They Bought Right As The Softening Commenced
A report from the Press Democrat in California. “Laura and Anthony Salvato wanted to buy a home in Santa Rosa before their 4-year-old daughter started kindergarten. However, the couple didn’t know what they could afford during a time of rising interest rates and home prices. The jump in prices was linked to a housing shortage exacerbated by last fall’s devastating North Bay wildfires. However, less than two months after finding a real estate agent and a lender, the couple completed the purchase of a house in Rincon Valley. The Salvatos, who are in their early 30s, moved in with their two young daughters in late June.”
“The three-bedroom, two-bath home comes with a $3,900 monthly payment, including almost $400 for mortgage insurance, a requirement with FHA loans. The payment is substantial, Laura Salvato acknowledged, but rents for similar houses also have grown costly in Sonoma County. Buying the home allowed the couple to fix their housing costs and provide a way for 4-year-old Grace and 22-month-old Emma to eventually ‘grow up in one school.’ ‘I just wanted to get in while we could afford it,’ their mother said.”
“But real estate agents and lenders maintain that in the past few months the market has shifted, with more homes available for sale and more sellers forced to cut prices to attract buyers. Frank Nothaft, chief economist for CoreLogic, estimated that prices for entry-level houses in California have risen about 10 percent over the past year. When factoring in the increase in mortgage rates, he said, the monthly loan payment for buying the same home in theory would have jumped about 20 percent in 12 months. And mortgage rates are expected to slowly keep rising.”
“Others also spoke of changed conditions. ‘I’m telling people now that there is absolutely a softening in the market,’ said Scott Sheldon, branch manager with New American Funding, in Santa Rosa. For those with the means, ‘it’s getting easier to buy a house today.’ Sheldon was the Salvatos’ lender, and he points to the couple’s home-buying experience as evidence of his belief. The Salvatos looked at only about five homes, and the first offer for their Estes Drive house was quickly accepted by the owner, Laura Salvato said.”
“The couple’s early success stands in stark contrast to the hordes of first-time buyers who over the past eight years regularly found themselves outbid by wealthier buyers. Sometimes the winning buyers offered more money. But they also won bids simply by paying cash or making larger down payments with proceeds from the sales of other properties.”
“Sheldon acknowledged the Salvatos’ experience was unusual for first-time buyers. Part of the reason could be when they began house hunting. ‘They hit it at the most opportune time,’ he said. ‘They bought right as the softening commenced.’”
From the Idaho Press. “Boise’s hot real estate market is an inescapable topic these days. No matter if you are looking to purchase your first home, searching for an affordable apartment or just looking at your property tax bill, skyrocketing real estate prices have likely made an impact on your bottom line. At a Citizens Planning Academy discussion hosted by the nonprofit Idaho Smart Growth, more than a dozen attendees bandied about topics related to rising rent and home prices.”
“Capital City Development Corporation Real Estate Development Manager Shellan Rodriguez said Boise’s real estate market is currently squeezed by an influx of people and not enough housing for everyone, which has created rising prices across the spectrum.”
“Erik Kingston, housing resources coordinator for the Idaho Housing and Finance Association, said the nationwide market is being affected by a huge influx of investment from overseas, largely from China. That means investors are buying up real estate in historic quantities and renovating it to be at higher price points, owning it just for storage purposes and money laundering or using it as short-term rental units instead of for residents to live in.”
“He echoed Rodriguez and called for the construction of more housing units, especially for the middle class, to increase market supply and bring prices down for everyone.”
‘Buying the home allowed the couple to fix their housing costs and provide a way for 4-year-old Grace and 22-month-old Emma to eventually ‘grow up in one school.’
Aww, notice how this is covered in gooey REIC talk. Do it for Grace and Emma!
‘I just wanted to get in while we could afford it,’ their mother said.’
Oh, their Mother said!
Click.
” ‘They hit it at the most opportune time,’ he said. ‘They bought right as the softening commenced.’”
Sheldon is a liar. Buying at peak price heading into a decline is most unopportune.
It’s the most opportune time to lose all your money. So it’s opportune for somebody.
