Wikinvest Wire

Still no bottom in sight for Sacramento

Monday, March 09, 2009

Now that the state government has again forestalled the inevitable by recently passing a budget, one that will surely not age well and may be in dire need of rework by summertime, attention once again turns to the dismal state of affairs in the region's housing market.

This story in the Sacramento Bee, in which Victor Clawson probably speaks for a far higher number of homeowners than most of us would like to believe, goes a long way in explaining why things are sure to get worse in the California state capitol before they get better.

Something about the way global finance flew so dangerously high and then spiraled into chaos tells Victor Clawson that trouble with the four houses he owns in Natomas isn't his fault.

"We are players in a game and the game is controlled by somebody else," said Clawson.

This sense of being unfairly bruised by powerful financial forces is key to understanding why Clawson is strongly considering walking away from his mortgages. Given the risky, ethically questionable behavior of lenders and financial institutions that caused "this enormous machine to grind to a halt," should he feel obligated to keep paying on houses now worth far less than he owes?
This lack of personal responsibility is likely to become much more pronounced, particularly in light of the many bailouts being offered at a dizzying pace in Washington.

It will soon be cut-and-dried for many - if I don't get a bailout, I'm bailing...

For investors and owners of second homes that are now worth far less than they owe - where, for good reason, no aid will be forthcoming - this will result in a new wave of properties going back to the bank to join the inventory that already sits on their books and, for the most part, off of the resale market.

At the rate we are going, it doesn't seem as though there's any possibility of housing markets like the one in Sacramento stabilizing anytime soon and at least one more software engineer seems to have things figured out:
It's a question that Ryan Jessup of Sacramento answered a year ago, when he, too, sensed the financial game had turned against him. Early in 2008, the software engineer stopped making payments on his Victorian house in Oak Park. A long habit of playing by the rules, he said, had provided him a good income, a credit score of 804 and a lovely $430,000 house.

But when playing by the rules meant riding down the housing market to who knows where, he said, "It came down to morals or survival. I chose survival. It made no sense to stay."
Of course it could be worse for people like Clawson and Jessup.

There's a whole other group in Sacramento who could care less about the future of the U.S. financial system and the innovative credit products that were foisted upon an unwitting home buying and investing public (or so the story goes).

These other people now live in tents.

Apparently Oprah has taken up their cause and, from the looks of this report also in the local paper, some of them got their fifteen minutes of fame a couple weeks ago.
A national spotlight will shine on Sacramento today, and the images promise to be less than flattering.

In a program about the recession and a growing homeless population, the wildly popular "Oprah Winfrey Show" this afternoon is featuring California's capital city, among other venues. The program will include interviews with struggling families at the Cal Expo and St. John's shelters, shots of homeless children at the Mustard Seed School at Loaves & Fishes and a sprawling "tent city" near the Blue Diamond almond factory where hundreds of men and women sleep every night.


Anonymous said...

This ass hole buys 3 investment properties and claims that system was unfair. Any investment comes with risk and you should not crib if your trade goes against you. I probably sympathesize those who bought homes to stay in. Even among them, a lot counted on future appreciation.

donna said...

Can I have Jessup's house? It's so pretty!

Houses are not investments. That's what they all forgot. They are places to live.

The jerk who bought four, thus helping drive up housing prices, is particularly egregious.

Chuck Ponzi said...

True, Ryan Jessup of Sacramento appears to be an ultimo douchebag of the 9th order. Still, it's hard to argue with the reasoning. There's a price to be paid with any decision. He'll likely find out how hard it is to find employment with a record of defaults.

If you thought competing with H1Bs is difficult, try doing it with shitty credit.


staghounds said...


I hope his friends, spouse, future business associates, and random strangers understand his morals/survival choice plan. They might want to be really sure of his definition of "survival", too. It might be "having this car that I see in front of me with the keys in it."

Although when buying "investment property", the continued payments must seem in the nature of a margin call.

staghounds said...

And he needn't worry about credit history. The party of tolerance will wipe all that off the books before this is over. The Fresh Start Act of 2011, or something.

Anonymous said...


The Americans With No Abilities Act

Washington , DC - (Dateline February 18, 2009)

President Barack Obama and the Democrat controlled Congress are considering sweeping legislation that will provide new benefits for many Americans. The Americans With No Abilities Act (AWNAA) is being hailed as a major legislative goal by advocates of the millions of Americans who lack any real skills or ambition.

"Roughly 50 percent of Americans do not possess the competence and drive necessary to carve out a meaningful role for themselves in society," said California Senator Barbara Boxer - Democrat. "We can no longer stand by and allow People of Inability (POI) to be ridiculed and passed over. With this legislation, employers will no longer be able to grant special favors to a small group of workers, simply because they have some idea of what they are doing."

Under AWNAA, more than 25 million mid-level positions will be created, with important-sounding titles but little real responsibility, thus providing an illusory sense of purpose and performance.

Mandatory non-performance-based raises and promotions will be given so as to guarantee upward mobility for even the most unremarkable employees. The legislation provides substantial tax breaks to corporations that promote a significant number of Persons of Inability into middle-management positions, and gives a tax credit to small and medium-sized businesses that agree to hire one clueless worker for every two talented hires.

Finally, the AWNAA contains tough new measures to make it more difficult to discriminate against the non-abled, banning, for example, discriminatory interview questions such as, "Do you have any skills or experience that relate to this job?"

"As a Non-abled person, I can't be expected to keep up with people who have something going for them,"said Mary Lou Gertz, who lost her position as a lug-nut twister at the GM plant in Flint , Michigan , due to her inability to remember rightey tightey, lefty loosey."This new law should be real good for people like me," Gertz added. With the passage of this bill, Gertz and millions of other untalented citizens will finally see a light at the end of the tunnel.

Said Senator Dick Durbin (Democrat-IL), "As a Senator with no abilities, I believe the same privileges that elected officials enjoy ought to be extended to every American with no abilities. It is our duty as lawmakers to provide each and every American citizen, regardless of his or her inadequacy, with some sort of space to take up in this great nation and a good salary for doing so."

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