The Daily Pilot recently reported that the Newport-Mesa Unified School District was postponing the sale of bonds.
The money raised by the Measure F bonds was meant to fund improvement projects at various schools.
These projects are being pushed back at least one year. The reason for not selling the bonds now was because the assessed valuation of real estate in the district was much lower than anticipated.
California has a staggering estimated $15-billion deficit because tax receipts are much lower than anticipated.
Capital gains taxes are expected to be a lower percentage of personal taxes this year than previous years.
Capital gains tax is paid whenever assets such as stocks, bonds and real estate are sold for more than their purchase price.
In Fiscal 2000-01, just prior to the bubble bursting on the stock market, the state collected $17.5 billion in capital gains taxes. This represented 39.3% of all personal tax revenues.
By 2002-03, capital gains taxes in the state were only $5.4 billion or 16.6% of personal tax revenues.
Whether it is school bonds or state budgets, the drop in real estate values will affect the economy for at least the next 18 months.
But to be fair, the drop in real estate values is directly proportional to the artificial increase in value we had in the last couple of years, which was primarily due to the creation of no money down “liar loans.”
These no-documentation loans allowed borrowers to overstate their incomes and qualify for larger loans, which in turn pushed prices higher than anyone could really afford. They also allowed a lot of people to buy widescreen TVs and RVs with their newfound equity.
As I wrote previously, until the $100 billion in losses, that lenders on Wall Street have already taken get to Main Street, the number of real estate transactions will continue to drop thereby continuing to put downward pressure on prices. Homes are now selling in our area for about the same prices they did in 2005. Not surprisingly, that is the same year the liar loans really took off.
There is, however, some good news in the real estate market. The Wall Street lenders have finally gotten their “short sale” departments up to speed to handle the actual write down of loans.
A short sale is where the lender agrees to take less than what is owed on a home in order to facilitate a sale. Lenders seem to agree that it is better to do a short sale and have an orderly transaction from one homeowner to another than to do a foreclosure and still have to find a buyer. Homes always sell better furnished than vacant.
Though it may only be anecdotal, I know of at least two buyers in as many weeks who bought homes this way. In one case the previous owners, who bought in 2006, paid $750,000 (all borrowed) for a four-bedroom, two-bath Costa Mesa home.
My friends, after waiting four weeks for the lender’s approval, paid just $512,000. The lender agreed to accept a $250,000 loss on the loan. This is what I mean when I say moving the loan losses from Wall Street to Main Street. Not coincidently, $512,000 was what neighboring homes were selling for in 2005.
I spoke with Valerie Torelli of Torelli Realty, and she said last year her office did one short sale. This year they expect one out of three home sales to be a short sale.
The other good news is that President Bush signed HR 5140, the economic stimulus bill. The important part of the bill was not handing out $600 checks to anyone who can breathe.
Any idiot can borrow from Peter and give to Peter and Paul. That was a political stunt to show the American people how concerned Washington is about us in an election year. That’s another column.
The important part is increasing guarantors Fannie Mae and Freddie Mac limit on the size of loans they can buy from $417,000 to $729,750. This allows lenders to make loans at the higher amount knowing that Fannie or Freddie can buy it on the open market. Lenders should start making these loans in April.
Until now, even strong buyers with large down payments could not get a reasonable loan, over the $417,000 limit. Most lenders are afraid to make larger loans because they do not have any confidence they can sell the loan later if needed. Raising the limit raises confidence. Raising confidence brings liquidity to the mortgage market and allows home buyer to get loans.
The number of home sales will trend up throughout 2008. Notice I did not say prices will go up. Homes are worth what they were in 2005. But at least now you will be able to buy and sell them.
Saturday, February 23, 2008
Saturday, February 16, 2008
You Win Some, You Lose Some
The last two weeks were politically a little rough for me. Super Tuesday was almost two weeks ago, and I am still feeling the pain.
I had been working to get former Massachusetts Gov. Mitt Romney elected for more than two years, and trust me: When you lose, it leaves a mark.
Looking back now, it is easy to see how it all played out. The conservative vote was split between Romney and former Arkansas Gov. Mike Huckabee.
Former New York City Mayor Rudy Giuliani had lost in Florida the week before, so he dropped out of the race. With no other moderate in the race, Arizona Sen. John McCain picked up the plurality of votes and won most of the delegates on Super Tuesday.
My hope was that Romney could do well in California and take the race all the way to the convention. That did not happen. McCain won fair and square.
This week Romney endorsed McCain and thereby forced every conservative in the country to make a choice about whom we wanted in the White House.
In any political race you do not get to create your own candidate. You chose from the candidates who are on the ballot.
When I look at my choices now they are McCain and Sens. Hillary Clinton and Barack Obama. Though I cannot believe I am about to say this, I will support McCain for president. He may not have been my first choice, but among the three, he is the best choice.
