San Diego County payrolls shrunk by 0.9 percent or 12,200 jobs between October 2007 and October 2008, the state Employment Development Department reported this morning.
 The biggest losses came in construction, which contracted by 5,800 jobs, and in retail, which lost 4,100 jobs. And 1,100 of those lost retail jobs were in motor vehicles and parts dealers.
The unemployment rate rose to 6.8 percent in October, up from 6.5 percent the month before and up significantly from the 4.8 percent rate in October 2007.
The local unemployment rate compared to 8 percent for the state in the same period, and 6.1 percent nationwide. (None of those rates have been seasonally adjusted.)
In a monthly comparison to September, the economy's biggest gains came from jobs in schools, both public and private. Leisure and hospitality lost 3,800 jobs over the month, a typical seasonal shedding of summer tourism jobs, according to the EDD.
Friday, November 21 -- 5:43 pm
Five defendants have pleaded guilty to charges arising from a mortgage fraud scheme in which lenders funded $16 million in loans for properties that have entered foreclosure.
Defendants Rafael Santiago and Angel Armendariz pleaded guilty Thursday to conspiring to commit wire fraud, and defendants Abner Betech, Said Betech and Aviva Betech pleaded to those charges on Nov. 13.
One defendant, Lucette Montane, remains at large.
The majority of the 21 properties examined by the FBI and the IRS as part of the scheme were in San Diego County, and at least three were condo units in downtown San Diego.
Here's more from my June story, which describes in more detail the scheme:
The group, operating under the name Creative Financial Solutions Inc., allegedly obtained mortgages for unqualified or unknowing borrowers.
The alleged scheme fits the profile of a variety of mortgage fraud against lending institutions called "cash back at closing." Such a scheme centers on inflating purchase prices, obtaining loans for the inflated amount and distributing the difference in cash among some or all of the parties in the transaction after the seller's asking price has been paid. Then, the buyer walks away from the property, leaving the bank with a house that was never worth what it lent the borrower to buy it in the first place.
The defendants face 20 years in prison, fines of $250,000 and three years of supervised release, according to the U.S. Attorney's Office. The defendants also agreed to pay restitution, said Christopher M. Alexander, assistant U.S. Attorney.
The defendants are scheduled to be sentenced in April 2009.
Abner Betech also pleaded guilty to filing a false tax return.
Friday, November 21 -- 7:20 am
Last week I got into a great conversation with Mark Riedy, executive director of USD's Burnham-Moores Center for Real Estate, when I called to interview him for this story. Riedy's been thinking about housing and mortgages for decades, as a longtime industry leader and the president of Fannie Mae.
What might change about the concept of homeownership now that this decade's huge homeownership push has the economy in crisis? I asked him.
Riedy said he thinks homeownership will always be an ideal. But he said that historically, the national homeownership rate was around 66.5 percent. Because of the combination of loosened restrictions for mortgages, new ways of financing loans and a governmental encouragement of the increased homeownership, the rate rose to about 69 percent this decade, he said.
"That 2.5 percent probably never should've been homeowners," he said. "We screwed around with the natural state of what it ought to be. There's a reason why they don't own."
I was putting Riedy on the spot with this question, and he acknowledged the conversation should be an ongoing one. But he theorized that 66.5 percent might be too high, and suggested the rate might naturally fall a couple of points. A lot of mortgage resources might not come back after this collapse, or they'll come back with loans at a higher (interest) price, he said -- leaving homeownership out of reach for many people.
"How would we look at rental housing differently if we knew that that was going to become a more normal part of our community?" Riedy mused.
It won't be normal in the little towns in Iowa and Nebraska, he said, but in pricey cities like San Diego: "Maybe renting isn't such a bad thing," he said. "If you start to say, 'I better pay more attention to the school district I'm renting in ...'"
Riedy sent me this thought in an e-mail today:
I do believe that promoting rental housing and perhaps providing more governmental support for it, while fiscally imprudent at the present time, might make a great deal of sense in a socially responsible manner at some point in the future. The time to start thinking and talking about it, however, is now.
