Showing posts with label subprime. Show all posts
Showing posts with label subprime. Show all posts

Tuesday, July 20, 2021

Open House

The only open issue in your mind was whether the house had been a brothel or a boarding house. As you walked out and weighed the ambiguous evidence, you decided on the latter. Either way, what you had seen, what you had smelt, in those ten minutes was misery itself. Human misery. It was a house of forced labour, of lost dreams. To call it an open house was to do violence to the very term; it was the reverse, a closed house in every imaginable way, featuring those elements of coercion, those elements of powerlessness and, especially, those elements of cruelty whose vestiges still lingered inside. It was the kind of cruelty that only men do to others.

But they called it an open house, that's what the sign outside proclaimed. The Wife and you had no clue, you had simply been on your rounds, doing your Sunday house hunting and getting to know the town. It was your penultimate stop that July afternoon. "It sounds like a bargain, it just came on the market. Spacious too." Well now you knew. Real estate.

It was a quiet walk out of the house and you periodically looked at each other, as if to confirm what you both had seen. "I feel like I'm going to cry", she said finally. You simply fumbled around for the Zipcar card to open up the rental. "Me too", you muttered as you waved your piece of plastic in the air above the windshield. The click unlocked the Prius. "I feel sick". Hell you needed a cold shower or a stiff drink.

It was a hot day and there was a stir in the neighbourhood, you hadn't quite noticed it when you had entered the house earlier on. People were beginning to come onto their porches, pointing and peeping at the house. A few had stepped out and were now making their way towards the house for their viewing. Presumably there had been much talk about whatever had been going on in its confines, thus all the neighbours were expectant and interested. They had long suspected that bad things were happening there, this was their opportunity to bear witness. Reflecting on it, you had been a little disturbed at the way some of those children were running amok inside that house. Your own walkthrough had been very sober.

There had been a pungent odour to the place, it smelled of... Well... The smell lingered even as you considered the case. You turned around and looked at the house again. That smell... Yes, it was the smell of unhappiness, of people who slept in shifts... This wasn't student housing, nor indeed was this your garden variety slum housing. There was no pleasure here, this kind of forced labour has the kind of disagreable odour you tried to forget but couldn't.

As if to confirm things, you notice that woman who had grabbed her two children just a few moments earlier, also leaving the house in a hurry. She was silent and grim-faced, dressed in her Sunday best, a school teacher type. Her eyes were disturbed beacons. She knew what she had seen. She knew what this was - a bad house, and she needed to get her progeny out of there before they too became tainted by it. She held on tight to them as she passed you. It was the first viewing, it was an open house. You were all victims.

As you sat in the car the two of you began to compare notes. It's funny how it all came out in a hurry now as opposed to the steady accretion of details when you'd been walking through the house.

"It was young women, coerced into doing who knows what"

A musty smell of resignation.

"Not many laughs in the house."

"It couldn't be a brothel, right?"

Does despair have a smell?

"They must have left in a hurry."

"No. not men. Doesn't smell like men." It was the smell of cheap perfume and women's hair.

"Pommade."

I'd seen many boarding houses of immigrants - men and women. This was disconcerting.

"No, it can't be a brothel. It would be more upscale. I don't think they'd bring clients here. Well..."

"So. A prostitution ring?"

"Yeah... This is where they kept the women until they sent them out to work."

"But what about the basement? Don't you think?..."

"No. Who would come to this place?"

The basement was the tipping point, its aura of unease had unnerved you.

"Here, let me see the flyer again"

"Wonderful Enormous 7 Room Finished basement" was what the flyer had advertised.

"People had left in a hurry... Very recently..."

"There were ..."

Your guess: 10-30 "guests" were accomodated in the house, most likely.

"Prostitution ring. It must be. Young women."

"Young women."

"They didn't have much to do with the neighbours."

"The rooms, the layout... Labyrinth..."

What troubled you most was the absence. Where were the inhabitants? Where were the most recent residents? Were they still in service somewhere, or had the entire operation been shut down? The cots or bunk beds weren't there.

"Cleaned out."

"I'm creeped out."

"Where are they now? I wonder..."

Too many questions and you didn't dare get them all answered for fear of further depression. These places surely exist, houses of prostitution, houses of trafficking even - but do you really want to know?

It wasn't about drugs: this wasn't a crack house or even a crystal meth house like you might have read about in Oakland, or hypothesized must exist in South Berkeley. And it wasn't immigrant workers... It wasn't men who lived here, of that you were sure. You pondered the question, the puzzle of this open house.

so sunny

Then it struck you that the owner had been there.

