A Lot More Value To Shed In California
The County Sun reports from California. “Development of the Foothill Walk properties in Upland began with 72 townhomes in early 2006. With a large banner draped across the fence on Foothill Boulevard screaming, ‘NOW SELLING,’ with a side note of ‘From the Mid 300’s,’ potential buyers almost couldn’t resist looking inside. Andy and Joan Knowlton are a couple of years away from retirement. After living in their one-story, 1,800-square-foot San Dimas home for 21 years, they were ready for a change.”
“I’m a Realtor and poked around on the Internet and saw the complex (at Foothill Walk) on the MLS and decided to check it out,’ Andy said.”
“The couple ended up buying a model home. ‘It was an impulse buy,’ Andy said.”
“Katie Distelrath is jumping in. ‘This is definitely a buyer’s market if you have the means to purchase,’ said the 22-year-old.”
“Distelrath closed escrow on a townhome at Foothill Walk in Upland on March 14, thanks largely to her mother who co-signed on the $339,000 property. ‘I fell in love (with it),’ Distelrath said.”
The LA Daily News. “San Fernando Valley home prices fell again in February, selling for 14 percent less than a year earlier, and sales plunged 32 percent, according to a report released Wednesday.”
“The median price for a Valley home is now $525,000 - the same as in March 2005 - or $85,000 less than February 2007, the Van Nuys-based Southland Regional Association of Realtors reported. The latest figure is also 20 percent below the record high of $655,000 set just last June.”
“Meanwhile, sales in February dropped to just 359 transactions.”
“During January and February, there were 1,084 foreclosures and 1,335 sales of houses and condos in the Glendale to Calabasas area, the center said. By comparison, during the first two months of 2007, with the market entrenched in a slump, there were just 235 foreclosures and 2,481 sales.”
“There were 7,090 properties listed for sale at the end of February, a 15-month supply at the current market pace. There were 2,182 properties listed for sale at the end of the month in the Santa Clarita Valley, a 14-month supply. In the Santa Clarita Valley, the median home price fell 14 percent, or $80,000, to $490,000. Sales declined 34 percent, to 115 transactions.”
“Association President Mary Funk, who works both valleys, has been selling real estate for 30 years and this is her third big market shift. She says one thing is certain. ‘In every downturn when the market has flipped back over,’ she said, ‘the prices have gone back up.’”
The North County Times. “Despite government efforts to aid a flagging real estate market, home loans intended for first-time buyers are getting harder to secure, according to interviews with lenders and mortgage brokers. Many banks have labeled most or all of San Diego County a ‘declining market.’ The distinction typically means all loans carry a 5 percent penalty on down payments.”
“Several mortgage brokers said they recently received an e-mail from Bank of America informing them that, starting this week, some products would no longer allow a 5 percent down payment in San Diego County.”
“Some mortgage analysts said they expect the housing market to further deteriorate as other banks follow suit —- if they haven’t already. ‘I think you’re going to see this as a definite trend, and that’s going to serve to deepen this crisis,’ said Dave Hopkins, a mortgage broker with a firm based in Rancho Bernardo.”
“North County sales over the last three months are almost 50 percent lower than the same time two years ago, according to a real estate association report. ‘It’s been extremely challenging for us to qualify buyers,’ said Yamila Ayad, a San Marcos mortgage broker who specializes in low-income buyers. ‘It’s killing everybody.’”
“‘The Fed is lending them (banks) money cheap, and they’re turning around and doing whatever they want,’ Hopkins said. ‘But honestly, it’s a smart business decision. I don’t think this thing is over and they think the same thing. We have potentially a lot more value to shed.’”
The LA Times. “Wachovia Corp. signaled that it may no longer offer some Californians the controversial ‘option ARM’ mortgages that give borrowers the choice of paying so little that their balances actually rise.”
“However, the bank said Wednesday that the memo had been sent prematurely and that it had not decided whether it would stop making the loans. In its fourth-quarter 2007 earnings report, Wachovia said its nonperforming assets, principally loans gone bad in the housing swoon, had risen to $5.2 billion from $3 billion at the end of the third quarter.”
“If Wachovia cuts back, it could further disrupt distressed housing markets. ‘This product was the last remaining hope for the sub-prime borrower,’ said broker John Diamond of Bancorp Funding in Chino.”
“With the tightening of loan standards by the government-sponsored mortgage buyers Fannie Mae and Freddie Mac, and other lenders afraid or unable to lend, ‘this could be the ’straw that breaks the camel’s back,’ Diamond said.”