If you haven't yet, check out the conversation raging today over in SLOP -- here and here. The debate started over here in Survival after I posted some of Councilman Ben Hueso's remarks this week about homeownership in San Diego.
As always, you can send your thoughts, tips and story ideas about housing, the economy and surviving in San Diego to me at kelly.bennett@voiceofsandiego.org.
Thursday, November 20 -- 5:21 pm I asked you what you thought of the comments Councilman Ben Hueso made yesterday. In a press conference and later in the City Council meeting, Hueso strongly emphasized his fear that the city's gains in homeownership in the last decade would be erased and that homeowners would become renters.
Reader CC took issue with Hueso's notion of the role of government in the housing market:
Hueso's ability to provide the illusion of 'home ownership' does not create a 'right', but a liability over being able to simply rent at a lower cost, until able to purchase. The grand 'escalation' of SD home prices was caused by such simple, unproven and unevolved, 'thinking.'
Local government, as all government, should play a SMALL role in 'promoting anything', much less "homeownership in the city of San Diego," because it hasn't worked, it can't work & is the CAUSE of the foreclosures, right NOW!
But reader FS said she's owned and rented homes before, and she knows what Hueso's talking about:
Bottom line, most renters do not take care of the yard. They might cut the grass but they don't do the improvements needed to upgrade the house and the neighborhood.
When I rented I painted the inside of the house for my personal comfort. I didn't touch the yard. It wasn't my yard.
When my son was younger (he's now 36), he let the yard go to hell. As he moved into his 30's he took more pride even though he rented the house. He even invested in grass seed and fertilizer. But he is in the minority. Now that he has his own house, his interest in a nice yard has skyrocketed. He will be concerned about his yard and other yards because he wants to maximize his investment.
That's not to say that there aren't plenty of homeowners who are slobs. But I venture they are in the minority relative to renters. Buying houses for renters will only increase the blight. Anyone thinking otherwise has not had rental property. Or is unable to accept reality.
FS concludes the government shouldn't purchase homes for renters if it wants to eliminate blight. The city is poised to buy about 30 foreclosed houses to fix up and rent out under its plan to spend HUD grants.
Wednesday, November 19 -- 3:32 pm The City Council this afternoon unanimously approved the city's plan to spend $9.4 million to combat the impacts of foreclosure in some hard-hit neighborhoods.
But comment from council members focused heavily on a need for a regional strategy to deal with foreclosure that would extend past the expenditure of the federal dollars. Should more money come in from the federal or state governments, the city should be ready to round up more money from its redevelopment and community assistance funds to make the foreclosure aid go further.
Councilman Tony Young asked Rick Gentry, CEO of the San Diego Housing Commission, to come back to the council in 60 days with a plan to engage community organizations, nonprofits and banks in its foreclosure mitigation efforts. He also suggested that city officials find ways to tap into funds from the Redevelopment Agency and other sources of community blight-fighting money.
"This (plan) gives the impression that we're responding just because there's money," Young said. "Nine million dollars is not going to address this issue. ... We didn’t hear a lot of creativity ... about this issue and that's one thing I really think is lacking here."
Representing the four districts identified as targets for this funding, four community members formally opposed the plan as it stands: Dwayne Crenshaw, executive director of the Coalition of Neighborhood Councils, Richard Lawrence, a longtime affordable housing advocate, Jay Powell, director of the City Heights Community Development Corp., and David Flores of Casa Familiar in San Ysidro.
Crenshaw spoke for the group, echoing many of the concerns he raised yesterday. Crenshaw suggested that the lion's share of the money not go to helping homeowners purchase homes, but rather the majority of the funding go to increasing the piece of the plan that acquires and rehabs foreclosed homes.
Barry Schultz, CEO of the San Diego Capital Collaborative, expressed support for the plan, but echoed the sentiments that the plan to spend the $9.4 million should exist in the context of a greater strategy, something his organization suggested as an umbrella approach over its land bank proposal.
