. The manager, who had been shocked at the behavior, had then gone back and looked at his own agents' files to see whether the practice ever happened in his own office. "The guy said he found so many in his own files in the past couple weeks, he didn't want to look anymore," my agent friend said."

"What exactly was happening here? The developer didn't think he was doing anything illegal, and the broker had no idea the inflation was happening under his watch. But in both cases, everyone involved probably would have been considered at least partially culpable if the lenders could mount a case that they were being deceived."

"Welcome to the convoluted world of mortgage fraud, a crime in which it's sometimes hard to disentangle victim from criminal, and crime from business as usual."

"Why? In the years of booming appreciation and bargain-basement interest rates, real estate has become a national obsession. With it have come certain run-of-the-madness practices. Appraisers agree to inflated property values. (By next month, the market will go up so much, they'll be valid.)"

"Agents write offers with increasing amounts of cash back. (How else can the poor homeowners get that Viking range?) Mortgage brokers play the "we'll get you that loan no matter what" game of social engineering. (How else can schoolteachers buy a home?)"

"But now the proverbial vultures have come home to roost -- mortgage fraud is being busted left and right. This month, the most spectacular example so far was reported in the Wall Street Journal: an $80 million federal grand jury case involving more than 100 homes in Indiana."

"Also, last year, one of the largest property owners in Buffalo, N.Y., was convicted of perpetrating a $4 million fraud-for-profit scheme, sentenced to a year in prison and slapped with a $1.5 million fine. Last July, the New York Times reported on the precipitous rise in mortgage fraud, quoting the FBI that lenders lost an estimated $1 billion last year, double the previous year's estimate, from mortgage fraud. (For a thorough list of recent cases, visit MortgageFraudBlog.com.)"

"Recently, a developer regaled me with a story about a house that seemed to be cursed. Although he beautifully renovated it and priced it below market, the Oakland bungalow just wouldn't sell. Deals fell through repeatedly for bizarre and unrelated reasons: Buyers got cold feet, or moved -- one was even arrested. By the time the fourth deal collapsed, the developer was in an acute state of financial panic. "

"So, when one of the mortgage brokers who had helped a previous prospective buyer called with a new one who would close the deal for -- get this -- $100,000 over the asking price, he naturally jumped at the offer. "

""The catch was that I had to give the $100K back to them after the close of escrow," the guy told me, still looking shell-shocked. "I couldn't understand why they would want to do that. The place was completely remodeled." (Most buyers who get cash back after escrow pour that money into repairs. Typically, though, lenders like to keep this amount to no more than 3 percent of the purchase price.)"

"The developer went through with the sale, wondering what his buyers (whom he never met) were up to. Because he wasn't lying about anything -- everything was disclosed on the purchase contract -- he didn't feel he was doing anything wrong. "

"As crimes go, mortgage fraud is hard to get riled up about. In many cases, the victims are institutions that earn billions of dollars a year. Even the banks have colluded in creating products, such as negative amortization and stated-income loans, that sometimes seem to encourage irresponsible borrowing. And straw buyers may claim they are victims, but, let's face it, they were motivated by the promise of easy money, so they are also perpetrators. (Of course, those whose identities were stolen are innocent.)"

"Whatever the case, it's important that we don't allow mortgage fraud to continue as one of those little illegal real estate things everyone does. Just as credit card fraud ends up on all our monthly bills, homeowners end up paying for lenders that get defrauded. As the saying should go, there is no free mortgage."

Dine In, Pick Up or Delivery?

"Last spring, John Ahmadi decided to drop his career as a real estate agent and toss pizza dough instead."

"Ahmadi, 35, adapted to the housing downturn by buying a Santa Rosa pizza shop. Although the money is not as good, the husband and father of two young girls likes the stability of running an established business rather than struggling to earn commissions in an increasingly difficult housing market."

'"It got more competitive. There was less to go around," said Ahmadi, who left Coldwell Banker last spring and bought Sandy's Take & Bake Pizza. "That's what you've got to do, just pick yourself up and keep moving forward."'

"For four years, Ahmadi was an applications engineer for Advanced Fibre Communications, where he provided sales support to large and small telecom companies. But he was laid off three years ago as the county's tech sector went through a wrenching downturn that wiped out thousands of jobs."

