Market Conditions: Is the Bust Spreading to the Rich?
Many of you sent me this article from the New York Times last week about the increase in distress sales among the million dollar property crowd.
While it didn’t discuss Chicago, specifically, the wealthy North Shore suburbs do get a mention.
Five properties here in Los Altos were scheduled for foreclosure auctions in a recent issue of The Los Altos Town Crier, the weekly newspaper where local legal notices are posted. Four have unpaid mortgage debt of more than $1 million, with the highest amount $2.8 million.
Not so long ago, said Chris Redden, the paper’s advertising services director, “it was a surprise if we had one foreclosure a month.”
The sheriff in Cook County, Ill., is increasingly in demand to evict foreclosed owners in the upscale suburbs to the north and west of Chicago — like Wilmette, La Grange and Glencoe. The occupants are always gone by the time a deputy gets there, a spokesman said, but just barely.
In Las Vegas, Ken Lowman, a longtime agent for luxury properties, said four of the 11 sales he brokered in June were distressed properties.
“I’ve never seen the wealthy hit like this before,” Mr. Lowman said. “They made their plans based on the best of all possible scenarios — that their incomes would continue to grow, that real estate would never drop. Not many had a plan B.”
I’ve also started to see more million dollar and higher priced properties under distress.
Take this 5-bedroom single family home at 1724 N. Cleveland in Lincoln Park.
It is currently being sold “as is”. There was a lis pendens foreclosure filed in November 2009.
It was new construction in 2005 and has an elevator and a rooftop deck.
Is the real estate bust finally spreading to the rich?
Timothy Salm at Sudler Sotheby’s has the listing. See the pictures here.
1724 N. Cleveland: 5 bedrooms, 5.5 baths, 2 car garage
- Sold in September 2003 for $1.04 million (this was the old property)
- Lis pendens foreclosure in November 2009
- Originally listed in June 2010 for $2.67 million
- Currently listed “as-is” for $2.67 million
- Taxes of $41,695
Biggest defaulters on mortgages are the rich [New York Times, David Streitfeld, July 8, 2010]
In May 2005 they had it listed at $3.7 MM then again in 2006 for $3.4 MM.
Geez, the property taxes alone are more than most people’s total housing costs.
Those taxes are #$(@*@$*)#*$@#$*#
There is a property that I followed in Old Town. Sold for ~3.5mil. Taxes of 20-25k a year.
Can I say it again. Those are some crazy taxes…
I don’t think that the “bust is spreading to the rich/wealthy”. Yes, there are houses in the 1 million plus range going into foreclosure, but those are properties that were never owned by anyone wealthy (ie, those are properties bought by posers who were NOT wealthy/rich – which is why they are going into foreclosure). Everyone should know that being able to afford the monthly payment on a house is not the same thing as being able to the afford the house.
Amen clio! I think a lot of people get into the $250k/yr salary range and THINK they’re rich. They end up spending the same % of their income on housing as someone making $100k or less, and then when the value of the home and/or their income drops, they’re in trouble. One of the beautiful things about making more money is that you should be able to spend a smaller % of your income on necessities liking housing, food, cars, etc. and build wealth.
“Is the real estate bust finally spreading to the rich?”
No, it’s spread to the delusionary rich; those with $100K incomes, $100K in student loans, car payments and $10K in credit card debt who thought they could afford a $600K condo financed by a neg amort loan with no money down.
Someone with a negative net worth is not rich, no matter what their income. The media always associates “rich” with income when net worth is the true determination.
Icculus: Unfortunately, it is not just the media that associates rich = income, but also our government.
Agree with the posts above. Truly wealthy people are not being affected by the bust. If anything, they are benefitting from others who are negatively affected by it.
That’s the thing with ‘new money’…it hasn’t been held long enough for it to really show the benefits it allows for those who have had $$$ all their lives.
My nickel opinion would be yes. All “rich” means in a recession like this is that you should hopefully have more cash reserves but reserves only last so long. In an economy like this, rich also just means that you have more dollars to lose. I am starting to see more and more wealthy people lose property and/or file bankruptcy and banks always pursue the wealthy unlike “Main Street” (one of my least favorite phrases because of the divisive nature of it). We must remember that wealthy people tend to be business owners. If the wealthy are losing residential or commercial real estate and struggling under non-performing assets, they are not going to create jobs. The repetitive story I see is that for every one good performing asset a wealthy person has; it also has an albatross non-performer that could sink the whole ship…… With cross collateralizing, I have seen where one asset could go down and take 2 more with it. Fun stuff
@Think Small – I totally agree with you that the wealthy ARE being affected by the recession (of course they are!!). However, the vast majority of the wealthy are NOT going to lose their houses, etc. If they were smart (and most are), they would NOT have over-extended themselves. If they did, they were likely never in the wealthy class to begin with!!!