"The owner!", you both exclaimed simultaneously.

"The owner. That's right, the owner..." You knew it as you'd walked past him but hadn't wanted to admit it to yourself. Black guy. He didn't look like the agent but looked to have authority, wearing what he did, and standing the way he did in the kitchen. The almost orange suit trousers and the shirt that looked a little dressy. The slightly sharp tan shoes. He was a pimp, a gentleman of leisure. The fruits of his leisure were on display for sale today.

It's funny how these details came back.

You had caught his lecherous assessment of The Wife. Well perhaps not lecherous, just a cool, calm assessment with a practiced eye. How could she be used? She later said as you exchanged notes, "Yes, he was sizing me up. It was that kind of look. There was definitely a sexual angle there".

Was that how he picked up his women, runaways or those who arrived at the Greyhound station barely ten minutes away? The easy triage of the flesh, the evaluation of weakness, a prelude to the approach.

Still, don't underestimate the man, he's been doing this for a while and this house sale is a temporary setback.

People, his people, had recently left the house. It had just been cleared of much of the incriminating evidence, the sleeping cots, but you can't disguise the smell. The house couldn't but reveal its purpose. Sweet misery, the bitter pungent odour of desperation, the heavy vibes of predation.

It was as you had mounted into the attic earlier that the smell really hit you. What was worse as you inspected it, was the realization that someone had been living there, even in that attic. Could it have been a punishment room perhaps?

When you came down from the attic, shaken, and about to get her to leave, The Wife slowly pointed to a door. By that point you didn't know what to think. "I don't want to know what's behind the door". You grabbed her hand and made to leave on. Some things are not worth knowing.

As you passed you saw that the closet held a few desultory cans of paint - funny that. You can't cover over the layers of of iniquity, and they certainly hadn't bothered trying in the house - or maybe they had, yes. You looked around and saw one wall vaguely painted. Well half a room isn't bad. They hadn't even had time to throw on a gesture before the viewing. Barely painted, the rest of the house was left raw and unadorned. They'd just listed it. Talk about an open house.

This troubling puzzle you'd tried to decipher as you walked through this house on [redacted] street.

"I'm steering clear of South Berkeley and North Oakland."

"I'm not doing any more open houses" was your rejoinder.

You returned again to the scene in the kitchen just minutes earlier. There was a certain axis of malignancy in that triangle. The real estate agent, the potential buyer looking for her entree into the society of slum lords, looking to flip the property, and, last but not least, the owner. A ruthless predatory vibe emanating from all three of them.

"It's structurally sound, a steal at that price." The real estate agent had no conscience. She was just selling it. Condescending too, to the couple who had asked for a leaflet earlier - she had dismissed them as window shoppers, not her brand of client. The Wife had observed that this was the most predatory real estate broker in town that was arranging the showing.

"What's a probate record?", asked the buyer, the prospective slum lord.

"Now we're talking", she started her spiel. The owner chuckled.

There was lots of interest in the property per the web site and the open house had gotten quite crowded by the time you were getting ready to leave. Slum housing has lots of possibilities, you suppose.

But you couldn't have been the only ones who recognized the suffocating atmosphere. You thought back to the church ladies clutching their handbags; they had their eyes wide open. The harrowing sights and the smell.

"This housing bubble is out of control. Pimps are getting into the act. We've been here a year, look, this is ridiculous. We've seen what, maybe 150 houses, all these overpriced open houses, and now we've seen this... this... what's the phrase again.. this charnel house, this den of iniquity."

At that The Wife laughed.

You continued, "I'm sure that they used some of the rooms here to have their way with the women. I just don't know. Or did they just use it to keep them and made them work in streets. Where were the women from. Black or Mexican? What do you think?"

"What was that satellite dish for in that concrete backyard?"

"Oh yeah, I saw that"

"Was it transmitting or was it receiving? A bordello?"

"It isn't worth thinking about. Let's go." You started the car.

...

Fifteen minutes later on a lark to detox, you entered the million dollar home listed on the other side of town. You saw the manicured lawns, the granite countertops, the wholesome picket fences of North Berkeley, a world away.

What is this town you live in? Where do you live? How to get a measure of a place? To think just ten minutes away from this...? Do they know what is happening just down the road?

You will never buy a house on that street. You may not believe in evil but this is a dark matter. They were, he was, trafficking in human souls, if not humans flesh and labour itself. You've lost your innocence.