The Asian Journal. “A real estate research firm reported March 30 that Daly City has the highest number of foreclosures in San Mateo County. Affected homeowners are said to be mostly Filipinos and Hispanics who have never owned a home before.”
“The Daly City figures followed another report from the site indicating that foreclosure auction sales have more than doubled in San Mateo County in February over a year earlier, though sales have slowed since January.”
“‘They were much more susceptible to getting into loans that they didn’t understand,’ said John Gieseker, a San Bruno broker. ‘Immigrants have seen it as very important to own your own home because it’s a greater level of security, so they would push harder to buy something.’”
The Los Gatos Weekly Times. “In light of the problems besetting the housing market and in accordance with Proposition 8, the Santa Clara County assessor’s department is going to lower the values of about 26,000 properties in order to reflect the lower market value.”
“Santa Clara County assessor Larry Stone said the biggest problem affecting the housing market is credit availability. The market for condominiums/townhomes has softened, especially in Morgan Hill, Gilroy, Milpitas and East San Jose, which are the areas in the county experiencing the biggest problems of foreclosures and subprime loans.”
“‘Silicon Valley still follows the boom and bust. The challenge is to continue to find new things,’ said Stone. ‘Everything happens in Silicon Valley first, fastest, good, bad, up and down.’”
Bay Area Newsgroup. “Cindi Gardner, a mortgage advisor based in Palo Alto, said that in her business the FHA loans aren’t proving to be as helpful. ‘Even though it went up from $362,790 to $729,750, it’s more expensive,’ Gardner said. ‘A client can get a cheaper 5-year-fixed loan at 5.75 percent than 6.5 on an FHA.’”
“Gardner said the federal loans were supposed to be more helpful, but to make the loan attractive to banks they had to increase loan criteria and interest rates to alleviate some risk.”
“‘It’s an application that’s great for areas where prices are $400,000 and below, but that was the market it was meant for before they increased it,’ she said.”
“Gardner advises clients who are on the fence, both mentally and financially, to hold off on buying and make a jumbo loan payment for six months.”
“‘Pay the difference between a rent of $1,200 and a house payment of $3,500 into a bank account,’ she said. ‘Then they will know if they can make the payment and in six months they will have at least 5 percent down.’”
The Press Democrat. “Economic pressures that are pushing the country toward recession are having an uneven impact on Sonoma County residents, leaving some hurting and others unfazed.”
“Rachel Harika, a single Santa Rosa mother and self-described ‘victim of the whole mortgage thing,’ said she hasn’t worked since December when she lost her job as a product developer for a subprime mortgage lender.”
“She said she’s forgoing the outdoor living room she had hoped to create once the weather warmed up, as well as the ‘bunch of flowers’ she usually plants each spring ‘that would always die anyway.’”
“But several people said they hadn’t felt the pinch. Jim Adams, retired and living with his adult son in a house that’s already paid off, was taking home a new flat screen TV to replace a set that was on the fritz and not worth repairing.”
The Fresno Bee. “The parent company of Merced-based County Bank reported its first-ever annual loss Wednesday, confirming the bank’s previous warnings that the faltering Central Valley real estate market had hurt its portfolio of loans.”
“The loss was driven by the bank’s increase in reserves meant to cover bad loans, up to $29.8 million at the end of 2007, compared with $400,000 at the end of 2006. The bank’s nonaccrual loans, or loans that weren’t being paid, rose to $53.6 million at the end of 2007, up sharply from $3.2 million in the third quarter of 2007.”
“‘The scope and rate of the decline of the real estate market were completely unexpected,’ Donald T. Briggs Jr., bank board member, said in a prepared statement. ‘As a result, the company did not anticipate the value of the collateral to fall as quickly as it did.’”
The Modesto Bee. “A rise in foreclosures has led to more people using abandoned homes, creating public health risks and trouble for neighbors. The police’s Beat Health Unit is tracking roughly 200 properties, about one in five of which are believed to be abandoned.”
“The city demolished five of those buildings Tuesday. Neighbors were pleased to see the buildings come down.”
“When foreclosures happen, families suffer the most, but cities are hurt, too, said acting City Manager Jim Niskanen. The abandoned houses are ‘vulnerable. They’re just left to the negative devices of the community,’ he said.”
“Owners cooperated with the city’s decision to raze the houses, building inspector Bert Lippert said. He said the work cost about $11,000, a charge to be paid by the landowners.”
“Foreclosures can muddy the paper trail when the properties change hands. Lippert is working with a New York bank on the Benson Avenue property where Officer Amy Bublak and Cpl. David Rhea arrested squatters Wednesday.”