Of course wealthy people are being affected by the downturn. Just ask the Bucksbaum family how their net worth has faired over the past 2 years. Or ask any family that previously owned a community banks that went through a FDIC seizure. I have to imagine even families like the Crown family have seen their net worth shrink. I guess it is all a matter of perspective.
For every million dollar plus house there is a million dollar mortgage. I’ve showed that time and time again on this site.
Add in the Acura in the garage, the nanny, student loans, RE taxes (often no escrow on the million dollar mortgages), credit cards … and you discover that they’re really just living paycheck to paycheck.
It’s the professionals living in the modest yet paid off house that they bought in the 80’s, those are the wealthy people out there. The 35 year old doctor living in a million dollar house with a super-jumbo mortgage, he’s just living the high horse. he’s worked so hard, you know, he deserves that fancy house.
“Everyone should know that being able to afford the monthly payment on a house is not the same thing as being able to the afford the house.”
The bust is spreading to the “fake” rich, the ones that levered up to buy multiple vacation homes or mansions or in town homes or whatever… they are the ones taking it in the keester.
The “real” rich will be fine, as always
“For every million dollar plus house there is a million dollar mortgage. I’ve showed that time and time again on this site.”
HD, just throwing it out there but because there is a 1mil+ mortgage doesnt mean the dude doesnt have the cash to pay off the mortgage! and that acura in the garage will have a car note on it, but doesnt mean a guy couldnt pay for it in full. (0% financing is like free money! even 2.5% financing is still free money).
but hey i care less about those rich bastardz. screw them
“The 35 year old doctor living in a million dollar house with a super-jumbo mortgage, he’s just living the high horse”
….while I agree with this statement, I also wonder (to be the devil’s advocate): if you DO have the money to get a loan for a million dollar house, and you have a stable job (being a physician is probably one of the most stable jobs around), why not? What is the point of making 500k/year and living in a 500k house with a chevy and a minivan? Obviously, if you do not have a stable job, that is another story.
It boils down to cash reserves. I don’t think a stable job is something you can really nail down easily. Things may appear stable but everyone without some serious savings is a couple bad events away from disaster. I don’t advocate the chicken little approach but I’d prefer to be mortgage free more than anything.
“What is the point of making 500k/year and living in a 500k house with a chevy and a minivan? Obviously, if you do not have a stable job, that is another story.”
$500k is an income twice as much as the doctor making $250k.
Quite a few neighborhoods in the city are filled with working couples each earning in the low to mid-100’s and leveraging every penny to live there. Roscoe Village comes to mind. That’s not to say that there are some high income earning households with substantial wealth. However, the history of western civilization has been that most borrowers have their feet in the gutter but some of them are looking at the stars and they have their eyes set on Lincoln Park.
““What is the point of making 500k/year and living in a 500k house with a chevy and a minivan? Obviously, if you do not have a stable job, that is another story.””
In that article it specifically mentions that around 23% of mortgages on INVESTMENT properties more than $1 million are heading towards default. Alt-A lenders lost their minds and a lot of mortgages that are defaulting are actually speculators/investors, not Joe Doctor/Lawyer.
In addition, because of stated income and low down payments, there were quite a few poseurs buying more than they could afford. Look at all the foreclosures associated with the Real Housewives show.
I haven’t seen too many folks in distress personally with those sized mortgages who weren’t investors.
There is a big difference between income and wealth. A lot of wealthy people don’t have huge incomes. I have a few clients with several million in cash, but very little income (ironically, they have a hard time qualifying for very small mortgages – totally stupid, but that is mortgage underwriting). I also have clients with $250k+ incomes and very little “wealth” to show for it. These are typically younger folks though.
The one thing I have noticed though is that people are realizing the non-mortgage carrying costs associated with these big homes are retarded – property taxes, landscaping, utilities, etc. A lot of people are rethinking if they need all that space.
“$500k is an income twice as much as the doctor making $250k.”
not to change the subject, but I DO believe that doctors probably make more than 250k/year. Most doctors I know live in million+ houses and have families. To do so, you really need an income closer to 500k.