Councilwoman Toni Atkins asked that the program target properties, not just families. She said community organizations have knowledge of certain blighted houses, condo conversions or pieces of land that are problem properties in each of these hard-hit neighborhoods.
The city's application for its $9.4 million allotment of the HUD grants is due Dec. 1. Should the application be approved, Gentry expects the city will have the money in hand in early spring 2009.
Wednesday, November 19 -- 4:03 pm Mayor Jerry Sanders formally announced the city's plan to spend $9.4 million in HUD grants at a press conference earlier this afternoon. Housing Commission officials are slated to present the plan this afternoon in the City Council meeting.
Along with the mayor, Councilman Ben Hueso and Councilwoman Toni Atkins spoke about the foreclosure wave that has doused parts of their districts. Housing Commission CEO Rick Gentry mentioned some neighborhoods yesterday where these HUD grants would be focused: Golden Hill, North Park, City Heights, Barrio Logan, Encanto and Nestor.
Atkins acknowledged the disproportionate funding for foreclosure aid in light of the huge numbers of foreclosures in San Diego.
"$9.4 million is a good start," she said. "But we know the need is greater and may even continue to grow."
She mentioned the fear among government officials and charities working in City Heights that foreclosure will erase some of the work done there to revitalize the community after it fell into blight in the last housing downturn. A few people I spoke to for this story in July described that concern.
I thought something Hueso said brought up an interesting question in the current housing market conditions. He said the city has put effort into increasing homeownership rates in the city of San Diego, rates which he said had historically been among the lowest in the country. He equated increased homeownership with increased civic-mindedness, neighborhood safety and pride of ownership.
And Hueso said this foreclosure crisis "threatens to undermine years and years of hard work" to get residents in homes and help them "realize the American dream."
Local government, Hueso said, should play a large role in promoting homeownership in the city of San Diego.
"We don't want people to necessarily become renters," he said.
But yesterday, Gentry of the Housing Commission said he wanted to be careful in these foreclosure plans to not just push someone into homeownership who shouldn't be there. So much of the housing boom was about using risky mortgages to get into a house that a borrower couldn't afford traditionally, all based on a bet that the housing market would continue to ascend and the borrower could refinance into a regular loan.
I'd love to hear your thoughts on Hueso's comments or on homeownership in San Diego. Will homeownership as an ideal change? Send me an e-mail: kelly.bennett@voiceofsandiego.org.
Tuesday, November 18 -- 2:54 pm I heard yesterday from Homer Barrs. He's a mobile home owner at Mission Valley Village, and I wrote this story about his plight last year. The land underneath the park was sold in February 2007 to Archstone-Smith, an apartment developer based in Colorado. The developer plans to clear the site and build 445 apartments in place of the mobile homes, some of which have been there for 42 years. The residents will have to find a new place to live.
Today the City Council is scheduled decide whether the land zoning that currently allows for the mobile home park use should be removed. That would allow the developer to proceed with its apartment plan.
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Barrs said he and dozens of other mobile home owners will be downtown today, protesting the developers' plan at noon and hoping for a City Council decision in their favor in a meeting at 2 p.m. Barrs has been in front of the council often to plead his case. He thinks they have a good chance of getting at least four council members to vote in their favor, which would force a tie on the eight-member council. "We're hoping for four and praying for five," Barrs said. Check back for the council decision later today. Tuesday, November 18 -- 12:09 pm
Mayor Jerry Sanders met yesterday with a group of real estate pros, nonprofits and bank reps to be briefed on the foreclosure situation in the city. The mayor is concerned about blight from foreclosures and declining property tax revenues, said Rachel Laing, mayoral spokeswoman. Sanders asked the group, named the Short-Term Housing Foreclosure Advisory Committee, to gather ideas and brainstorm ways that the city can address the foreclosure problem, anything from local ordinances to lobbying for state or federal funding.
"Not everything originates from his head and he knows that," Laing said. "This comes out of the 10-heads-are-better-than-one concept. And it's also a little reassurance that you're not missing anything."
