Earthquake! 11:42 AM PDT
Chuck Ponzi July 29th, 2008
If you felt it, register it here on the USGS website.
Event number 14383980
Archive for the 'SoCal' Category
Who Am I?
Chuck Ponzi November 19th, 2007
While much more than a philosophical question, the answer and what you say more often reflects not just who you are, but the character you carry with you.
Since I moved my blog over from Blogspot, I have wanted to put pen to paper and give just enough background on the author of the blog to provide some dangerous information, but not enough to provide enough clues for any given person to guess who I am. In reality, there are only a couple of people who know who I am as a real person, and I’m just fine with that. I never intended the blog to be a springboard into fame, nor was I trying to make a business out of it (trust me, the pitiful revenue the blog generates wouldn’t provide more than an occasional lollipop it seems in Southern California.)
About Me
Well, my story is too long for a blog entry. I didn’t originate in Southern California, but rather the midwest, though I haven’t lived there for more than 15 years. I have lived in SoCal much of my adult life (after University studies), and have lived in North LA County, Central LA County, San Diego, and Orange County where I currently reside with my wife and 2 kids. I studied Accounting and Information Systems and have a Bachelor’s Degree from one of the top schools in the US (can’t give too many details). I also earned an MBA since being in California in the past few years. I am in my 30’s and have also lived in diverse places such as Germany, DC, Utah, and Hawaii and I speak 2 languages fluently This has given me a unique perspective on language and how it reflects and changes our attitudes about life and surroundings; a window into our social makeup.
My wife… I don’t talk about her much, but it only seems fitting to give her a worthy run through. She is the most important person in my life, and so therefore deserves a place on this blog; not in name, but because she has supported me in all that I have done, even sacrificing personal beliefs and time for our family’s better good. My wife grew up in the intermountain west, and holds a Master’s Degree as. She speaks 2 languages fluently as well (not the same as mine, but she is teaching me bits and pieces of hers) and is an entrepreneur as well as stay at home mom. She truly is amazing; I got very lucky. She has lived in all of the same places in California that I have.
With that said, I started thinking about writing a blog in early 2004, although it took me nearly a year to put that plan into conception. In truth, I thought homes were overpriced already in late 2002 and early 2003. By mid 2004, it had become unbearable, and since I was itching to move onto another company, I convinced my wife in the Summer of 2004 that housing was overvalued and we had better sell our place; even before I had another job. Our place sold in exactly 3 days for a couple percent over asking price, and more than double what I had paid for it a few years earlier. It was insane. We even had one bid more than 20k above that, but at 100% financing. We chose the more prudent buyer because we feared not closing in time. It’s funny in hindsight. Housing Bubbles take years to pop.
Over the next 6 months, we resituated ourselves, moving closer to LA and taking a job in Beverly Hills. It was a nice move, but we both knew it was only temporary. It was during this time that I first started the socalbubble.blogspot.com blog. My primary inspiration was Rich Toscano, of www.piggington.com fame. I had no desire to be known, and only told a few people about the blog. I was fine to be anonymous, because, frankly, real estate had become a religion to most of the people we knew. It was as if I was attempting to hoist their savior up on a cross when I dared to even consider that housing had ever fallen in value in the past, or that it could ever fall in the future. “At worst,” one friend assured me, “it will only go up by 10% per year. That would be a terrible year.” Conceding defeat of trying to warn those close to me, and finding that noone wanted to know the inconvenient truth, I started a blog to just spill out my feelings and try to put things in context in my life. At first, the only visitors were there to ridicule me. Some sent me harassing emails, some just quietly told me how stupid I was and left. Either way, it seemed that there were only a few out there who would believe that there was a bubble, or that it would ever burst. I read Patrick.net, Piggington, and The Housing Bubble Blog daily and scoured news stories to try to piece together what would happen; I read historical economics treatises; I pored over more historical economic data than I care to admit. I was convinced, but noone else was. At times, I thought I might be going crazy myself. Noone I met would agree with what I thought was self-evident. Most people who should have known better just ignored what was going on.
It only took time. I changed my name from John Doe (my old screen name) to Chuck Ponzi when I moved to my own hosting and domain, to pay homage to the man who defined our current economic system (with stamps, no less).
Still, this was supposed to be about me.