What do they call it, the ROAD to riches?
Radiology – Orthopedics – Anesthesiology – and Dermatology?
How much money do you think general practitioners make? Or pediatricians?
Again, behind most million dollar homes are million dollar mortgages.
Not all, but most. There’s always the guy like Russ describes above with no income but lots of wealth including his million dollar mansion. but that’s not the norm. At least not in Chicago. Monaco maybe, but not here.
“clio on July 12th, 2010 at 9:08 am
“$500k is an income twice as much as the doctor making $250k.”
not to change the subject, but I DO believe that doctors probably make more than 250k/year. Most doctors I know live in million+ houses and have families. To do so, you really need an income closer to 500k.”
Agreed that the fact that a person has a million in the bank doesn’t mean they’ll “waste” it on a property that’s under water — it seems it is people’s Godgiven right to make money on property in this country; buying property is not like buying shares of stock. To argue that the buyer took the risk in taking out the mortgage is considered pollyannaish. The new morality equals “rational economic decision.”
One thing everyone seems to forget is that Americans love to be comfortable and feel rich. We are (and always have been) extremely spoiled. Just take a look at the people still spending lavishly at restaurants and bars….
My point (it’s in here somewhere) is that while people can be a little skiddish about high end real estate now, they will soon forget and, as soon as some smart businessman comes up with a scheme to get them into nicer places, there will be plenty of people jumping at the bit. The U.S. is NOT like Asia or Europe (where people will “suffer” and live in crapholes just to save money). Mark my words…. real estate will come back (all you have to do is know the psychology of the American people
I have been quite underwhelmed by what most doctors make to be honest. It has to be the worst ROI career ever. For every heart surgeon I have seen making big bucks, there are a bunch of general practitioners barely making $150k.
HD, the scenario I described with little income and a lot of wealth is quite common. I see it all the time. They tend to be OLDER folks though, near retired executives. $300k mortgages on $3 million dollar properties and they can’t quality for a rate/term refinance due to lack of income but they have a couple million in the bank.
Most of the jumbo lenders are requiring significant reserves now. Some want 36 mos of liquid reserves or 25% of the loan amount.
Russ,
Don’t forget the selection bias you have. There are relatively few people taking mortgages right now and the only people trying are those with good credit, income or wealth.
My relatives and in-laws are all like you. Much older, lots of wealth, not much income other than pensions and social security. Very little investment income in a ZIRP environment.
Clio, how would you explain the higher costs of real estate in urban centers in Europe compared to counterpart cities in the US? Merely a byproduct of supply and demand due to population density and “old money” in Europe? Granted, my knowledge of European housing prices is founded on avid watching of House Hunters International, but I get the impression that urban real estate in London, Paris, Berlin, is more expensive per square foot than New York, Chicago, LA.
Re: all the doctor talk- here are my observations from my wife’s journey through med school and residency. There is a dramatic difference in incomes for physicians across two major subsets, and it even varies within. First major decision point is Academic medicine (ie employee of a hospital with research responsibilities) or Private Practice. Doctors with their own practices have historically made much more, though there is a recent trend of Hospitals buying them which gives the docs some level of institutional negotiation power and better protection from ambulance chasers, while the hospital gets a stable revenue stream and a strong franchise.
Of course, specialists make a lot more than internists, pediatricians, etc, though keep in mind specialization requires additional deferment of income during fellowship, and more debt. From what I have gathered, the further out you live from a major urban center, the higher your compensation will be. You can make 500k + a year as a gastroenterologist in Montana, problem is… you’re in Montana, on call overnight every third night, and can’t take out of town vacations since you’re the only doc around.
“I get the impression that urban real estate in London, Paris, Berlin, is more expensive per square foot than New York, Chicago, LA.”
Joe, you are correct – real estate in the best locations in these fine European cities is untouchable. It is purely a result of population density (even in India, real estate is MORE expensive than L.A., NY or Chicago). We will never have such a “problem” in the US because of all the land and easy transportation.
With regard to the “doctor talk”, one interesting personal note is that my sister and her husband are both ophthalmologists. They are in their mid 30s, 2 small kids, no debt and their combined income is around 400k. They had the hardest time finding a lender to loan them 600k (on an 800k house). If doctors with this type of income and stable jobs can’t get loans, who can?
