Since I read a lot of web content, blogs and news, I see a lot of things in the course of my work that most people don’t.  I subscribe to several RSS feeds that cover the mortgage market, and I am especially fond of Dr. Housing Bubble, who gives me a big head’s up on certain areas of the country, but especially California.  Housing prices there are ridiculous, and the median value of homes in 6 of the counties flirts with $1 million.  If you could see some of these homes, you would put yourself in the hospital, laughing so hard your sides would split.  Seriously, folks, these homes are little cracker boxes that often run less than 1,000 square feet, yet command very high prices.  A home featured, in Toluca Lake, Los Angeles County, has a going price of $6,650,000. The home has been on the market for 450 days and has seen a reduction in price by $2.1 million in one year.  Before you decide that his is a bargain, realize that the home sold in 1991 for $1,200,000.  A $5 million gain in those few years since is more than superb, it is absolutely ridiculous. This, however, is just typical of California real estate.  Dream on.

In Florida, things are not a lot better.  One of the troubles facing Bank of America is their book in that state. As of June 30th, $463 million was listed with BOA as noncurrent.  Of the $15.17 billion in residential mortgages, this ratio of 3.05 percent is bound to put BOA in a world of hurt.  Yet Florida, like California, remains a state where the price of property has skyrocketed to a very lofty height. And you can’t blame it on the snow birds.

I think that until these markets become more reasonable, there will be troubles in the mortgage market.  Ask Ed McMahon.  The Donald has bailed him out to the tune of beau coup bucks.  And that was after Ed dropped the price from $7.7 million to $4.6 million.  No one knows yet what the final price will be, but rest assured, it will be huge.  And that, I think, pretty much sums up a lot of what is currently wrong.  Home prices are way higher than they have been in these areas, and people have refi’ed to the point where the mortgage is upside down.  Some say the general consensus is to just walk away…