Sheldon is a POS.
Now that Chinese investors have bought myriad U.S. commercial and residential properties at all-time high prices, isn’t reversing the buying spree something like shooting themselves in the foot? If the market crashes as a result, it will be Chinese investors who lose a bundle.
Markets Property Report
Chinese Reversing Big U.S. Real Estate Buying Spree That Had Helped Boost Prices
Chinese investors become net sellers of U.S. commercial property for the first time in a decade
By Esther Fung
Updated July 24, 2018 3:54 p.m. ET
Chinese real-estate investors, facing pressure from Beijing, are reversing a yearslong buying spree in the U.S. where they often paid record prices for marquee properties like New York’s Waldorf Astoria hotel.
Chinese insurers, conglomerates, and other investors have turned net sellers of U.S. commercial real estate for the first time in a decade. They have spent tens of billions of dollars to acquire hotels, office buildings, and vast swaths of empty land to build residential towers.
…
Overpaying is like holding a wolf by the ears.
It’s everywhere and always for the children. Just like in the deplorable Suzanne Researched This commercial!
“The three-bedroom, two-bath home comes with a $3,900 monthly payment, including almost $400 for mortgage insurance, a requirement with FHA loans.”
I’d rather be Papillon being tortured than have to cough-up $4,300 every thirty days. Scott Sheldon should be caned in public outside the Sonoma County courthouse. Laura and Anthony and their two kids will be homeless or squatters in less than twelve months, IMHO. And shouldn’t Anthony be wearing that baseball cap backwards?
I don’t get the hatred for the buyers here. Young couples want to raise their kids in a home just like most Americans have done for decades. For almost 20 years (an entire generation) the housing market has been rigged against the buyer.
Living in apts or rentals while raising a family is not the ideal way of life.
They could have rented it for half the monthly cost. They bought a rapidly depreciating asset at a grossly inflated price instead.
Foolish DebtDonkeys.
I don’t get the hatred for the buyers here.
Just frustration that they sacrifice their futures to help keep the bubble going a little longer. If they would just stop doing that we could get the ugly part over with a lot quicker.
“Just frustration that they sacrifice their futures to help keep the bubble going a little longer.”
And my prolific lifestyle properly financed and intact. 😁
“If they would just stop doing that we could get the ugly part over with a lot quicker.”
If they had any common sense that is what they would do. But common sense has been educated out of them over the past twenty years-or-so and thus this is what you end up with.
I don’t think it’s hatred for buyers.
A great many frequent posters and frequent visitors here have made a great deal of money sticking it to buyers. From my own observation over seven years, I estimate that roughly two-thirds of everyone here has purposely screwed people over to get ahead, housing or not.
That includes those who believe the answer to housing ills resides in redistribution and other socialist programs. They are just as unethical as the greedy pigs they complain about.
rom my own observation over seven years, I estimate that roughly two-thirds of everyone here has purposely screwed people over to get ahead, housing or not.
I haven’t screwed over anybody. But I would like the chance to buy from someone who screwed themselves while I’m still alive.
I bought from someone who screwed themselves. They were well screwed years before I opened my checkbook.
‘two-thirds of everyone here has purposely screwed people over’
Care to provide even one example?
“A great many frequent posters and frequent visitors here have made a great deal of money sticking it to buyers. From my own observation over seven years,”
I think the Alexandria Ocasio-Cortez poster in your garage needs another thumb tack.
“For almost 20 years (an entire generation) the housing market has been rigged against the buyer.”
😁
“I don’t get the hatred for the buyers here.”
I don’t hate them, but damn they’re stupid… only $4,300 every thirty days? I moved away from friends and family to where we had a fighting chance.
Laura and Anthony should make a spreadsheet of anticipated income and expenses over the next thirty years… see if it makes any sense.
@Jessica-
You and I will be taxed to provide this young family with a safety net and make their former lender whole again.
“You and I will be taxed to provide this young family with a safety net and make their former lender whole again.”
Yes!
And housing prices fall anyways which is the real gift that keeps on giving.