The members of the committee include Sherm Harmer of the local Building Industry Association, Bob Kelly of the San Diego Foundation, Sue Reynolds of Community HousingWorks and Rick Gentry of the San Diego Housing Commission. Yesterday's meeting also included other real estate professionals and representatives from the credit counseling and banking fields.
The mayor will hold a press conference today to announce the city's plan to spend $9.4 million in federal Housing and Urban Development grants to help homebuyers purchase foreclosed homes and have the city buy homes to rent out. The plan is slated to go to the City Council for approval this afternoon at 2 p.m. I'll be there and will keep you posted; check back later for more.
Tuesday, November 18 -- 11:32 am
I heard this evening from David Cleveland, the house-hunter we introduced you to last week who recently moved to San Diego from Denver. You can catch up on Cleveland's situation in that intro post.
Cleveland began with a recap of last week. His wife, Jill, and their real estate agent identified eight homes that had been newly listed on the market as of last Monday, by searching the MLS for their target areas of Carlsbad, Rancho Bernardo or La Mesa. On Tuesday, they went through all eight houses. Wednesday morning, the agent called the selling agents for three of the houses Jill liked, asking about the status and history of the house.
 | | David Cleveland sleeps on a boat and showers at the gym, and his wife and kids stay with family in Orange County, while they navigate the local housing market. |
Each of those three houses was in foreclosure, but in each case, the selling agent already had accepted multiple offers and submitted them to the bank, basically cutting the Clevelands off from making an offer on those. Here's Cleveland, in his own words: Last week was not typical, but is becoming more the norm for our search. ...
What is happening is that each bank, and its associated broker for the foreclosed house, seem to have different rules that they go by as far as how they want to proceed. In one case the selling agent collects a number of offers and sends them all in for evaluation, in another case the selling agent may send over the first offer it receives. Regardless of the method though, the house is effectively out of play.
Based on some research we’ve done recently however, it appears likely that a number of these type of offers will not go through due to the buyer not being able to obtain their financing. So for each of the 3 homes we didn’t get to place offers on we at least sent the selling agent a letter of intent indicating that if for some reason the sale of the property doesn’t go through, that we would like the opportunity to get our offer in.
Obviously there is no guarantee that the proposed sale will not close, or that if the property does come back on the market that we would win in a bidding war, but it does potentially get our foot in the door if something should happen. We’ve also started to go back and inquire of the properties we’d previously placed offers on but were outbid as to the current status and making sure the selling agent knows we are still interested.
As of this morning, Jill reports that there are no new listings in our target areas but we are checking each day. We'll keep you posted on the Clevelands' progress. If you have any thoughts about their search or another of these topics, you can send me an e-mail at kelly.bennett@voiceofsandiego.org. Monday, November 17 -- 6:56 pm
Housing Commission officials will present details of the city of San Diego's application for $9.4 million in HUD grants to stabilize neighborhoods ravaged by foreclosure at a meeting today at 12:30 p.m. in Conference Room C at 202 C Street downtown.
It'll be a special meeting of the City-County Reinvestment Task Force, the group tasked with monitoring lending practices and encouraging investment in some of the region's low-income neighborhoods.
Here's a draft of San Diego's plan to spend its $9.4 million allocation. A quarter of the money has to be spent to assist households earning less than 50 percent of the region's median income, which is $39,500 for a family of four. The plan has two main parts:
purchasing foreclosed homes to rent them out to families in that income bracket
assisting first-time homebuyers with second mortgages and rehab loans to help them purchase a home that has been repossessed
The task force will decide whether to support the plan and send it on to City Council tomorrow.
Monday, November 17 -- 11:49 am
A reader passed along a few links to some very high-end homes listed for rent on Craigslist. Here's one in La Jolla asking for a monthly rent of $11,800. And here's a six-bedroom, 4.5-bathroom home in Point Loma seeking $7,500 a month.
We've known for a while that homeowners -- instead of selling for less than they think they deserve (or less than they owe on a mortgage) -- are turning to rent out their houses and wait out the market. I'm curious: How successful are these homeowners in finding a tenant willing to pay that much to rent a place?