What lies ahead for Chuck Ponzi? Even I don’t know. Will I buy again in Southern California? Who knows?; I may move before that happens, but an opportunity may present itself in the future too. Either way, moving has been both about good and bad. While many of the families in our age group that we have known in SoCal have since moved out of state or are planning to do so in the next year, we have remained noncommital to our future as Californicators.
I guess we represent much of what we thought California was, middle class families committed to our children’s future and our own personal responsibility. It is perhaps fitting that we are a dying breed here in California. Even if we leave, in a few years, there will be another group of people ready to take our place. I hope them much more success than we have had in living the American Dream. We have found that the price for that dream was much more than we were willing to give. And, for many trying to buy it; have found that it was much more a personal nightmare than the dream they (with their commissioned agent and loan broker) dreamt of. I could in some ways feel justified that I did what I could to warn, but rather, I feel saddened that most had no idea what was about to happen. Sometimes, when I’m feeling down, I walk around my neighborhood and see the Hummers, Mercedes and Lexuses, and then I’m not sad anymore. At least everyone got awesome rides.
So, by definition, who am I?
I am Chuck Ponzi. Welcome to Southern California.
My contact information can be found here.
Consider what you have just witnessed
Chuck Ponzi August 6th, 2007
If you consider all that has happened over the past week, past month, and past 6 months, it is likely that many of us have never seen before the kind of turning point we have just seen.
American Home Mortgage bit the dust
Accredited Home Lenders is teetering on insolvency
Countrywide warned
Indymac pulled core products
Numerous other lenders are also pulling their main products as well
If we take the logical next steps to what this means for the overall housing market, where does it leave us?
While Gary Watts would like you to believe that all that has to happen is that the FED needs to lower interest rates, the problem is not that easily solved… and I’m not sure we want to solve a problem that the market is currently working on solving anyway.
In addition, many in the housing market will fail to see the turning point and are going to be suspended in the air for another six months like Wile E. Coyote. It won’t be until next year that we really see the freefall in values.
Nowhere in the Constitution does it offer the right of ever appreciating real estate in this country. Neither does it promise that you won’t get hurt for your own stupid decisions.
This is the end of the housing market as it has been for the past 7 years. It is a changed market, and we will likely not see the end of the housing bust for at least 3 or 4 years from now at the very soonest. With all of the lending losses, it will be very unlikely that lending would approach the reckless abandon it achieved over the past few years any time in the forseeable future. Even the FED can’t save this now. It would be as they say “Pushing on a String”. lenders do not need to lend money if they do not want to, or if they percieve the risk to be too high. Lenders are not worrying about interest at this point, they are worried about principal.
Homesellers, I warned you, if you didn’t listen, it was your own fault, and now you are stuck.
No, the best thing for this market, and for the economy overall is a monumental housing crash. All houses immediately marked down 30-40% throughout SoCal would just about put us right with where we should be considering household formation, interest rate risk, personal incomes, affordability, and consumer debt load.
Sadly, it won’t happen that way. No, today’s sellers agents are as delusional, and as thick-skulled as they come. Transactions will likely come to a screeching halt from their already stymied location. The only thing that will move this market is need-to-sell inventory by the way of foreclosure forced sales and short-sales. Now it’s time to get down and dirty with the housing bubble.
Collectively, we could have all avoided this point, but individually, we did what each thought was the best for us and it has failed. No amount of public preaching from a blog telling people to ready themselves for the coming crash would have changed many people’s minds. I only hope that some readers have read, understood, believed, and acted upon the recommendations. You have been saved. The lemmings coming after you have only the cliffs of insanity, and the cold, hard rocks of reality below.
On the other hand, depression about (not) owning a home in Southern California occasionally grips even me. Even knowing all of the pain to come (it was a certaintly last year and the year before, so it’s still a certainty), I’m not confident that I’m interested in waiting it out here. Many of the people our age have left the area, leaving a swath of people 5 years older or 3 or 4 years younger than us. The older ones don’t understand the predicament since they don’t have it, and those younger don’t have the pressures of a peaking career and growing family. The ones before us are “over the hump”, and those younger haven’t begun looking at the hump. Periodically, I just want to throw in the proverbial towel and say “bag it”, it’s not worth the wait and just work somewhere else. If I weren’t in the middle of some big things at work and I could walk away without harming the company I work for, I would. Alas, by the time my projects slow enough for me to leave, we may already be in a recession with a difficulty finding a new job out of state. I’ll just have to see at the beginning of next year.