I agree Jessica. It is an ace in the hole for the sellers. If you have children and you have been waiting around for a price correction, you have been waiting for over half their childhood. Housing is not suppose to be an investment, government has made it one. It is a basic need which should have not been raised in price passed the prices that working class people could afford. Unfortunately, after a short time it is accepted as normal. Just heard on Bloomberg that London’s outrageous house prices actually went up last quarter. After a few quarters of declines, the “bargain” hunters kept the prices from falling further. You see the same thing happening in other areas where compared to rents or incomes, housing prices are way over valued, if you were valuing them without emotion.
Yeah, no kidding. $4,300 per month for 30 years? That’s insane. I’d rather stay in a $100 per night hotel and bank the rest.
The only possible explanation is their belief that they will get rich.
You know Laura is kinda cute, but I’d have trouble getting any serious wood knowing that $4,300 is due soon… and again, and again. Frankly, I wouldn’t (couldn’t) sign the fugg’n mortgage papers.
‘But real estate agents and lenders maintain that in the past few months the market has shifted, with more homes available for sale and more sellers forced to cut prices to attract buyers’
Wa? Why over the past few days we’ve had a new troll who insists - NO! Shack prices are up across the nation!
Maybe someone is a lion?
over the past few days we’ve had a new troll
Take that Realtorbabble back to the city-data forums, LOLZ.
Ironically they openly discuss housing fraud there.
+1 That’s their business model… fraud locally, deficits nationally.
City Data is a horrible site.
‘They’re causing the rents and home prices to soar. They’re old, and so they’re scared of any “kid with a backwards hat who went down the street twice on a BMX bike.” And they’re even taking our Uber driving jobs!’
‘We’re talking, of course, about Californians. Specifically, Californians who have moved to Oregon.’
‘Do Californians feel welcomed in Idaho?’
‘Idaho’s appeal is drawing out-of-staters here in droves - particularly Californians. Because there are so many of them here, we wanted to hear from you about whether Californians are welcome in Idaho.’
Apparently criminal elements are welcome:
‘Erik Kingston, housing resources coordinator for the Idaho Housing and Finance Association, said the nationwide market is being affected by a huge influx of investment from overseas, largely from China. That means investors are buying up real estate in historic quantities and renovating it to be at higher price points, owning it just for storage purposes and money laundering or using it as short-term rental units instead of for residents to live in.’
This part always cracks me up:
‘He echoed Rodriguez and called for the construction of more housing units, especially for the middle class, to increase market supply and bring prices down for everyone.
OK, so this is where the supply and demanders end up looking stupid. “Sure lets build an oversupply and crash the market!” We are seeing that all over the place now, aren’t we? I don’t hear the joy about it. Actually they are crapping their pants. So what’s your answer, you might say. How about we get the gobernment out of the shack lending biz to start with:
May 25, 2018
“In his corner of American finance, where hard selling meets hard luck, Angelo Christian is a star. Each time Christian sells a home loan, the company he works for, American Financial Network Inc., takes as much as 5 percent. Many of Christian’s customers have no savings, poor credit, or low income—sometimes all three. Some are like Joseph Taylor, a corrections officer who saw Christian’s roadside billboard touting zero-down mortgages. Taylor had recently filed for bankruptcy because of his $25,000 in credit card debt. But he just bought his first home for $120,000 with a zero-down loan from Christian’s company. Monthly debt payments now eat up half his take-home pay. ‘If he can help me, he can help anyone,’ Taylor says. ‘My credit history was just horrible.’”
“Christian can do this kind of deal because he is, in effect, making the loan on behalf of the federal government through its most important affordable housing program. It’s a sweet deal: He gets his nearly risk-free commission. Taylor puts no money down. If things go south, the government ultimately bears the risk. Many borrowers ‘are living paycheck to paycheck and, if they lose their jobs, they go into default immediately,’ says John Burns, a housing consultant.”
“One reason more borrowers may be stretching: Real estate prices are soaring again.”
http://thehousingbubbleblog.com/?p=10443
Interesting data. According to the Scribd document embedded in the article, Idaho is gaining population net from every state, except for Utah. More people went from Idaho to Utah than the other way around, but more people came to Idaho than left to other state for all other states.