I wrote about a few desperate homeowners in that situation, renting their houses out, who raised their asking rent prices after the fires last fall. Owners of 20 of the 118 rental listings on the MLS in the communities of Poway, Rancho Bernardo, 4S Ranch, Santaluz and Rancho Peñasquitos had raised their rents in the 10 days since the fire had started last October.
Where have you seen people with houses for rent at prices like this? Have you seen them find success with landing tenants willing to pay that? Send me an e-mail: kelly.bennett@voiceofsandiego.org.
Friday, November 14 -- 7:07 pm
Meet David Cleveland, a house-hunter trying to navigate the San Diego housing market. He recently moved from Denver and is trying to find a house to buy. He agreed to keep us posted on his search for a house here, as a window into the process in these market conditions.
He sleeps on a boat and showers at the gym, and his wife and kids stay with family in Orange County, while the Clevelands try to navigate the local housing market.
Here's Cleveland, in his own words:
I would have to agree that we haven’t seen the end of the mortgage mess yet. I was lucky to sell my house in Denver, CO for 98% of my asking price in 11 days, but I lived in a hot neighborhood and priced my home at a fair price. What I am seeing here in San Diego is a continued feeding frenzy. Yes some are losing their houses, but there are people out there that are bidding up the prices of homes that are in short sale or are foreclosed thinking they are getting a great deal. Others in trustee sales are also becoming investors choosing to rent out the home vs selling.
What you find is that modestly priced single family homes just do not exist in this market. And what is there sets off a bidding war between as many as a dozen parties. We’ve lost at least 5 homes due to these circumstances. There is lots of inventory at the high end, and the low end, but not so much in the middle.
So for now, I sleep on a small boat, shower at the gym, and work Monday through Friday. My wife and twin 4 year olds live with my in-laws up in Orange County looking at the MLS listings every day for anything new to come up. But after 2 months we are starting to re-think our ability to purchase in the given economy. At least I don’t have to pay a mortgage in this economy I guess, though I’d love to try.
 Cleveland lived in California once before, in the Bay Area, but he left because of housing prices. He moved to Denver, where he and his wife could afford a 1,100-square foot bungalow built in 1918 (with a basement! he adds) near the city's upscale Cherry Creek North neighborhood.
Cleveland was offered a job that he said seemed to have been written with him in mind at Cricket Communications in Mira Mesa. Since housing prices have started descending from the stratosphere, he and his wife decided to move to San Diego with their 4-year-old twins. They're looking for a $500,000 detached house in Carlsbad, Rancho Bernardo, or maybe La Mesa. He said he knows they won't find an equivalent house to the one that they had in Denver, but the proximity to family makes up for that difference.
But, like economist Ryan Ratcliff, whose tale of house-hunting frustration we learned about earlier this fall, Cleveland has found the house hunt a difficult one here in San Diego.
He's sleeping on a family member's boat and seeing his wife and kids when they come down to look at a listed house or sign papers to make an offer. "If I'm lucky I get to have dinner with them," he said.
On the offers they've submitted, Cleveland has been outbid time after time.
"We are oh-for-five in the offers game," he said. "It's causing us to kind of step up. Part of it is doing as much research as I can to get a better understanding of what's happening in the market. And my agent and my wife are scouring the MLS."
I asked him why buying won out over renting. He said that's a question he's been getting from a lot of people. But the Clevelands are certain they want to buy, because he has a relocation package for his new job that includes financial assistance for closing costs and furniture storage. Renting means losing those benefits on the table, he said.
But the search is frustrating. "It's not pretty," he said. He said they were planning to send in two more offers today.
Cleveland said he'll keep us in the loop, and we'll post his progress here. Check back for updates on his search.
Wednesday, November 12 -- 7:59 pm
In November 2006, I introduced you to Vahan Serpekian and Erika Jones, two members of the quality control team at Chicken of the Sea, the Mira Mesa-headquartered tuna company. They were our third installment in the People at Work series.