The previous generation was very good at saving and it’s been claimed that the first generation makes the money, the second one preserves it, and the third generation spends it. I always wonder how many people are buying these homes on inherited wealth. Maybe Russ can share some light on this.
I think you have to leave your kids with more wealth than you parents are going to leave you. Otherwise, you have not contributed to civilization. I also tell my kids that we never know what future descendants of us are going to need to tap into the “family emergency fund” because of some tragedy.
Real estate is more expensive in Europe because there is less of it. They don’t allow for building of suburban tract homes for as far as the eye can see outside of Rome, Brussels or Paris. In fact when I lived in Europe for my student abroad there were luxury mid-size high rises right up to the edge of the city limits, and it was the hills of Tuscany for miles and miles beyond that.
Secondly a lot of people rent off the generous pensioners salaries that the european government provides. That sets a floor for all pricing.
Secondly, there’s still a huge housing bubble going on over there and it’s in the process of deflating. Spain and Ireland have been first but expect the rest of Europe to follow.
on the subject of this property in particular, it goes to auction this coming thursday…….will report back where the bank opens the bidding
Clio,
It’s funny you should mention Europe. I came to Chicago from a very affordable part of the country 10 years ago and my first thought was that people here (a lot of them anyway) live in squalor because this is not a very affordable city. I compared it to Europe. My view of that has not changed. Frankly, I just don’t understand why people don’t get up and move to a more affordable place. Actually, I think it is/will happen.
Europeans started leaving Europe around the times their people were freed from serfdom….
“Frankly, I just don’t understand why people don’t get up and move to a more affordable place. “
“Frankly, I just don’t understand why people don’t get up and move to a more affordable place.’
Again, all you have to do is understand psychology to understand why people don’t move to more affordable places. Basically, people don’t like change – studies have shown that the vast majority of people will live within 20 miles of where they grew up. This is the reason all of those idiotic developers in Las Vegas, AZ and Florida were so wrong – they all thought that all of the retirees would flock to these warmer climates – WRONG!!! They didn’t because they like being around their families and friends.
Clio: Mortgage underwriting is not very logical and very rarely takes context into account. It literally is painting with numbers. EVERYTHING has to meet guidelines or the bank won’t do the loan. It is over efficiency at its worst. Most logical people would lend money to those types of clients all day long, but that isn’t how banks underwrite loans. The problem is the loan has to be salable in the secondary market. Banks make loans because they are salable on the secondary market, not because they are a low credit risk. They two don’t necessarily go hand in hand. THis is why there was so much sub prime lending. Our buddies on wall street would buy the loans, so banks didn’t really care if the underwriting guidelines were stupid. This is also why you have cases where millionaires can’t get a small loan because the guidelines says you need X amount of income with no regard to if that person could write a check for the mortgage and not miss it one way or the other.
Gary: I have actually been very surprised at how many people are able to get gifts and loans from parents to buy properties. I would say something like 20% of my purchases involve a gift these days.
The ability to pass on wealth is definitely one of the things that helps folks get ahead in life. I actually studied this in b-school. It is one of the reasons that minorities sometimes still lag behind whites in some areas even though their incomes may be the same. Many minorities are the first generation of making any kind of income that could be passed on to their kids.
Thanks Russ – great information!!!
People don’t move to more affordable places because affordable places are affordable for a reason… they by in large suck.
I have friends that have huge McMansions for what we paid for a little bitty bungalow in Oak Park. However, I wouldn’t trade where I live for their boring car dependent insta-homes under any circumstances. They have to drive 30 minutes to do ANYTHING. Culture and arts is not going to the shopping mall. Dining out is not Olive Garden.
Yeah, I am urban snob and proud of it.
Re Europe: If the socialist government is footing the bill for your education, childcare, and medical care (my relatives in Belgium got a childcare allowance for, of all things, having more babies — the gov’t paid for the diapers), then you can afford to put your income on housing. In Ireland, eighty percent of per capita healthcare is provided by the government, which I believe also (despite being broke) continues to provide college tuition or at least a huge subsidy.
Hell, I was watching an episode where I crappy, 5th floor walk-up in a small town in Bulgaria was 250K.
“Granted, my knowledge of European housing prices is founded on avid watching of House Hunters International, but I get the impression that urban real estate in London, Paris, Berlin, is more expensive per square foot than New York, Chicago, LA.”