There are people behaving badly... They know, he knew... And you saw it in his eyes. A little embarrassed, perhaps, but it was a way of life, it was his way of life, and he chose it, he'd live with it. Heck, he was even looking to get a bit above land resale value out of the house. The hustle continued.

True, the affair had shut down in a hurry. That they had cleared out within living memory... made things all the more worrying... perhaps just days earlier. Where were the people? Where are the people he was using? Disposable people.

You couldn't bear to do the research. But at the back of your mind, you surely knew. There's a paper trail for sure, if you searched you could put the story together. Trust your intuition, you're the son of a journalist.

...

It had been an assisted living facility ten years ago.

After some more digging on your conjecture, you determined that this was originally a family business. They did things like funeral homes on the Oakland-Berkeley border. The young one, the current scion was obviously into more grisly stuff - he had a stable of women. Probably not picky could even be those Honduras or El Salvador women so beloved in West Oakland. People steered clear of the operation but it was open knowledge what went on there. You stopped digging.

The open house.

There was a sick feeling in your stomach, you have been in the presence of malignancy. And it has been like that for a long while.

The open house.

Where are the women? Where did they go?

The open house.

The stain persists whenever you walk through an open house.

million dollar house

The listing, July 2007


[Redacted] Street, Berkeley, CA

Price: $583,000

Huge Craftsman! Grand Dame In Need Of New Mate! 2594 Sf 5Bd/ 2Bath, Formal Dining Rm.,& Great Home Office; All On Main Floor. Gracious Front Porch & Wonderful Attic. Zoned R2a For Pos.Duplex Use. 1919 Vintage Detail! Wonderful Enormous 7 Room Finished Basmt. W/2 Sep. Pvt. Entry. Open Sun 2-5.

5 Bedrooms, 2 Baths, Main Entry Room - Additional: Basement Finished, Formal Dining Room, In-Law Quarters, Office, Rec/Rumpus Room, Unfinished Room, Utility Room

Postscript


This was the penultimate open house we viewed together in our time in Berkeley. I stuck to my resolve. I called the peak of the housing bubble.

One week after our viewing, Bear Stearns liquidated two of its hedge funds worth billions of dollars due to collateralized debt obligations and subprime mortgages. The stage was set for the Great Recession.

Note: In 2021, the house on [Redacted] Street was listed at over $2 million dollars. It has reasonable bones and was mildly revamped. Presumably the owners are unaware of this aspect of its history

104.1 FM End imperialism

Open House, a playlist


A soundtrack to alleviate my distress. (spotify version) The statute of limitations has passed and so I can belatedly nominate this piece for The Things Fall Apart Series.

Next: The Bad Seed

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Writing log. Concept: July 31, 2007, March 6, 2021

Tuesday, August 14, 2007

Home Economics

The Wife and I have been thinking of buying a house for the past year and, since spring, have been mostly bemused at the huhudious prices that were being quoted to us (with straight faces, mind you) for mostly depression era houses. Thus we've been getting an education on the hard sell during our few months of attending open houses, and also some lessons in home economics.

follies

The New Mathematics


After last week's action, some new mathematics is in effect. We have the following equation:

Maximum prudent ™ house price = $521,250 = $417,000 (maximum federally-insured mortgage) + 20% downpayment

Note: prudent ™ denotes a conforming loan and home financing deal that wouldn't raise the eyebrows of even the staidest banker.

Note: the days of 20 percent downpayment have been out of fashion for a long time (we live in a subprime era) so we'll relax our stringent banker conservatism and use a 10 percent downpayment as our baseline. This reduces the maximum prudent house price to $463,333.

Note: the conforming loan limit of $417,000 is the maximum federally-insured mortgage above which point we are in the realm of jumbo mortgages which have all of a sudden become quite scarce.

uncompleted mansion

Voodoo Economics


The median price of housing listed in the Bay Area was said to be $785,380 in February 2007 when we started looking in earnest. That was the listing price and not necessarily the sale price but, regardless, that was sticker shock by any definition.

In June 2007, the median housing price paid in the Bay Area was $665,000, a new peak. See also a trend graph of an earlier data set.

The typical monthly mortgage payment in the Bay Area was $3,219. "adjusted for inflation, current payments are 24.0 percent above typical payments in the spring of 1989, the peak of the prior real estate cycle." Jumbo mortgages "represented 62 percent of the purchase loans" made in the area.

taos pueblo

Jumbo Jitters


Putting these things together, it is clear that something does not compute. The force of gravity will make itself felt and the $200,000 gap - the fat on which the housing sector in the Bay Area has been feasting on for the past 15 years - will of necessity be closed. The only questions are how much the gap will narrow and how long it will take.