 Serpekian has seen the local tuna industry from the inside for more than 30 years, and has worked for Chicken of the Sea since 1997. And when we met Jones, she had been with the company for just seven months; she was a recent nutrition grad from SDSU. I was fascinated to see the 21st-century face of the tuna industry:
The face of the tuna industry in San Diego today less resembles a weathered fisherman with a knit cap and a week's worth of stubble or a masked cannery worker whose hands have been ravaged by fish scales than it does a savvy international businessperson using a Palm Pilot to manage operations and canneries in several countries.
Two years ago, I went to Mira Mesa for a cutting -- a Monday morning meeting where a bunch of executives crowd into the kitchen while Jones and Serpekian and their team open more than 65 cans of tuna and salmon and touch, smell and taste the fish to make sure it meets company standards.
I caught both of them on the phone yesterday to see what they've been up to for the last two years. Serpekian said the team's as busy as it's ever been, testing and smelling and coming up with new products like the cups of flavored, ready-to-eat tuna that were just about to launch when I wrote my story in 2006.
Jones, now a couple of years into her career, said she's become a supervisor and has had a chance to travel often to American Samoa to see the company's plant there. She manages some of the recipes for the company's products, and analyzes data now to make sure all of the products are meeting federal and company requirements.
She was in American Samoa five times this year, for two to three weeks at a time.
"There I actually get to see the whole process," she said. "Understanding what goes into it and what things affect it, seeing it firsthand. You actually comprehend all the work that goes into just making this one little can of tuna."
You can read the story about Serpekian and Jones here, and if you have any ideas for future installments for the People at Work series, please send them my way: kelly.bennett@voiceofsandiego.org.
Tuesday, November 11 -- 12:05 pm We had an interesting discussion here in Survival last week that led to this story today on some implications of the mortgage rescue plans being discussed around the country right now.
I heard last night from reader CG, who said he thinks housing prices are still "ridiculously high." He describes a hypothetical scenario: If someone bought a house for $200,000, saw its value ascend to $1 million during the boom, and has seen its value (according to comparable sales) fall to $600,000 now, CG wonders whether the government should "intervene to level the market price at $600,000."
How many home owners are taking actual losses in San Diego? ... Just because a house goes into foreclosure does not mean it is no longer overvalued. ...
I think the real story is that banks, and home owners are waiting to see the government stabilize prices at a high point, or even see the market get back to the skyrocketing numbers. They are hoping to get from the government what they can no longer get from the house of cards free market.
CG worries about the future of real estate:
Once we stabilize the prices, what prevents the whole thing from starting again? I hear lots about the government doing things to stop the free fall, and get the free market moving again, however I have yet to hear anything about the changes that are going to prevent this from happening again.
And Janet Shelton, an Escondido homeowner I interviewed for the story today, added some thoughts in an e-mail this morning. Shelton was the one who saw her neighbors and friends use the equity from their homes to purchase new furniture and go on vacation. Now she takes exception to the idea that her tax dollars would help them out:
Two things disturb me. First, from my personal experience, a lot of this was driven by greed and irresponsible behavior. These people are going to get help at the expense of taxpayers and investors. Second, I am 100% sure that none of them would have shared their profits if they had made them; yet, many feel entitled to help.
Some were innocent victims, but a huge number of people were living large!
What do you make of CG's or Shelton's arguments? Drop me a line at kelly.bennett@voiceofsandiego.org.
Monday, November 10 -- 12:32 pm
I touched base yesterday with Mike Shelton, assistant city manager in El Cajon, and Gary Ameling, finance director in La Mesa, for this story to see how they thought Gov. Arnold Schwarzenegger's proposed sales tax increase might affect their cities.
First, they said, the tax hike is far from a done deal. Legislators earlier this year voted down a sales tax increase the governor had suggested. They might do so again.
But, I said, there's still a possibility that your residents start paying 10 cents on the dollar or more on their purchases. Here's how they responded.