My wife is not oblivious to the pressures, she feels them as well. On the other hand, it has made us realize what we don’t like about Southern California (or at least L.A. and O.C., not including S.D. or Ventura), the self-righteous, self-centered, selfish home-trust-fund babies that inhabit not only the dark corners, but the visible ones, and frankly, much of the cry-me-a-river-my-house-lost-10K-but-went-up-400K-before-that crowd that is 90% of all OC. It all but sickens us with the idiotic drivel that escapes their lips. My god, what a bunch of whiny bitches! And their wives are even worse.
Luckily, our children don’t sense the pressure, or at least not at 3 and 1. Ever feel like a failure? Just spend a few hours with your preschool kids, and it’ll change your opinion. (disclaimer, I’ve heard this only works until they are teenagers)
No, at this point, we are basically in it for the long haul. We’ve gotten over the hardest part being former owners and renters… the back side of the slop is in front of us, and it’s hardly worth leaving at this point with family here, a good job, and security… although that would change with the right job offer. I suppose that we’re not the only ones in this situation, except that if an employer needed us next week, we can break our lease. Most around us would need to sell a house in probably the worst housing market since the Great Depression.
So, all in all, I consider what I have just witnessed, and suppose that there are a number of people just like us. We will get our house someday… regardless of what the “priced out forever” crowd of real estate agents have told us. It is sad to see so many houses in our area begin to fall into an untended mess, but there’s no escaping that many of our neighbors just can’t afford their houses. I can’t imagine anyone wishing ill to them, but when they were driving H3 Hummers and bragging about how much their house was worth, I had to remember that all things would return to the way they were. The financial lessons people are learning now are hopefully strong enough to prevent a repeat, but easy enough to not sink our economy.
If you have any thoughts on staying put/leaving, leave them here.
Don’t Wait… Git ‘er done!
Chuck Ponzi March 7th, 2007
Realtors predict a better year… for themselves, not for homeowners or home sellers.
The real estate market traditionally picks up in the spring, but Remax Gold Coast’s Virnig said waiting until then to put up a “For Sale” sign might not be the best strategy.
“I always think if you’re a seller, it doesn’t really matter. You can wait for a busier time,” he said, “but there are going to be more buyers and sellers out there. It’s not like there’s going to be a bunch more buyers out there and the same number of sellers.”
Nothing like a little common sense to shake up a seller. How many do you think are really thinking like this? Last year was the year of insane asking prices and a disconnect. This year seems to be the year of cognitive dissonance. Buyers are vanishing, and sellers are in deep, deep denial (except a few… I actually saw a home priced somewhat sanely in Mission Viejo the other day)
Meanwhile.. elsewhere in the southland…
Slow RE News Day in SoCal
Chuck Ponzi February 26th, 2007
The slow news days the past few days in SoCal has given me an opportunity to take a trip around the area. This last weekend I failed to post because I was visiting locations in Orange County, Riverside, San Bernardino, and Victor Valley. Needless to say, for me it was busy.
For real estate in SoCal? Not so much, especially when sewage backups in Tijuana are basically front page news. Isn’t there constantly sewage coming across the border from TJ? Sorry, no references to immigrants please. The place is just dirty, and is constantly polluting San Diego beaches because the Mexican government fails to do just about anything about environmental protection besides limiting ownership of land by non citizens. Pretty much sums up the problem with the Mexican government (er, politics)anyway… does nothing.
Which, sometimes isn’t all that bad.
For example the former Fed chairman Alan Greenspan (a politician, but alas not currently with the US government) declared today that we might slip into a recession later this year. This was as much of a contrary indicator that fellow blogger Barry Ritholtz of the Big Picture could take. It might make him change his economic forecast since Al has been wrong on so many occasions. Of course, the change in opinion was made in jest (I think), so there’s little chance of a major rally (or is there?).
Are People Really That Dense?
Chuck Ponzi February 20th, 2007
Last stick-at-the-top discussion was about the ongoing pressure of lending on homebuying… whether there really are any changes taking place.
For this discussion, are there people still flipping houses? Do you see them? Have they listed and relisted several times? Is anyone selling, and who is buying them?