Bulgaria is to Spanish and French infestors as the Inland Empire was to coastal california infestors. There’s no reason whatsoever that a tract home in the middle of a small town in the high desert should cost what it did BUT FOR coastal californians borrowing against their HELOCs and bidding up investment properties. Eastern Europe is the same analogy to western europe.
Don’t even get started on the housing bubble in China. They have pop songs about the bubble over there. Second and Third tier cities are crazy expensive beause of the money flowing from Bejing.
I have a few doctors among family/friends. The majority of them have had some type of problem with business partners, thieving office managers, crazy debt schemes (i.e. taking loans agains their medical equipment), etc.
In fact, I’d advise a young person against persuing an MD. The debt load is too large and income is deferred for too long. Not many of the ones I know would I consider “happy”.
HD: I think you may have just accidentally spawned a new CribChatter term: “infestors”.
infestors is actually a term from the HBB, they call people from the CA coasts ‘equity locusts’ who infest the hiterlands (inland empire, montana, arizona, idaho!) with their HELOC money and drive up the cost of housing to bubblicious values.
There has been a lot of mention about the taxes being expensive. If this house sells for 2.6m the taxes are about 1.5-1.6% of purchase price. Seems a bit high but not that out of line? do you think they are reasonable? Do you think the new owners lawyer would actually win an appeal?
flo,
I agree that the taxes are in line for a property that actually sells for that amount. But the notion that you would have to pay that much just in taxes is revolting.
Gary:
I did a loan for a $7 million property on the ocean. The hazard insurance alone is almost $40k a year… WTF? That is revolting.
at least you can write off the property tax i guess
“I did a loan for a $7 million property on the ocean. The hazard insurance alone is almost $40k a year… WTF? That is revolting.”
And what do you think the insurer should charge for the *privilege* of paying to rebuild if a covered risk destroys the house?
If I owned a $7,000,000 property on the ocean, I would most definitely get Obama to bail me out if my house needed to be rebuilt.
“anon (tfo) on July 12th, 2010 at 4:49 pm
“I did a loan for a $7 million property on the ocean. The hazard insurance alone is almost $40k a year… WTF? That is revolting.”
And what do you think the insurer should charge for the *privilege* of paying to rebuild if a covered risk destroys the house?”
I dunno, but my gut tells me the odds are pretty low. I am sure some quant can justify the premiums.
Just pointing out how much it costs to carry a big house. That is a lot of money to pay before you even get to the PIT part of the PITI.
“I dunno, but my gut tells me the odds are pretty low. I am sure some quant can justify the premiums.”
Low odds, but high payout, still means a fairly high EV. There were over 400,000 residential fires in 2006, out of–what? 110mm units? so .364% chance of a claim of up to $5mm? So a one year EV of up to $18,200–just related to fire loss. And that doesn’t include any other covered damage or any personal liability or contents insurance or anything else. And there’s no extra deductible for a claim on day one. Sure, it’s high compared to my house (more than 10x for about 10x coverage), but oceanfront (a) has more risks, (b) further (usually) from police/fire protection, (c) less likely to be year-round house, (d) different state with diff claims profile.
“If I owned a $7,000,000 property on the ocean, I would most definitely get Obama to bail me out if my house needed to be rebuilt.”
Wait–you’re either Trent Lott or Haley Barbour?
Chances are that the person that bought the 7million dollar house probably did so with cash and 40k for insurance is not that big a deal to them. Seriously, when you think about it, there are a lot of people out there worth 10-50million dollars. These people are not famous and fly under the radar because 1) they are not THAT rich (like Warren Buffet, Oprah, Gates, etc.) and 2) they are not famous (most probably own small businesses, inherited wealth). To these people, the premiums don’t make that much of a difference.
To prove my point, just go to blockshopper.com and look up any town in chicago. It ranks ALL of the residential properties in terms of real estate taxes (it also lists the owners). You would be surprised to see that in Kenilworth, Winnetka, Wilmette, Hinsdale, Oak Brook, Naperville, and, of course Chicago, that there are hundreds (if not thousands) of people paying well over 50,000/year in RESIDENTIAL REAL ESTATE taxes).
Like I have always said, there is a LOT of money out there!!!
If you are worth 10 to 50 million I hope that you don’t fly under the radar on commercial but rather on your own plane! Forget the huge crib! When im worth 50 million imm never flying on a commercial flight again.
The Moral of all the above stories is to live within your means and have some fun with the extra disposable income. My wife is an attorney and I am a business owner. We are fortunate to have a very large income. Our PITI hovers around 10% of our monthly gross income. My income varies each year.