"His father suggested real estate. Ahmadi had grown up watching his father fix up and sell homes in the Los Angeles area, and he figured he could do well as home sales surged and prices soared. With his new broker's license in hand, Ahmadi took his shot with Coldwell Banker."

"After selling eight homes his first year and six homes his second year, Ahmadi found the market begin to grow tougher and less lucrative last year as sales slowed and homes started languishing on the market."

'"You're constantly chasing prospects down and trying to do everything you can to find new business. So it can be stressful," he said.Ahmadi credited Coldwell Banker with providing training and support for new agents. Still, he decided to leave the business."

"He is not alone. The county's housing industry lost 1,300 jobs in the second quarter, the sharpest downturn in a decade, according to a study by Moody's Economy.com."

"He still ponders a return to real estate. He has kept his license active and thinks he could boost his income by working on the side as a mortgage broker."

'"I'm not making the money I used to. But I'm having a lot of fun," he said. "I'm happy and I'm not waking up every morning wondering where my next paycheck is coming from. This was a good transition for me."'

The Way To Lose Is Simple...

From CHRIS COURSEY & THE PRESS DEMOCRAT

"I used to claim the title of the only person ever to lose money in the history of Sonoma County real estate."

"Not anymore. Thursday's story by Mike Coit said the number of home sales in the county hit a 10-year low last month, and the median home price dropped 7.7 percent from a year earlier. Which means I could have plenty of company in my real estate misery."

"It's actually pretty easy to lose money in Sonoma County's housing market, and it always has been - except, perhaps, for those few crazy years between 1999 and 2005 when annual appreciation was hitting 15, 20 and even close to 30 percent."

"The way to lose is simple: Buy high and sell quick.That was how I lost money. And I did it not once, but twice."

"The first time was in 1981. We bought a place near the fairgrounds for $69,000 (Our mortgage interest was something like 11 percent, if I recall correctly.) Three years and two kids later, when we needed a bigger house and a quieter street, we sold for $72,000."

"After subtracting the real estate commission and other costs, the transaction was a net loss.In 1989, another go-go time for Sonoma County real estate, my ex-wife and I settled our divorce when I bought her half-interest in our house in the Junior College neighborhood. The price was based on the value of the place at the time. When I sold it four years later - during an ebb in the market - it went for $15,000 less, and I was on the short end again."

"I tell these tales not to seek sympathy, but to illustrate an important point: Real estate prices wax and wane. There's no guarantee that housing is a good investment. And there's always a risk of losing money."

"The median, even at 7.7 percent below last year, remains prohibitively high for many would-be buyers. Likewise, it remains lucratively high for homeowners who purchased their property more than a couple of years ago."

"Me, for instance. I bought my current house in 1997 for the then-median price of about $220,000.In other words: If and when I sell, I'll no longer be able to say I lost money on Sonoma County real estate. And all I had to do was stick with the market for a quarter-century or so."

Sales @ a 10 Year Low for Sonoma County

"Sonoma County home sales hit a 10-year low in September and the median price declined for a third consecutive month as the housing market drops from last year's record highs."

"Homes are taking longer to sell and price cuts are accelerating, with the median dropping to $567,500 in September, a 7.7 percent decline from a year ago. It was the first three-month price drop in 12 years."

"More buyers are continuing to wait for the market to hit bottom, frustrating sellers who must increasingly compete for offers."

"The supply of homes for sale continues to exceed demand. Homes sold in September took 93 days on average to sell compared with 62 days a year ago."

'"I'm telling my clients that if you want your house sold, you need to be in front of the market," Sandy Geary, broker and owner of Remax North Bay Realty in Rohnert Park said. To draw interest from potential buyers, sellers should list their homes under the most recent sale price for a comparable home, she said."

'"And the buyers are still going to come in and ask for concessions," Geary said. "You have to be honest with your clients about what's really going on. "Buyers remain wary about purchasing homes despite lower prices and favorable interest rates, which have dipped this fall to their lowest levels since late March. Buyers don't want to pay more than a home might be worth a month or two later."

"Prices have fallen the most in Windsor, the Cotati-Rohnert Park area and west Petaluma.The greatest increases in inventory, by percent, were in Petaluma, northwest Santa Rosa and Cotati-Rohnert Park."

"One year into the current downturn, the county's housing market could remain weak through the middle of 2008, according to the latest forecast by Moody's Economy.com."

Donde Esta Sonoma County Jobs?