It is not just money that is flowing out of China, it is people also. I hope the taxpayers do not get struck with too much of a bill for the search.
https://www.yahoo.com/news/girl-abducted-dc-airport-picked-231329440.html
That’s just how those with a little more money illegally immigrate. Get a tourist visa and book a tour and then meet your mom at the airport and disappear.
I have noticed it’s a little harder to get my step daughter registered in a California school than I expected, I wonder how illegals do it? They want a lot of birth certificate and address info and evidence of the who the legal parent/guardian is. I had assumed that just evidence of an address in the district would be enough in California.
‘The three-bedroom, two-bath home comes with a $3,900 monthly payment, including almost $400 for mortgage insurance, a requirement with FHA loans. The payment is substantial, Laura Salvato acknowledged, but rents for similar houses also have grown costly in Sonoma County’
Plenty of shacks for rent below 4k a month.
https://www.zillow.com/homes/for_rent/Sonoma-County-CA/house,mobile,land,townhouse_type/1396_rid/38.913475,-121.975709,38.049172,-123.906556_rect/8_zm/
The mortgage insurance means they didn’t put much down. How much of a swing would it take to put them underwater?
$400/month in mortgage insurance! Wow. That’s a used car payment plus a few carts of groceries.
After several years, if they haven’t defaulted, that will drop off. But the $3,500 for 30 years totals $1,260,000.
They’ll never pay that off. They’ll default.
they will get a principal reduction.
Only if the prices drop, if they do not, there is never really any need to pay it off, they actually can use it as an ATM. If government does allow prices to drop it causes a recession. Government is more and more boxing itself into a corner and is forced to support housing prices. Obama had a pen, phone and printing press to support housing prices. It just was a question of figuring out how fast to run that printing press. Of course, in the long run it cannot go on, but since they are disciples of Keynes they take comfort in the fact that in the long run we will all be dead. Is it immoral to follow policies that are guaranteed to cause a collapse of society to create personal wealth? I think so, but the people that have been running government just do not seem to care.
Yeah they’ll default long before the 30 years are in…. It will happen right after they start taking out no-appraisal heloc/Refi to make their mortgage payments….. Just like everyone else is doing.
Ooooph.
San Francisco, CA Rental Rates Crater 8% YOY As Tech Industry Crashes
https://www.zillow.com/san-francisco-ca-94110/home-values
*Select price from dropdown menu on rental chart
Note, too, there’s a little thing called property taxes. Wonder what their yearly nut is for that.
Roughly $5000 monthly for a roof over your head, if not more. $60K annually.
That’s a rather large number.
Now stack on depreciation at $3/sqft/yr and you’re triple rental rate for same features.
“You gotta roll with it” — Caitlyn Vestal, Portland, OR
LMFAO!!
But totally appropriate for Laura and Anthony’s demise.
Redington Beach, FL Housing Prices Crater 7% YOY As Global Housing Correction Expands In All 50 States
https://www.movoto.com/redington-beach-fl/market-trends/
Additional Building Won’t Make City Housing More Affordable
Forbes
August 3, 2018
“A Federal Reserve published report from earlier this year looks at the notion of marginal additions to housing and finds that they’re unlikely to help. Prices will march on as they have.”
“Researchers at the Fed found there were no “direct estimates of the rent elasticity with respect to new housing supply in the literature.” No one knows how much housing you’d have to add to have any significant impact on costs. So, the researchers built a simulation to estimate, directly from data, the elasticity of rent with respect to housing supply.”
“They wanted to know how much rents might change if there was an influx of new housing. Given metropolitan housing crises and a lack of other data, it was an important study.”
“The Fed report suggests that housing will be much the same: The implication of this finding is that even if a city were able to ease some supply constraints to achieve a marginal increase in its housing stock, the city will not experience a meaningful reduction in rental burdens.”
https://www.forbes.com/sites/eriksherman/2018/08/03/additional-building-wont-make-city-housing-more-affordable-says-fed-study/#4929da3218b3
“Boise’s hot real estate market is an inescapable topic these days. No matter if you are looking to purchase your first home, searching for an affordable apartment or just looking at your property tax bill, skyrocketing real estate prices have likely made an impact on your bottom line.”