On the local level everything I voted on came out my way except for Indian Gaming.
But I already knew those initiatives were going to pass when they started the “please help our poor tribe” ads six months ago.
One measure I supported that did pass was Newport Beach’s Measure B “City Hall in the Park” referendum.
Though this was passed by the voters, the issue is still muddled up with the Allan Beek lawsuit.
Mr. Beek sued under the argument that only the city council had the authority to decide where a city hall should be built and that the citizens could not make that decision.
It was reported in this paper that even though the initiative passed, he has decided to continue with his lawsuit.
The very essence of his suit is that the voters do not have the right to decide this type of issue. He wants his day in court.
Well, I am not a lawyer and can’t give a legal opinion of Beek’s lawsuit. But one way to solve this is to give Mr. Beek what he wants.
The council could vote on the City Hall in the Park’s location. This would solve Beek’s concern that only the City Council can make that decision.
Previously, four of the seven city council members did not support having the city hall at the park.
Hence, Bill Ficker and friends collected signatures and put it on the ballot. Now that the initiative has passed, I think the council vote would be quite different.
Mayor Ed Selich, who was one of the four who did not support the City Hall in the Park’s Avocado Avenue location, has said publicly all along that if Measure B passed he would go with the will of the voters and move forward to have the city hall built at the Avocado site.
I talked with Councilman Keith Curry, who also was not a supporter of the park location. He told me that the people have spoken and that no matter what happens with Beek’s lawsuit, he will now support the city hall in the park location.
That would now make it at least five of seven votes for the city hall in the park. Curry surmised that if a vote came forward he thought it would probably be 7-0 in favor.
Just prior to finishing this column I got a return call from Councilman Mike Henn.
Though he said he did not want to declare a vote in the newspaper, unless there was a prior decision in the Beek case, he would also support the will of the people.
Just as in the presidential race, some of us have to work with the choices we have, and not the choice we want. It is nice to see that the Newport Beach council is looking to unify the city and move forward on a location for city hall.
I had been working to get former Massachusetts Gov. Mitt Romney elected for more than two years, and trust me: When you lose, it leaves a mark.
Looking back now, it is easy to see how it all played out. The conservative vote was split between Romney and former Arkansas Gov. Mike Huckabee.
Former New York City Mayor Rudy Giuliani had lost in Florida the week before, so he dropped out of the race. With no other moderate in the race, Arizona Sen. John McCain picked up the plurality of votes and won most of the delegates on Super Tuesday.
My hope was that Romney could do well in California and take the race all the way to the convention. That did not happen. McCain won fair and square.
This week Romney endorsed McCain and thereby forced every conservative in the country to make a choice about whom we wanted in the White House.
In any political race you do not get to create your own candidate. You chose from the candidates who are on the ballot.
When I look at my choices now they are McCain and Sens. Hillary Clinton and Barack Obama. Though I cannot believe I am about to say this, I will support McCain for president. He may not have been my first choice, but among the three, he is the best choice.
On the local level everything I voted on came out my way except for Indian Gaming.
But I already knew those initiatives were going to pass when they started the “please help our poor tribe” ads six months ago.
One measure I supported that did pass was Newport Beach’s Measure B “City Hall in the Park” referendum.
Though this was passed by the voters, the issue is still muddled up with the Allan Beek lawsuit.
Mr. Beek sued under the argument that only the city council had the authority to decide where a city hall should be built and that the citizens could not make that decision.
It was reported in this paper that even though the initiative passed, he has decided to continue with his lawsuit.
The very essence of his suit is that the voters do not have the right to decide this type of issue. He wants his day in court.
Well, I am not a lawyer and can’t give a legal opinion of Beek’s lawsuit. But one way to solve this is to give Mr. Beek what he wants.
The council could vote on the City Hall in the Park’s location. This would solve Beek’s concern that only the City Council can make that decision.
Previously, four of the seven city council members did not support having the city hall at the park.
Hence, Bill Ficker and friends collected signatures and put it on the ballot. Now that the initiative has passed, I think the council vote would be quite different.
Mayor Ed Selich, who was one of the four who did not support the City Hall in the Park’s Avocado Avenue location, has said publicly all along that if Measure B passed he would go with the will of the voters and move forward to have the city hall built at the Avocado site.
I talked with Councilman Keith Curry, who also was not a supporter of the park location. He told me that the people have spoken and that no matter what happens with Beek’s lawsuit, he will now support the city hall in the park location.
That would now make it at least five of seven votes for the city hall in the park. Curry surmised that if a vote came forward he thought it would probably be 7-0 in favor.
Just prior to finishing this column I got a return call from Councilman Mike Henn.
Though he said he did not want to declare a vote in the newspaper, unless there was a prior decision in the Beek case, he would also support the will of the people.