The typical price of the only reasonable houses we have seen during our search was $750,000 (The Wife has called much of the rogues gallery that were shown to us "illegal dwellings"). We thought we'd seen an overheated market in Boston but the Bay Area has redefined our perceptions on that front. A software engineer and history professor ought to be able to afford a starter house.

The hard sell and the real estate shell game was in earnest and it was as if the whole town was in on the con. The pinnacle was the university housing officer who advised her academic client that we could easily afford a $700-800,000 mortgage - if you ran the numbers, monthly housing payments (circa $5,000) would far exceed the salaries of most academics which prompted said academic's quip "I'm not going to spend that much on a depression era bungalow" to the surprisingly-shocked agent. I suppose I would have put it as the Emperor has no teeth.

Even if we could afford such imprudent things we'd rather spend our money traveling to more congenial settings, we are modern travelers and exiled souls after all. The funny thing is that if you spend enough time talking about housing in the Bay Area, you could almost convince yourself that everything was normal. Nobody blinked in conversation; the stratospheric prices were just the way things were — indeed it was so surreal and you could very easily allow yourself to be bamboozled — there was a week where we almost succumbed. Almost...

modest

There's lots of moral hazard in the mounting chorus to bail out the fiscal wizards. Many are lobbying for the limits on Fannie Mae and the like to be lifted or for interest rates to be cut. Sidenote: the language of financial panics is always interesting: credit crunch, mortgage meltdowns, debacles etc. Fed chairman Ben Bernanke has been known for his "cautious experiments" in the past and will surely come up with some kind of intervention. When well-heeled bankers start invoking the spectre of millions out on the street you can almost hear the subliminal "think about the children" message. John Kenneth Galbraith is sorely missed.

In any case, we continue to search for a home... For the first time last week, we saw advertised a condo in a nice neighbourhood that was priced under the new mathematics at $469,000 - some sellers obviously need to cash out quickly (similar houses were priced at $650,000 just a few months ago). Hopefully we'll start seeing more of these things and it might even become a buyer's market. I won't hold my breath however; there's a surplus of unreality in the Bay Area.

no hurry

In closing I'll note that Ikea was packed last weekend — everybody is doing home improvement, it seems. I don't think much of it was about putting a shine on show houses that you needed to flip ("one last try"), rather I suspect that it was belt-tightening at work, and making do with what you have. Time will tell and we'll be waiting this one out in our rented nest.

A Subprime Playlist


Some music for those inclined to home economics...
  • Dionne Warwick - A House Is Not A Home
    Dionne really came into her own when she sang the Burt Baccarach songbook. It was a sublime case of pathos, operatic pop as it were featuring Baccarach's lyricism distilled in that delicate voice. All her later monetary triumphs stemmed from the magic of those wonderful interpretations.
  • Kool Moe Dee - They Want Money
    I was going to pick Money Jungle by Duke Ellington, Charlie Mingus and Max Roach for this playlist - the song (and album) is suitably jarring and tense, but I thought that Kool Moe Dee would be more appropriate. The title of the album is a key indicator: Knowledge is King. Laymen are always the last to get bailouts hence education is key to prepare for the periodic shocks of the grifter impulse. They Want Money is the soundtrack for Jim Cramer's crew, its blaring horns an ode to Alan Greenspan's politically expedient teaser rates, its rapid-fire lyrics are dedicated, with respect, to all those who have been selling a bill of irresponsible goods in the housing market.
  • Simply Red - Money's Too Tight To Mention
    Social commentary of hard times and explicit lyrical harkening to Reaganomics. Mick Hucknell saw the darker side of trickle down economics and told it like it was. There are of course thousands of "no money" blues but when rendered in this pop vein, never have they been so upbeat or danceable. Perhaps one should also mention here Money to Burn by Wrinkars Experience in the reggae vein and round things off with the Wu-Tang Clan's C.R.E.A.M. ("Cash rules everything around me, cream get the money, dollar, dollar bill y'all")
  • Luther Vandross - A House Is Not A Home
    I really need to do an appreciation piece on Luther who, like Aretha, had the uncanny ability to make any song his own. Simply put, his version is the definitive version - it's not even close. Soul music with all the accoutrements, lush and emotional.

A house is not a home, how true.

village huts by K. Baka
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