[SauronOfMordor]

-- According to the California Employment Development Department, 1,012,600 people were working in Santa Clara County at the end of 2000, which meant a lean 1.3 percent unemployment rate. Last month, the numbers had dropped to 927, 500 and a 7.6 percent jobless rate -- the highest in the state for an urban county.

The rumbling you hear in the distance are the fractures in the foundation of the banking system.

What created the stratospheric real estate prices in the Bay Area were all those high-paying tech jobs, and the people who wanted to live near them.

What happens to real estate prices when there's nothing to induce buyers to really want to live there?

What happens to banks when they have lots of mortgages in default, and they can't find new buyers for the houses willing to buy for the outstanding mortgage?

[foreverfree]

bump

[pyx]

Lest this sound like another dot-com karmic payback -- arrogant young millionaires learn the hard way about the "new" economy -- it's not.

Clark worked long hours for some of the biggest companies in Silicon Valley and pulled down as much as $150,000 a year, depending on the client and size of the job. One ad campaign for a software firm was so successful it earned nearly $30 million for the agency for which Clark worked.

By spring, 1999, Clark was vice president of marketing for a sizable dot- com. That fall, a search engine startup came courting. They offered a bigger salary, better benefits and, of course, future stock options. Clark jumped, and the two Cs believed they would realize their dream of buying a house in the Bay Area.

After a few months, the bottom started to fall out.

It appears the author lied.

[nmh]

Maybe next time they'll read the handwriting on the wall and put some money aside for a rainy day instead of spending it. I can't feel sorry for people like this. Financial collapse doesn't happen over night. They let it happen and it couldn't have happened to a more appropriate person - one with no compassion or regard for others - only themselves wadddling in self pity.

[nutmeg]

Bump to read later

[kcvl]

community food bank has become their supermarket

"I was able to loan a friend $200 to pay his cell phone bill'

[Sloth]

$2300 monthly rent? Sorry, no sympathy here. Though I will give them credit for not running up credit card bills.

[dogbyte12]

You can live in a $2300 place in the Valley without living extravagantly.

To give folks from elsewhere, an idea,.... a few years ago, the median price for a condo in San Francisco was $440,000... median price. I got out of the bay area when my 1 bedroom place climbed steadily from $750 to $985 in a few years.... I moved into the apartment in 1992 at $750, as of today, it is going for $1950, 10 years later. This is for 1,100 square feet. People can get over their heads out there. But they do have themselves mostly to blame.

[GOP_1900AD]

So I've got sympathy for anyone whose life has been affected due to the economic downturn, for our own income level has gone down by about 40% Vs. the boom times. That said, there are a number of unexplained incongruities in this story. If they were, as claimed, not living extravagantly and with 150K / year, then they should have been able to rapidly pay down whatever mortgage they had unless they bought quite recently. Here in the Bay Area it is still possible to buy places in outlying areas (but, I must admit, with a lousy commute) that would have allowed even a recent new home buyer to do this. The other thing I do not understand is that if as claimed this guy went from paying the bills to down and out so fast, then either he had lots of unpaid consumer debt or prematurely had his wife at home not working (I hate to say it but a single income here is very difficult to get by on at least initially - many folks do the dual income thing and put off having kids for a while...). Something just doesn't jibe with this story. Here is what I know about people who have had this happen. Typically:

1. They were not aggressive about paying down student loans.

2. In spite of claims to the contrary, they lived beyond their means.

3. They insisted on living in a house/condo that was bigger than they could afford, or, in a neighborhood that was very overpriced.

4. They saved, however, at the same time, did things like refinanced to support home improvements that they could not otherwise afford.

5. They threw away money on vacations or vices.

Look, I do not wish this on anyone. That said, when we bought our house, we purposely limited our upper end of cost (much to the chagrin of our realtor and loan officer!) and stuck to it. We bought a house that was too small and needed some work. It was in an area that didn't have either the worst or best reputation but was clearly up and coming. Because of the downturn we've had to defer improvements. It is a bit of a downer sometimes to look at our very spartan lifestyle. All of that said, we are well ahead of our payment schedule against the loan principle and continue to slowly accumulate assets. Do things suck? You bet! Are we a paycheck (or even many paychecks) away from disasater? No! It CAN be done! But it takes something that most moderns have forgotten - self control!

[TC Rider]

C&C - The Grasshoppers