Here's Shelton, from El Cajon, which stands to see its sales tax rate rise to 10.25 cents on the dollar:
I'm not an economist so I can't say exactly what the impact's going to be, but everything I'm reading shows the current economy is not going to turn around real soon. With reduced revenues and the difficult economy, this 1.5 additional sales tax is not going to be positive, there's no doubt about that.
Ameling, in La Mesa, emphasized that the city didn't want to raise its tax rate but also didn't want to see its services reduced. Looking at a potential 10-cent sales tax rate if the governor's increase is approved, Ameling added this:
My reaction is that I'll believe it when I'll see it. If it does happen, I certainly would be concerned.
Friday, November 7 -- 11:12 am
I left you hanging in my earlier post with this question:
Would the governor's proposed statewide 1.5-cent sales tax increase push the local tax measures -- including this week's approved increases for La Mesa and El Cajon -- over a sales tax limit?
I heard from Anita Gore at the state Board of Equalization, who said local governments can tax up to two percent above the state sales tax rate. If Gov. Schwarzenegger's tax hike is approved, the tax limit would raise to 10.75 percent, up from the 9.25 percent cap on sales taxes now.
Thursday, November 6 -- 2:26 pm Gov. Arnold Schwarzenegger this morning unveiled a plan to temporarily raise the statewide sales tax by 1.5 cents on the dollar and called for cuts to schools and some medical and welfare programs to shore up a state budget shortfall that has grown to $11.2 billion.
The move comes after two San Diego County cities just passed sales tax increases Tuesday.
From the LA Times coverage of the announcement:
The governor said "drastic measures" are needed because the state has lost so much money in tax revenue since the Legislature passed the state budget in September.
"We are living in a different world now," Schwarzenegger told reporters this morning.
Schwarzenegger today opened an emergency session of the sitting Legislature to deal with the budget shortfall. Lawmakers will have until the end of the month to take action.
The statewide sales tax increase would come after voters this week in El Cajon and La Mesa passed propositions to raise their cities' sales tax by one-half and three-quarters of a cent, respectively.
The two increases would push El Cajon's sales tax rate to 10.25 percent and La Mesa's to 10 percent. The state currently limits sales taxes to 9.25 percent, but a couple people I've talked to this morning say they think the state might raise that so the local sales taxes aren't pushed over the limit. I've got calls in to the state to find out the answer and I'll, of course, keep you posted.
Thursday, November 6 -- 12:21 pm
This free-lunch, taking-the-high-road conversation about potential programs to help homeowners is really fascinating.
I heard from a reader who once sold a house in Rancho Peñasquitos and took a bath in the last downturn without a potential for a bailout:
I had to sell my house in 1994, one of the bad markets in history; between the time I listed it with the broker to the time I actual sold it, the value went down $45k...if I had been as irresponsible as some, I could've had a mortgage higher than the price I got...nobody gave me any money to make up the difference.
Some people just don't understand that certain things we do in life as adults have no do-overs...adults need to take responsibilities for decisions that they made...good, bad, or ugly...we have become a nation of whiners...
Reader JF came up with his own solution:
No one should get a free lunch, what people need is employment. If someone is employed and cannot keep up with their mortgage, why aren't they offered a lesser house that they could afford. Maybe a clearing house with all possible foreclosures listed. Someone with a $500,000 mortgage could possibly afford a $400,000 and so on down the line.
Here's another employment-related thought. When I first started reporting on the foreclosure that were hitting San Diego, a lot of optimistic analysts were saying that as long as the region didn't have massive job losses like when aerospace and manufacturing packed up and left in previous decades, the housing downturn couldn't last long or be very bad.
Of course, we've seen the opposite: the housing downturn has been long, and bad, and has drained a ton of jobs from construction and finance and now other places in the economy, leaving the region in a recession.
There are a lot of people who stand to benefit from programs to help them stay in their homes that didn't necessarily gamble unwisely on home appreciation, but just assumed their jobs wouldn't vanish. There are others who've already lost their homes and many must be watching closely the plans to help those in the same situation they were in before.
I'm working on a story about this debate. If you've got questions or insights to add to this conversation, or personal stories, please send 'em my way: kelly.bennett@voiceofsandiego.org.