Just as in the presidential race, some of us have to work with the choices we have, and not the choice we want. It is nice to see that the Newport Beach council is looking to unify the city and move forward on a location for city hall.
Friday, February 1, 2008
A Week of Sickness and Excitement
The week started off as any other in the Righeimer household. Saturday morning I met up with Costa Mesa City Councilman Allan Mansoor at the Hale Crest and Hall of Fame Homeowners’ Assn. yearly meeting.
We had recently approved the CarMax at Harbor Boulevard and Gisler Avenue, and we wanted to hear how the construction was affecting the neighborhood. My almost 4-year-old Ellie, who begged to go that morning, was now squirming in her seat thinking she should have stayed home with her sisters instead of learning how CarMax had designed the center dividers to keep truck traffic out of the neighborhood.
The neighbors seemed fine with CarMax, so I headed home. We had a ski vacation planned for Friday, so when I got home Lene was off to Sports Chalet to buy the girls ski clothes. Our two youngest girls had colds, so we stayed inside and tried to enjoy the rain. Mitt Romney’s loss to John McCain in Florida didn’t help my spirits, but there’s nothing like playing with your kids to put your life back into perspective and make you realize how good you have it.
Monday morning started completely different. The Romney campaign had contacted me earlier about doing a rally in Orange County and they just confirmed that, despite the loss in Florida, Mitt was not giving up. They needed the rally and could I work with the advance team and put it together for Thursday morning?
I am what you call in politics a true believer. You stick with whom you believe in until the end. If Mitt is not going to quit, neither am I. This game is not over.
I called in a favor from Rick Huffman, one of the owners of the Bassett Furniture store in a center I developed in Fountain Valley. Could we use the warehouse part of your store for the rally, I asked. How many people, he asks. Maybe 250, I say. He thinks for a second and says, “You got it.”
I call the Romney headquarters in Boston and tell them we have the location. The advance team kicks it in high gear. We have less than 72 hours to pull off what may be Romney’s only rally in Southern California before Super Tuesday. We have to set up a stage with sound and lights, risers for the press corps television cameras, contact the VIPs and rally the Romney supporters to get a crowd.
About this time I get a call from Lene — the cold our 22-month-old Katherine has worsened, and our pediatrician says she has a respiratory virus and admitting her to Fountain Valley Regional Hospital now. This is when hiring good people pays off. One of my assistants, Ethan, a smart 23-year-old with a little campaign experience, says he can handle it. I put him in charge and head for the ER.
When I get there Katherine does not look happy with the IV in her little arm and oxygen tube in her nose. The ER is crazy, but Lene is keeping her happy. Boy did I luck out when I went on that blind date 14 years ago. Fountain Valley’s staff is great, but they do not have an available bed in pediatrics.
Mesa Verde neighbors Steve and Robin Mensinger came to the rescue and picked up Morgan from school at St. John the Baptist. I stayed at the Hospital for a few hours to give Lene a break, but now I had to leave for my planning commission meeting. I got home after 10 p.m. and called the hospital. They finally had a room, and Katherine was responding well to treatments. Things were starting to look better.
Tuesday morning I get up early and head to the hospital to give Lene a break. She has been up most of the night. Needless to say, without going into all the details, the stress and worry you go though during these times, I did not get much sleep. Two days pass, and they release Katherine from the hospital. We get home by noon Wednesday with a list of prescriptions for antibiotics and breathing treatments.
Well, I still have a company to run and a rally set for Thursday so it’s back to the office. I get in and start making phone calls. We have less then 24 hours to pull off the event. I head to the warehouse about 8 that night, and the place is hopping.
These Romney people are pros. They have the stage and risers built for the TV cameras. Sound and lighting is almost finished. Before morning we will have three satellite trucks set up in the parking lot linking us to the world. Only one issue left. Did we do enough to get the crowd? Without a cheering crowd this rally is going to be a bomb and that’s not exactly what the campaign needs right now on national TV. We put out the word to everyone we knew, but it is not like people are going to make a reservation for a rally.
I have two business meetings Thursday morning, and all I can think about is whether anybody show. By 10:15 I get a text message from Ethan that just says “big turnout.” I rushed over to find there wasn’t a parking space for blocks. The turnout was huge. I see Rep. Dana Rohrabacher in the parking lot, and the crowd is so big we cannot find a way to get into the building.
Finally I see a familiar face, and we get though a different door. I count 21 TV crews on the risers. The Romney staffers are stunned by the size of the crowd. After the loss in Florida they were all concerned about losing traction. To make a long story short, Mitt shows up, and the crowd goes nuts. He delivered the best speech I had ever seen him do. He energized the crowd, and they energized him.