"County lost jobs in September for the fifth straight month — the longest period of job losses since the recession in 2001, the state reported Friday."

"Most analysts agree the economy is in worse shape than a year ago, in part because the housing downturn has wiped out jobs and threatens to undermine consumer spending."

"Unemployment fell in September to a five-year low of 3.7 percent, down from 4.1 percent a year ago, as fewer people are searching for jobs, according to the report. The mixed numbers depict an economy teetering on the edge, said economist Steven Cochrane, senior managing director at Moody’s Economy.com."

"Job growth began to stall in Sonoma County in March and the local economy began to shed jobs in May. Since then, job losses accelerated every month."

'“Unless there is something very unique going on in Sonoma County, some of that vitality from the tech sector should be filtering up to Sonoma,” Cochrane said. “But the (employment) numbers just don’t look very good ... almost all the different industries are going down.”'

"Overall, employment declined to 192,900 in September, down from 195,600 a year ago. Job losses were spread across several key sectors of the local economy."

"Agriculture, one of the county’s defining industries, has lost 900 jobs over the past year. Tech manufacturers have shed 400 jobs as companies such as JDSU and Tellabs downsized, and TriVascular closed its Santa Rosa location."

"Retailers have lost 200 jobs over the past year, primarily at grocery stores, and restaurants have cut 300 jobs.Temporary employment agencies, which serve an array of industries, have shed 300 jobs."

'“It is not the year 2005, when things were wildly good, probably too good,” said Ben Stone, executive director of the Sonoma County Economic Development Board. “There has been an adjustment; I wouldn’t call it a recession.”'

"Sonoma County business executives are planning to spend less money on upgrades or expansions, Stone said, citing a survey by the board."

“Confidence is down, so they are not going to be hiring people. They might be letting people go,” Stone said."

"Friday’s report shows that 5,500 Sonoma County residents have left the labor force in the past year. There were 253,900 Sonoma County residents working or actively looking for work last month, down 2.1 percent from a year ago. However, the report does not indicate whether they have moved out of the county or stopped looking for work."

'“People might be moving back to Silicon Valley, because Silicon Valley is quite healthy right now,” Cochrane said. “For some reason people are exiting the labor force in Sonoma County.”'

Some of These People are Stupid...

"Foreclosure activity accelerated this summer in Sonoma County, rising to a seven-year high as homeowners found they no longer could rely on rising home prices to fend off financial woes."

"The Bay Area experienced an 89.2 percent increase, with Solano County's 171.3 percent increase being the largest."

"Default notices jumped 83 percent in Sonoma County during the third quarter, following a 53 percent increase in the second quarter, according to Data-Quick Information Services, a La Jolla-based company that released the figures Wednesday."

"The third-quarter spike was the largest percentage increase in at least 14 years - as far back as the DataQuick records go."It has the potential to be a very big problem," Cutts said. "I definitely think it's a worsening problem."'

'"Some of these people are stupid, and others got caught by unscrupulous lenders," said Amy Crews Cutts, deputy chief economist with Freddie Mac. "And others just had bad luck and couldn't make their payments."'

"Under particular duress are residents who took out mortgages near the peak of the housing market in August 2005 or later, particularly those who used nontraditional loans, such as interest only or negative amortization, real estate analysts said."

"More than half of California's default notices came from loans created in the past 14 months, according to DataQuick."

"Negative amortization and interest-only loans have the highest default rates - nearly double the rate of traditional loans, Cutts said."They are performing much worse," she said. Some people used these types of loans to get into houses they otherwise could not have afforded."

"Homeowners under financial stress are finding it more difficult to sell their properties quickly and pay off their debts. Home sales tumbled almost 40 percent in September compared to a year ago, while prices have dropped 7.7 percent in Sonoma County - the most in the nine-county Bay Area."

"As a result, lenders are initiating foreclosure proceedings against a small but growing number of homeowners."

Leaving Skidmarks

"Bay Area home prices fell last month for the first time in more than four years, providing evidence that the region's seemingly unstoppable housing market could be starting to hit the skids."

"Sonoma County experienced the steepest drop in existing single-family home prices, at 8.2 percent."

Wait a minute... didn't some local REIC windbag say that buyers shouldn't be waiting for prices to drop because it wasn't going to happen? Didn't said windbag say that even in the last real estate bust that prices in the county only declined by something like 4% and that won't happen again?