This allows three great things.
1. Lots of travel! (4 of 7 down)
2. Sleeping wll at night
3. We never had a argument over money
Live well on less than banks are willing to loan you and your life will still be complete, spend some of that extra money on making great memories with friends and family! It will pay off in the long run.
I get it. You’re awesome Jp3chicago – you’re rich. Can I move in with you?
“If you are worth 10 to 50 million I hope that you don’t fly under the radar on commercial but rather on your own plane! The Moral of all the above stories is to live within your means and have some fun with the extra disposable income.”
-those 2 statements seem to contradict one another. 10-50 million is definitely NOT enough to buy and maintain your own private jet (even if the plane “only” costs a couple of million dollars, you will spend upwards of 300k/year in maintenance/storage costs!!) Talk about an albatross!!!! Owning a plane is a much more stupid idea than investment real estate!!!!
Clio,
My brothers in-laws own a 8 passanger cj, not sure what the maintenance costs are but I do know they set up an airlines for tax purposes. I have had the chance to use the plane a few times, and I have to tell you that if I had the money its the only way to travel. Limo to a private hanger, valet to take your bags to the plane, and no lines or security. My last trip I was 45 minutes late to the airport, plane and pilot wait for you.
Also you have many more options for airports to land, which can put you closer to your final destination. I’m sure maintaining and paying the taxes on their 7 homes far exceeds the cost of the plane, so for them not sure what would be considered the more stupid idea/investment. Of course they probably don’t sit around debating this like us cribchatterers. On a seperate note this recession/housing bust doesn’t seem to be effecting them as they are currently putting a 4,200 sq. ft addition on to one of their homes. I’m sure HD will point out that the 7 homes are probably heloc’d to pay for the cost of the plane.
10-50 million is definitely NOT enough to buy and maintain your own private jet (even if the plane “only” costs a couple of million dollars, you will spend upwards of 300k/year in maintenance/storage costs!!) Talk about an albatross!!!! Owning a plane is a much more stupid idea than investment real estate!!!!
I think a point that gets missed in this dialogue is that at any point in the economy there are what I will call truly wealthy (have a decent net worth with cash reserves) and new wealth (building wealth and have high assets but low net worth- the old saying “asset rich and cash poor”). Some “new wealth” will eventually become “truly wealthy” if they do not get their clocks cleaned from an unforeseen economic downturn. There are a lot of Americans tied to the “new wealth” as they typically employ many people. These are just risk factors to the recovery. “Truly wealthy” can retire when a recession hits but we need someone to want to create jobs. We have an environment right now where everyone wants a job and does not want to take the risk to create jobs. If you will not create a job, what would make someone else want to?
“This allows three great things.
1. Lots of travel! (4 of 7 down)
2. Sleeping wll at night
3. We never had a argument over money”
ok as for you bullet points,
2. i guess you dont have kids
3. BS, no matter how much/little money you have there will be at least ONE fight about money. at least one.
i will say now that i am bleeding money left and right this summer, we havent had one fight about money. i guess i just gave up once we opened the flood gates.
“10-50 million is definitely NOT enough to buy and maintain your own private jet”
Most of these people will use a fractional jet ownership service such as NetJets. You pay a hefty premium to have a private jet at your disposal without owning one.
“Most of these people will use a fractional jet ownership service such as NetJets. You pay a hefty premium to have a private jet at your disposal without owning one.”
I have a friend who particpates in fractional ownership. He constantly tells me IT IS NOT WORTH IT!!!!! It is MUCH MUCH MUCH MUCH cheaper and, more importantly, MORE CONVENIENT to fly FIRST CLASS anywhere you want to go. THERE IS ABSOLUTELY NO BENEFIT to these programs (other than to brag about it). People are uninformed about such programs. They think that the people that particpate can just call up on a whim, drive right onto the tarmac and travel anywhere they want – WRONG. You have to make reservations, have to park in the parking lot and then WAIT for escorts to go to your plane. Furthermore, if you are going out of the country, you still have to get in line to go through customs, etc..
“They are in their mid 30s, 2 small kids, no debt and their combined income is around 400k.”
It’s clear that you cannot get underwritten for a 600k loan with this level of income if your IRS 1040 AGI is off and you are not earning on W2 income. This was the original purpose for “liars Loans”.