If you are wondering what happened to our ski vacation, well, Lene and I talked it over, and she decided that I should take Morgan to Aspen. Morgan had been really looking forward to her first ski trip and she didn’t want to break her heart. Lene would stay at home with Ellie and Katherine. We got up at 4 this morning and headed to the airport. So here I am in Aspen on a daddy-daughter ski trip. The snow is falling as I type these words.
We had recently approved the CarMax at Harbor Boulevard and Gisler Avenue, and we wanted to hear how the construction was affecting the neighborhood. My almost 4-year-old Ellie, who begged to go that morning, was now squirming in her seat thinking she should have stayed home with her sisters instead of learning how CarMax had designed the center dividers to keep truck traffic out of the neighborhood.
The neighbors seemed fine with CarMax, so I headed home. We had a ski vacation planned for Friday, so when I got home Lene was off to Sports Chalet to buy the girls ski clothes. Our two youngest girls had colds, so we stayed inside and tried to enjoy the rain. Mitt Romney’s loss to John McCain in Florida didn’t help my spirits, but there’s nothing like playing with your kids to put your life back into perspective and make you realize how good you have it.
Monday morning started completely different. The Romney campaign had contacted me earlier about doing a rally in Orange County and they just confirmed that, despite the loss in Florida, Mitt was not giving up. They needed the rally and could I work with the advance team and put it together for Thursday morning?
I am what you call in politics a true believer. You stick with whom you believe in until the end. If Mitt is not going to quit, neither am I. This game is not over.
I called in a favor from Rick Huffman, one of the owners of the Bassett Furniture store in a center I developed in Fountain Valley. Could we use the warehouse part of your store for the rally, I asked. How many people, he asks. Maybe 250, I say. He thinks for a second and says, “You got it.”
I call the Romney headquarters in Boston and tell them we have the location. The advance team kicks it in high gear. We have less than 72 hours to pull off what may be Romney’s only rally in Southern California before Super Tuesday. We have to set up a stage with sound and lights, risers for the press corps television cameras, contact the VIPs and rally the Romney supporters to get a crowd.
About this time I get a call from Lene — the cold our 22-month-old Katherine has worsened, and our pediatrician says she has a respiratory virus and admitting her to Fountain Valley Regional Hospital now. This is when hiring good people pays off. One of my assistants, Ethan, a smart 23-year-old with a little campaign experience, says he can handle it. I put him in charge and head for the ER.
When I get there Katherine does not look happy with the IV in her little arm and oxygen tube in her nose. The ER is crazy, but Lene is keeping her happy. Boy did I luck out when I went on that blind date 14 years ago. Fountain Valley’s staff is great, but they do not have an available bed in pediatrics.
Mesa Verde neighbors Steve and Robin Mensinger came to the rescue and picked up Morgan from school at St. John the Baptist. I stayed at the Hospital for a few hours to give Lene a break, but now I had to leave for my planning commission meeting. I got home after 10 p.m. and called the hospital. They finally had a room, and Katherine was responding well to treatments. Things were starting to look better.
Tuesday morning I get up early and head to the hospital to give Lene a break. She has been up most of the night. Needless to say, without going into all the details, the stress and worry you go though during these times, I did not get much sleep. Two days pass, and they release Katherine from the hospital. We get home by noon Wednesday with a list of prescriptions for antibiotics and breathing treatments.
Well, I still have a company to run and a rally set for Thursday so it’s back to the office. I get in and start making phone calls. We have less then 24 hours to pull off the event. I head to the warehouse about 8 that night, and the place is hopping.
These Romney people are pros. They have the stage and risers built for the TV cameras. Sound and lighting is almost finished. Before morning we will have three satellite trucks set up in the parking lot linking us to the world. Only one issue left. Did we do enough to get the crowd? Without a cheering crowd this rally is going to be a bomb and that’s not exactly what the campaign needs right now on national TV. We put out the word to everyone we knew, but it is not like people are going to make a reservation for a rally.
I have two business meetings Thursday morning, and all I can think about is whether anybody show. By 10:15 I get a text message from Ethan that just says “big turnout.” I rushed over to find there wasn’t a parking space for blocks. The turnout was huge. I see Rep. Dana Rohrabacher in the parking lot, and the crowd is so big we cannot find a way to get into the building.
Finally I see a familiar face, and we get though a different door. I count 21 TV crews on the risers. The Romney staffers are stunned by the size of the crowd. After the loss in Florida they were all concerned about losing traction. To make a long story short, Mitt shows up, and the crowd goes nuts. He delivered the best speech I had ever seen him do. He energized the crowd, and they energized him.
If you are wondering what happened to our ski vacation, well, Lene and I talked it over, and she decided that I should take Morgan to Aspen. Morgan had been really looking forward to her first ski trip and she didn’t want to break her heart. Lene would stay at home with Ellie and Katherine. We got up at 4 this morning and headed to the airport. So here I am in Aspen on a daddy-daughter ski trip. The snow is falling as I type these words.
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