Boise home prices sank like the Titanic when the last bubble burst. Is this time going to be any different and why?
drive until u qualify literately means crossing state lines now.
Who is gonna be to blame this time?
It’s gotta be the potatoes.
I knew a former construction inspector who bought a huge McMansion out near Star, a distant suburb of Boise. When the last bubble burst he said he was upside-down over $200k!, and his health was failing due to a life long cigarette habit. He was frail and gaunt looking with frightened eyes peeking out from large sockets set in a a skull with skin loosely draped over it. It was the last time I saw him, and I never inquired further.
According to Zillow the Star market is cool and prices are expected to drop
https://www.zillow.com/boise-id-83669/home-values/
Eagle’s market is even worse, it’s cold and prices are also expected to drop
https://www.zillow.com/boise-id-83616/home-values/
My brother-in-law’s parents were in real estate in Boise before the last crash. They were originally from Idaho falls. They lost had spec homes and literally lost everything when the market turned.
Saint George UT Housing Prices Crater 11% YOY On Rampant Mortgage Fraud
https://www.movoto.com/saint-george-ut/market-trends/
“This is a social crisis for the United States. Having an economy rigged to suck the wealth out of society and place it in the pockets of a tiny, already ultra-wealthy minority is an extremely risky situation for a democratic state. We need big, aggressive moves to club down corporate profits, and start directing that money back into the country as a whole. Banning buybacks is a simple and straightforward way to get started.”
https://www.zerohedge.com/news/2018-08-05/ryan-cooper-rages-ban-share-buybacksimmediately
Why are multi-national corporate profits so high? Open borders created a labor glut and allowing corporations to manufacture in overseas countries with low wages and low environmental standards and then ship to the U.S. without tariff. Apple and China is a prime example. Trump is trying to fix it and virtually all the Democrats and the globalists Republicans are fighting him. Obama just made it worse when he was in office. MAGA support Trump.
Tariffs and quotas won’t fix it. Destination-based cash flow tax (a.k.a. the border adjustment tax) would get us 80% of the way there. Too bad that Koch et. al killed that last year.
Thanks for the California post, Ben. I am beginning to see things happening in my neighborhood, or rather, NOT happening as humongous new construction sits in the market like this one:
https://www.zillow.com/homes/for_sale/Los-Angeles-CA-90064/20498886_zpid/96045_rid/globalrelevanceex_sort/34.073172,-118.386655,33.997351,-118.473344_rect/13_zm/0_mmm/
They’ve been trying to sell since February 2018. Started at 4.7 million and now down to an “affordable” 4.1 million. Still ridiculous, but a big reduction nonetheless. It was bought for 1.5 million in 2016. It’s the kind of thing that leaves you speechless, or like Ben says: “click”.
$751 a square foot. This in the most impoverished state in the country. Sounds like there might be some kind of income inequality problem there. Maxine Waters and Alexandra Ocasio Cortez can fix it. They’re both experts at representing poor districts they don’t live in, because they’re carpetbagger hypocrites…
Wow, the property tax on that property went from $1334 in 2015 to $18,175 in 2016. Prop 13 distorts the market so much in CA.
Wow, that is insane.
“…down to an “affordable” 4.1 million.”
That’s a lot of money for so little backyard in sunny California.
This one is smaller, more in tune with the neighborhood, but it has been on the market since November 2017
https://www.zillow.com/homes/for_sale/Los-Angeles-CA-90064/20460890_zpid/96045_rid/pricea_sort/34.073172,-118.386655,33.997351,-118.473344_rect/13_zm/2_p/0_mmm/
ripoff
Tarzana, CA Housing Prices Crater 11% YOY As Crime, Fraud And Illegal Aliens Devastate Southern California
https://www.zillow.com/tarzana-los-angeles-ca/home-values/
*Select price from dropdown menu on first chart