Stay tuned, Baby!!! Looks like we already have doubled that decline and this can barely be called the beginning. You ain't seen nothin' yet!

(ps. advice from REIC gasbags is useful at this time if you are in need of a good belly laugh.)

"In Napa County, prices declined 6.5 percent and in Marin County, prices were off 3.3 percent."

"'This is an enormous real estate bubble, bigger than we've ever seen, and it's got to work its way out of the system one way or the other," said Christopher Thornberg, an economist in the Los Angeles office Beacon Economics, a consulting firm that focuses on the Western states."

"You've got to pay the piper."

"The Bay Area could be following other regions of the country that already have experienced a decline in prices."

'"Housing prices moved up too far, too fast relative to people's incomes,'' said Ken Rosen, chairman of the Fisher Center for Real Estate and Urban Economics at UC Berkeley."

'"The affordability is worse here than most anyplace else, but San Francisco is not the only place this is happening."'

"Sellers say they are feeling the sting of a market that is no longer skewed in their favor."

'"It used to be that all you had to do is put up a 'for sale' sign in front of the house and tell people if they didn't put in an offer by a certain date, the house would be gone -- and it was," said Claudette Center, who is trying to sell a Bernal Heights home that belonged to her uncle."

"After gutting the kitchen, refinishing the floors and putting in new bathrooms, she still hasn't received any offers, and traffic at open houses has been slow, she said."

'"Last week nobody came," she said."

'"I understand that if I really want to sell the house fast, I'll probably have to drop the price," she said."

"Across the state, inventory more than doubled in the past year."

"As buyers continued to take their time, the number of all homes sold, new and existing, sank to a five-year low last month, dropping almost 30 percent from September 2005, DataQuick found."

A View from the Road to Housing Hell...

Sonoma County home sales fell in September from the month before. Single-family home re-sales were down -15.5% from August, off -40.1% year-over-year.

Condo sales were off -41.7% year-over-year.


Home Sales:
Sep 06: 366
Aug 06: 433
Sep 05: 611

Days on Market:
Sep 06: 93
Aug 06: 92
Sep 05: 62

Median Price:
Sep 06: $565,500 third month in a row year-over-year appreciation has been negative.
Aug 06: $575,000
Sep 05: $610,000

stats from: rereport.com

The realtor's website claims that this 40% decline is totally normal and consistent with seasonal sales fluctuations. I laughed. That 40% is YEAR over YEAR which means it is even lower than last year's apparently normal seasonal decline.

The realtor also said that if buyers are waiting for more price declines they aren't going to happen, because the economy is good and we aren't losing jobs. Apparently this realtor doesn't pay attention as last reports indicated that Sonoma County is losing many more jobs than expected and is definitely being harder hit than the rest of the state. + the jobs lost in the real estate industrial complex in Sonoma County is piling up the body count.

Remember that part of 1 in 6 jobs in the county being in the REIC? Remember that part of the county has lost 1,300 of those jobs in the three month period ending June 30th?

They apparently haven't finished county the bodies from June 30th to present... So far it is predicted the county will lose 2,000 more REIC jobs. tsk tsk... to that realtor that says our economy is doing great and there will be no major job losses or serious price declines.

Sit down, hold on and get ready for the downhill plunge from this real estate roller-coaster. 2007 brings home the bulk of the toxic loan resets and 2/3rds of our county are holding these bend-over loan products. We are talking about the biggest margin call in history.

In the words of Steve Cochrane, an analyst with Moody's Economy.com, which prepared the study on employment in the county's housing sector.... "It's going to be painful."

Today's Housing Bubble News...

...Brought to you by faithful reader: Trailer Trash

Enough of this gloom and doom, already! Here are a few gags to brighten things up:David Lereah, Chief Economist for the National Ass. of Realtors, said the housing market is showing signs of life and that sales may be leveling out.

"Many potential home buyers who have been taking a wait-and-see attitude or taking their time and being methodical in the search process are being enticed by lower home prices," he said."

"Given a positive economic backdrop of lower interest rates and job creation, we expect sales activity to pick up early next year."

"Walter Molony, David Lereah's sidekick, went on to say:"Existing-home sales are forecast to be fairly stable in the fourth quarter and sales for all of 2006 are expected to drop 8.9 percent to 6.45 million – still the third strongest year after consecutive records in 2004 and 2005. New-home sales are forecast to fall 17.3 percent this year to 1.06 million, the fourth highest year on record. Housing starts should be down 10.9 percent to 1.84 million in 2006."