400k on W2 income and you can have a $1,000,000 mortgage without blinking, assuming you are debt free.
“400k on W2 income and you can have a $1,000,000 mortgage without blinking, assuming you are debt free.”
And have the $150-250k DP, no?
And, yeah, those are *exactly* the sort for whom OARMs and stated income were designed–to be offered to existing banking customers.
Ha ha…I forgot to look back at this post to see the ripple effect my comments made. For the record if I’m ever worth 10 to 50 million I’ve won the lottery. Not happening in this lifetime. The private plane thing was a joke. I guess that it came from the fact that I spent five years of my life constantly on a plane.
I dont consider myself awesome or rich but comfortable and happy. Having an above average savings helps me sleep at night. As for the fights about money comment I’m sure that one will surface someday. My wife and I have only been married for 3 years. I know that we have not really been tested yet.
Our baby was born last September. Since then we have taken her to Costa Rica and Hawaii. This fall we are planning a trip to South America. We get some strange looks but she travels well at the moment and so we are taking advantage of that small final window of time.
I’m not saying that my answers are correct for anyone else but they work for us.
“My wife and I have only been married for 3 years. I know that we have not really been tested yet”
please teach me great yoda. wife and i got into a fight about money this past week it all started because i didnt get my son to pick up his thomas the train trains and she stepped on it, that evolved to i ate the last of the watermelon and didnt cut up the other half which evolved some how to a random argument about money (spending habit type stuff).
so i ask please teach me, please!
“We get some strange looks but she travels well at the moment and so we are taking advantage of that small final window of time”
as cheesy as it is i have found “Beaches Vacations” to really work out well with 2-4 year old crowd. the all-encompassing thing really helps you focus on the other stuff when dealing with temper tantrums.
also for the next trip look into a quinny zapp stroller we got one its great at gate checks plus it has its own bag and it folds smaller than any other.
so i ask please teach me, please
the night I randomly met my wife one of her quotes was “it’s all about being happy” Knowing her much better now it is clear that she did not mean it in a spoiled way but rather in what her attitude to live by would be formed around. Big win for me!
Nice tip on the Quinny. It looks cool! Our gate checked stroller and car seat missed the plane on our first vacation with the baby. We found this out in DFW before boarding the next flight to Costa Rica. Apparently they forgot to load it on our plane. AA could not track it because it went out on the next plane to leave from that gate. Sadly that plane was headed to Japan. 72 hours later it was delivered back to our resort.
That pissed off the wife but even with that stressful situation she held it together and did not turn it into WW3 for my idea of an international trip with a two month old. She did have a strong chat with the not so caring AA representative who would not help solve our issue.
When we arrived in C.R. the shuttle driver for the resort offered to pick up a car seat at his own house. His kids had grown out of it already and he loaned it to us for the week. Go to Costa Rica and stay at the Four Seasons. Great all around property!
On the first night we found a live scorpion in one of the bathrooms. Again not so happy but very cool wife. Forget the earlier comment about winning the lottery for the 10 million and access to a plane. I realize more every day that I’ve already won by marrying a great woman!
we travel with the Qunniy Zapp and Combi Coccoro car seat. i “built” a back pack straps for the Coccoro car seat. after the first trip we took i gave up on lugging a playard with us as most hotels have mini cribs anyway.
doode that would suck having the kids shyt lost, i cant imagine which AA person i would choke or at minimum back hand slap. but so far all our trips have been delightful and somewhat stress free. we havent yet gone out of the us with our little guy yet wife is a partial germy and wants to wait until 2 years old before we infect him with “evil foreigner” air. (i love when she says that, as she has only been in this country for 11 years)
you should pick up some flowers and take your wife out for dinner, not having a fight about money ever she deserves some earrings or something nice.
i remember our first married fight about money. we were saving up to buy a house in full. both of us were busting hump working two jobs and neither of us had a day of in like 25 days (yes working monday-sunday for 25 days straight) and i skipped visiting her at where she was bartending as i was busting my azz at twice the speed in the summer heat on a saturday working a construction job outside to get home early and work on some horrible sales tax audit for my career job. she came home at 4 am woke me up (i fell asleep at the computer) and with the heat and no days off we went full on fight mode and it was about money and why are we working so hard, said some bad thing about her spending habits, and she grilled me on my season tickets, i used the rebuttal about her insane collection of necklaces and rings, she came back with why did i need that car……it went on for about two hours.
after that fight, a few days latter we cooled down and i realized that neither of us mentioned anything about splitting or divorce, i had her quit her bar tending job and i finished a few side jobs up. then went and just took the money save and dropped a huge DP on the house we are in now.
we still argue about money, mostly cause i am a “my back up plan has a back up plan to with the sub plan has a secret savings” type of person. and she is a “dear gosh we dont need that much money just collecting dust, tap that shyt and lets go shopping”.
yep we balance each other out so the arguments do accomplish something.