Date: 11/5/08 After posting this Friday, I heard several perspectives this weekend on the federal plan to potentially modify mortgages for distressed homeowners. I picked a couple to share here.
One reader said he finds himself in the same situation as the homeowner in The New York Times story I highlighted. He used a conventional loan to buy a house three years ago:
Those of us that used risky products but are actually able to keep up with our payments are in the worst possible situation right now. ... Not only will we be stuck in these dead end loans while paying interest endlessly, we'll be paying taxes to support the bailout of others.
We're in a very difficult situation where honest homeowners who bought houses that they can afford are being asked to take the high "moral" road and continue paying gigantic interest payments on loans while those who acted irresponsibly are getting off with a bailout. It's totally outrageous and why the bailouts won't work in the long run. ...
Another reader offered this perspective:
I wonder how people like my sister feel about homeowner bailouts --- foreclosure proceedings have already gone through for them, and they lost their condo last month. Aren’t there quite a few people whom it would be too late to help at this point? I would feel bitter if people who came after me got more help than I did.
I know there are more perspectives out there. Join the conversation and send me an e-mail at kelly.bennett@voiceofsandiego.org.
Date: 11/3/08 Rich Toscano is quoted in a New York Times story today about a possible $40 billion federal program to bail out delinquent borrowers and help them stave off foreclosure.
In the story, reporter David Streitfeld introduces an underwater homeowner. Todd Lawrence is an airline pilot in Connecticut who can afford his monthly payments on his traditional 30-year loan, but he owes more on his mortgage than he could sell his house for. There are millions like him in the country, and Lawrence thinks they should get a share of the relief:
If the banks, which frequently lent irresponsibly, and many homeowners, who often borrowed irresponsibly, are getting government assistance, Mr. Lawrence says he believes sober souls like himself are also due a break.
"Why am I being punished for having bought a house I could afford?" he asked. "I am beginning to think I would have rocks in my head if I keep paying my mortgage."
It's another fascinating byproduct of many of the homeowner-rescue plans going into effect. Lots of people who can otherwise afford their payments -- but are upside-down -- are going to want a piece of the bailout pie. How can the government stop people from falling behind on their payments on purpose so they qualify for help?
Of course, there are some factors that will keep people paying their mortgages, even if they owe way more than they could sell for: the thought the house might appreciate in value again, a moral obligation to pay back their debt, and an attachment to the house or the neighborhood.
But here's Rich:
Against those considerations must be measured the burden of paying a $500,000 mortgage on a property now worth $350,000.
"From a purely economic standpoint, there’s not a whole lot to be gained from staying," said Rich Toscano, a San Diego financial adviser whose popular blog, Piggington.com, predicted the collapse.
The story mentions another San Diegan, Jason Luker, whose business is buying homes and renting them out.
"If all of our neighbors are getting bailed out despite their own bad decisions, arrogance or ignorance, and we’re asked to keep playing by the rules for the sake of the greater good, I don’t want to participate," Mr. Luker said.
Some of these same fairness issues came up in a recent story I wrote about what happens to a neighborhood's property values if loans are modified.
I thought this was one of the most telling quotes from the story today, which has generated a slew of comments on the Times' website:
"If the lunch truly is free, the demand for free lunches will be large," said Paul McCulley, a managing director with the investment firm Pimco.
These issues will continue to impact our housing market here in San Diego and across the country. If you have thoughts on these or other topics, I'd love to hear from you. Send me an e-mail at kelly.bennett@voiceofsandiego.org.
Friday, October 31 -- 4:09 pm
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"When we launched this blog in August 2006, we knew that housing concerns and job issues -- the building blocks of surviving in San Diego -- were grinding away a little bit of our readers' bliss. We thought the blog would be a great chance to share little bits of our longer housing and economics stories. And what a couple of years we've had covering such hot topics."
-- Kelly Bennett (May 12, 2008)
E-mail Bennett at kelly.bennett@voiceofsandiego.org
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