"With a recent correction in the market, the national median existing-home price is likely to rise 1.6 percent to $223,000 for all of 2006; it’s anticipated prices will remain slightly below year-ago levels before gaining positive traction in the first quarter of 2007. The median new-home price is projected to decline 0.2 percent to $240,500 – largely the result of builder price cuts to move unsold inventory."

The rest of the NAR's October laugh festival can be found here: NAR Lies

But wait, there's more!For those who may have missed them, here are some classic Lereah lies from September:

"Households and investors are now sitting comfortably and patiently on the sidelines waiting to get back into the real estate game, but only when property prices come down to more suitable levels.""The good news is that prices are beginning to soften."

"With price reductions come gains in home sales. If prices continue to fall, the decline in sales might have bottomed out in July."

"Most homeowners today have enjoyed substantial equity gains on their properties during the real estate boom years. Cutting prices by 5 or 10 percent will not wipe out their home equity gains."

((Unless the homeowner has one of the many interest only loans or a negative amortization loans which have been so popular lately. If this is the case they probably didn't have any equity to begin with, so they are upside down in their houses.)

"Going forward, restoring buyer confidence is the key to ending today’s real estate contraction."

(Restoring buyer confidence in a real estate con game that is completely played out won't be easy.)

"Only price reductions can bring confidence back to the market. So let’s give a round of applause for prices taking center stage for a brief turn."

(Applause for "brief turn" of crashing real estate prices: "Clap, clap, clap! Whistle! Rah, rah, rah, rah, rah!")

"The sooner home prices drop, the sooner we can stop the bleeding. Expect home prices to fall for most of the remainder of this year. Although it may seem to go against your better judgment, this is a good thing for the long-term health of housing."

(Crashing home prices are a good thing? Does the NAR have Martha Stewart ghostwriting this crap?) The rest of the lies can be found here: Laughable Lereah Lies

Falling Hard and Fast

PressDemocrat: "The housing industry, which propelled Sonoma County out of recession three years ago, is now shedding jobs as builders, mortgage brokers and real estate companies feel the impact of the slowdown."

"After an eight-year run capped by unprecedented sales and price increases, Sonoma County home sales have fallen hard and fast. Sales have dropped for 11 consecutive months, when compared to levels from a year earlier."

"The sector, which employs one in six workers in Sonoma County, lost 1,300 jobs in the three-month period ending June 30, according to a new study. It could lose 2,000 more jobs before the shakeout is expected to end next year, reducing employment to 28,700, the study forecasted."

"Job losses on that scale would be comparable to the previous housing downturn, when the county lost 3,800 housing-related jobs from 1990 to 1992, according to Moody's Economy.com."I remember those 2½ years like they were yesterday," Blankenbaker said."

"It marks an abrupt turnaround for the housing sector, which almost single-handedly pulled Sonoma County out of recession in 2003. Over the past five years, the housing industry added 2,900 jobs in Sonoma County while the rest of the region's economy lost 7,400 jobs."

"For many of the newcomers, this is the first housing downturn they have experienced."For five years it was a bull market in this business. All they saw was their incomes go up and the loans flowing. You never saw the other side of it," Blankenbaker said."

"New real estate agents and loan officers flocked to the industry, attracted by the opportunity to make good money from the boom in home sales and mortgage lending. What agents, lenders and builders see now is the toughest real estate market in a decade."

"The job losses - the largest since the housing market was in retreat in early 1990s - have been deeper than anticipated, even in an industry accustomed to employment swings as housing cycles run hot and cold."

"Mortgage companies and real estate sales companies have been hit hardest, Cochrane said. Many had expanded over the past five years, employing a new crop of agents and loan officers who were drawn to the booming market as home sales - and commissions - soared."

"The effect on the economy will be magnified because many of these workers earned $60,000 to $70,000 or more a year during the housing boom, far more than the typical worker in the county."It's going to be painful," said Steve Cochrane, an analyst with Moody's Economy.com, which prepared the study on employment in the county's housing sector."

'"They were coming into the industry in droves. There's definitely going to be a purge in the real estate industry," said Rick Laws, Santa Rosa manager for Coldwell Banker, which dropped 20 agents two months ago. "I'm sure there will be more to come."'