Do you see anyone, or know anyone who is thinking of flipping houses?
I have a work colleague who is anxiously awaiting his a family member’s death so he can take their inheritance and begin “flipping properties in earnest”. Is that sick or what?
What evidence do you see?
Cycles and Supercycles: The Auto and SoCal
Chuck Ponzi January 17th, 2007
Every once in a while, I stumble across some good analysis of the current housing bubble that seems to go unnoticed. I uncovered just such a tidbit the other day that would make for a good read.
Some of the points I agree with, some I find hard to digest… the logic seems a little light, or perhaps there are other answers to the question posed. Just such an article appeared on Prudent Bear the other day.
The Author, Dan Forshee, takes us on a great historical ride regarding the last 90 years or so of housing prices in the US. It even includes the very impressive chart:
I am confident that it took quite some time to compile the data, normalize it, and show it in a meaningful way. As they say, a picture is worth a thousand words.
It made me reconsider the concept of cycles and supercycles that housing is falling into or may be falling into. Regardless of whether there is a supercycle at play here (I’m not sure myself), it’s a great way to consider the past as a possible predictor of future events.
Dan also includes a great discussion of land-use restrictions by measuring the number of years it takes for the tallest building early in the century to be superceded by an even taller structure. His estimation (and anecdotally if you look at the data he presents), is that it took quite some time after the roaring Teens, 20’s and early 30’s for land to once again be valuable enough to build taller skyscrapers on.
However, like any critical reader, I must view any assertions in some suspect light, even if I agree with the potential outcome.
For example, there was a very large drop after the 1930’s in land prices and corresponding building of supertall structures. Does this mean that suddenly land could become even less valuable than before? Possibly, but he offers very few clues as to the triggers.
Personally, I believe that there was a substantial shift that occured within cities as we knew them in the early part of the century with the widespread availability of automobiles and interstate highways. This made it possible for families to reside outside of urban centers and economically commute to places of work. This reduced the pressure on builders to build vertically. The technological changes of the automobile are fundamental when viewing the Southern California region’s building habits.
Much has been said about the condo-izing of Los Angeles, Orange County, and San Diego. However, the impetus for this kind of building up is also related to the relative prices/scarcity of cheap fuel for autos. The unseen hand both squishes up and smooshes down.
Peak Oil advocates (in my mind) would find it hard to be pro-housing bubble due to the obvious effects pricier energy would have on outer exurbs and commuting costs. However, it’s interesting to note that there are a number of die-hard bubble believers who are also peak oil believers as well. How they resolve that cognitive dissonance is as as difficult for me to understand as how Gary Watts is still able to sell his predictions after his embarassing smack-down on his 2006 forecast. Guess the impossible does happen.
On the other hand, if there were to be another fundamental technological shift, some disruptive technology that makes energy substantially cheaper than oil, or just as likely to negate the need for oil, we might see land prices once again fall. I have mentioned 2 such shifts… cheap nanotube based Solarpower and advanced telecommuting (for non service-based jobs). I know that many of the people I work with would gladly trade the great weather but terrible schools and oppressive taxes of California for other locales that have much cheaper housing and better schools (the bad weather notwithstanding). Anecdotal as it may be, employers have much to gain by reducing the costs of living for their employers since they then will be able to negotiate lower salaries. In the past, bandwidth was the primary hindrance to this dream. I believe we have already overcome it, and many new communities are recieving fiber to the home (fiber-optic internet) which can have much higher bandwidth than many can currently imagine. At this point, the hardware switches become the bottleneck, not the wire.
In addition, cheap nanotube solar power makes it possible for households to be self-supporting. Roofs as solar collectors are quite efficient and that’s a lower input per person in a high-rise. Stick-built houses are relatively inexpensive, and can collect greater amounts of solar power. This kind of disruptive technology will be available to homes much quicker than some know. As we speak, Nanosolar Inc. is developing a large production plant in Northern California to produce flexible solar panels on orders of magnitude cheaper than current silicon-based methods.
While my intention was not to discredit any particular concept outlined in Mr. Forshee’s analysis, it is rather to invite those reading to consider that even when a person comes to the same conclusion, thier reasoning might not be bullet proof. Bubble bloggers, after all, were the ones who railed against groupthink. We cannot allow ourselves to become victim to it.