***disclaimer….my wife does read the blog comments, so what i write does reflect that knowledge***
My relationship is more like Rod & Patti. And I’m Patti.
“after the first trip we took i gave up on lugging a playard with us as most hotels have mini cribs anyway. ”
The babybjorn travel crib rocks, is light and reasonably small. Phil & Ted have one too, but haven’t seen one in action.
“My relationship is more like Rod & Patti. And I’m Patti.”
You don’t actually have a legit job, but still make a lot of money and it was your family who got your so a job, but s/he’s publicly humiliated your family, anyway? You’re a really loathsome person, HD.
““My relationship is more like Rod & Patti. And I’m Patti.”
LOL
the bjorn wife liked but i already pulled the trigger on the Joovy Room2 and we had a a arms reach mini that was his newborn crib. that was nice on his first trip at three months (a driving trip). he out grew that thing at 4 months.
“a arms reach mini that was his newborn crib. that was nice on his first trip at three months (a driving trip). he out grew that thing at 4 months.”
And it weighs more than he will when he’s 14.
You seriously bought a 30+ pound “portable” crib? Bjorn’s under 10 pounds, which means it’s actually portable.
“The babybjorn travel crib rocks, is light and reasonably small. Phil & Ted have one too, but haven’t seen one in action.”
We have bjorn and it’s very nice. It is much wider (or longer or whatever) than the phil and ted, but read some so-so reviews on the phil and ted.
this isn’t crib chatter, its “crib” chatter you fools!
Oh come on, I’m not loathsome, it’s just a funny joke because Patti took all of Rod’s abuse. don’t read too deep into it.
“anon (tfo) on July 15th, 2010 at 12:15 pm
“My relationship is more like Rod & Patti. And I’m Patti.”
You don’t actually have a legit job, but still make a lot of money and it was your family who got your so a job, but s/he’s publicly humiliated your family, anyway? You’re a really loathsome person, HD.”
“Oh come on, I’m not loathsome, it’s just a funny joke because Patti took all of Rod’s abuse. don’t read too deep into it. ”
WHOOSH. I laid out the “like Patti” that I was assuming–for purposes of *my* joke. *She’s* loathsome; not as bad as Rod, but bad.
Just came across this article about the middle class under pressure in the US, notably this great graph of the value of mortgages relative to home equity. Is this the shadow inventory HD speaks of?
One hell of an URL by the way…
http://www.businessinsider.com/22-statistics-that-prove-the-middle-class-is-being-systematically-wiped-out-of-existence-in-america-2010-7#for-the-first-time-in-us-history-banks-own-a-greater-share-of-residential-housing-net-worth-in-the-united-states-than-all-individual-americans-put-together-9
“You seriously bought a 30+ pound “portable” crib?”
no the arms reach mini was for our bedroom in the first three months. I am a softy and wanted him to be in the same room. i thought the idea of the arms reach was cool but we ended up not even attaching it to the bed just using it as a mini crib in our room.
the joovy room2 was light for me, but now the squirt will sleep on anything any where so its used for baby jail when one of is alone and needs to shower or deuce it up.
“this great graph of the value of mortgages relative to home equity. Is this the shadow inventory HD speaks of”
Some of it. Because most of the shadow inventory is deeply underwater, but until an f/c is complete or the property sold to a new buyer, the mortgage is still “outstanding” for purposes of that chart. I’m pretty comfortable stating that there are hundreds of properties in Chicago (south and west sides), sitting with pending f/c’s in various states, with mortgages of 4x or more of their actual, current market value.
That’s a small piece of that overall problem, but there are thousands more that are 2x current value and either still holding out or in the f/c pipeline, with defaulted, but still outstanding mortgages. It’s the kick the can process that Bob rails on every once in a while.
Sonies on July 15th, 2010 at 1:06 pm
this isn’t crib chatter, its “crib” chatter you fools!
F’n hilarious! Somehow I did not see that one coming. Thanks sonnies!