"Real estate agents and loan officers who logged long, often hectic days to serve customers during the real estate frenzy now are scrambling to drum up business. Those who can't generate enough deals to keep commissions coming in could leave the field."

"During California's eight-year housing boom, the number of licensed agents and brokers jumped 70 percent. Sonoma County had 6,195 in September - 1 for every 55 adults, according to the state Department of Real Estate.But now, the winnowing of the real estate field is under way."

'"We downsized when it was obvious the business was going away. It's kind of a weeding-out process," said Randy Blankenbaker, regional manager for Chase Home Mortgage, who lost five loan officers in Santa Rosa earlier this year because of a lack of business."

Sonoma County Feeling the Squeeze?

THE PRESS DEMOCRAT-- "Housing costs are eating bigger holes into the budgets of families in Sonoma County, where more than 4 in 10 households spend more than a third of their income on housing, according to a Census Bureau study released today."

"The bureau reported 44 percent of Sonoma County homeowners spent more than a third of their income on mortgage payments in 2005, up from 28 percent of homeowners in 1999. Renters faced a similar predicament. In 2005, 42 percent paid more than a third of incomes on rent, compared with 33 percent of renters in 1999."

'"Housing prices are just a huge gouge in everybody's income," said Bonne Gaebler, Petaluma's housing administrator."

"The numbers, which have grown dramatically over the past five years, illustrate the toll that soaring home prices and sluggish wage increases have taken on families in Sonoma County."

"To purchase homes, many home buyers must stretch their finances or turn to interest-only and negative amortization loans to get a house in Sonoma County.After two decades as renters, Rosa and Juan Meza bought their first home in Cloverdale last month."

To make the purchase, they took out an interest-only loan and financed the entire $455,000 price. The couple spend half their monthly income for their $2,300 mortgage payment, which is more than double the rent they paid for a house."

"Most home buyers Roger Farah makes loans to spend more than 30 percent of their income on mortgages and some top 50 percent, he said."

'"They're financing more of their purchase. We're starting to see more people coming forward with less down," said Farah, Santa Rosa branch manager for Mission Hills Mortgage."

"Fully two-thirds of home purchase and refinance loans in the county today are either interest-only loans or negative amortization mortgages with minimum payments that don't even cover the interest due."

'"The median monthly mortgage payment in the county jumped 38 percent between 1999 and 2005, from $1,561 to $2,156. But the median household income of families who own homes grew only 12 percent during the same period, from $64,189 a year to $72,036."'

'"It is now much more difficult for first-time home buyers to get into the market and for existing homeowners to trade up," said Mark Zandi, chief economist at Moody's Economy.com. "This decline in affordability is the catalyst for the current sharp decline in housing activity."'

"Sonoma County's median monthly rent climbed 25 percent from 1999 to 2005, rising from $864 to $1,080. But the median household income of renters increased just 5 percent during the same period, from $37,503 to $39,505."

"That more renters are spending a greater percentage of income on monthly rents suggests wages for lower-income residents aren't keeping pace, said John Lowry, executive director for Burbank Housing, the region's largest developer of affordable housing."

Say What?!?!?

PaperDinero is my hero today. Today they bring you... 70 minutes of Bubble History.

Click to see the see a review of Lereah, Bernanke and their ilk on the housing bubble.

They're So Desperate, They Want To Sell My Dog A House!!

I'm not kidding. This morning we were working as usual when very unusually my cellphone rang. Very few people have that number and it's usually business, agents, studio execs and such. What I wasn't expecting was a cold call from a RE agent asking to speak to Sula and see if she was interested in buying a house.

Now I must confess that I have signed up for some of those RE websites like Zip et al just to keep up with things. The name I usually leave is Sula..last name Dog, and I never, but never leave a phone number so I haven't any idea how they got that.

If that isn't evidence that the bonfires of the RE vanities aren't upon us then I don't know what is. In fact it took us a moment to figure out just what the hell was going on.

I should have told them that Sula had a house in LA, but that she got rid of it and moved up here permanently last year. "Oh!" the agent might have said. "did she sell it?"

"No" I would have answered. It was just a one room house ,small and and kind of beat up the plastic flap "door" was torn. I threw it in the dumpster.

God knows how far it might have gone. I have no doubt that someone somewhere in this wonderful valley probably would have been able to get our 13 year old Siberian Husky an IO/ no money down/ AR loan, without us even having to co-sign for her.