The Desert Sun. “The City Council formally adopted an ordinance 5-0 Tuesday that aims to reduce blight created by property foreclosures. Desert Hot Springs city leaders, along with other cities across the Coachella Valley, are struggling with this issue as state and national foreclosure rates reach record numbers.”
“About 990 homes within Desert Hot Springs’ city limits are in various stages of foreclosure, according to city documents.”
“‘When banks foreclose the property, they have to notify (the) city so houses don’t become a place to have a rave party for kids or so that the homeless don’t occupy them,’ Desert Hot Springs City Manager Rick Daniels said.”
“‘It also helps property surrounding it from decreasing in price,’ Daniels said.”
“The creation of the ordinance was prompted by concerns from residents living near foreclosed homes, whose complaints ranged from worries about mosquitoes breeding in neglected pools to break-ins to ‘kids holding keggers,’ Daniels said.”
From the second page of the AJ:
‘The city known as ‘the gateway to the Peninsula’ also had twice as many foreclosed homes than San Mateo, a city of comparable size with a higher median income and a smaller immigrant population, according to DataQuick.’
‘Everybody wants to live here because of our proximity to San Francisco, Daly City Filipino American Councilmember and past mayor Mike Guingona said. We can’t punish those people for wanting a piece of the American dream — we should accommodate them.’
“If Wachovia cuts back, it could further disrupt distressed housing markets.”
what the ??? banks are cutting back. they should continue to lend. Bears stern needs companions.
Better get your money out of the stock broker AG Edwards! They are owned by Wachovia. Eh.
OMG they’ve got one of those on every corner here. What’s with that anyway?
NYC too. They are just going up everywhere. Unreal.
How stupid does one have to be to take out a negative amortization loan in a crashing real estate market?
Not as stupid as the guys making the loan?
shame on the banks - like shooting fish in a barrel.
Funny - I’ve noticed Wachovia doing TV ads for ‘Pick your Own Payment”
…one of the options being and ARM
— another being for Interest Only
Daly City just plain sucks. The weather is FOGGY & WINDY most of of the time. We’re talking MAJOR mold, etc. I don’t know how people live there. San Mateo is way warmer in the summer. We live on the coast near Half Moon Bay and geez the weather is balmy compared to DC…and you’re packed in like sardines big time. Please closer to the city…we’re 20 mins MAX
Hey Guingona, accommodate THIS.
ex-nnvmtgbrkr?
Everybody wants to live in Daly City because of its proximity to San Francisco? Now I’ve heard everything. By that logic, everyone wants even more to live in Hunter’s Point, because that’s actually IN San Francisco, and not much crappier than Daly City.
mission acCOMPlished, Pomona-adjacent
“Development of the Foothill Walk properties in Upland began with 72 townhomes in early 2006. With a large banner draped across the fence on Foothill Boulevard screaming, ‘NOW SELLING,’ with a side note of ‘From the Mid 300’s,’ potential buyers almost couldn’t resist looking inside. Andy and Joan Knowlton are a couple of years away from retirement. After living in their one-story, 1,800-square-foot San Dimas home for 21 years, they were ready for a change.”
Better yet (from the article):
“I’m a Realtor and poked around on the Internet and saw the complex (at Foothill Walk) on the MLS and decided to check it out,’ Andy said.”
“The couple ended up buying a model home. ‘It was an impulse buy,’ Andy said.”
Ugh.
Leigh
This was originally posted by me on LA land blog regarding the idiotic REIC IE foreclosure bus tours started by some idiotic REIC auction companies:
‘No home in the IE is worth more than $300,000. I don’t care if it is the grandest palatial 6 bedrom 4 bth mansion in a plush exclusive hillside. The IE is a Re meltdown zone . Anyone paying more than $300,000 needs a lobotomy. U can get a decent large REO fixer in decent IE hoods close to LA for around $200,000. Lake Elsiniore is a crapzone but great deals for under $200,000 there and 1.5 hrs to OC . Entire Corona Valley way overbuilt in new homes and deals for under $200,000 will open up by end of 2008. Brand new REO fixers .
Extreme North fontana N, of 210, an area of virtually brand new developments, should fetch for around $200,000 max if u do your homework.
RC has some decent developments but tons of foreclosures: do the homework online & legwork and U can find a deal for under $300,000.
Corona area in general extremely distressed in fore closures and by end of year a decent REO should be around $200,000.
Norco way overdeveloped with cheap crappy standard cookee -cutter new homes and prices should be no more than $250,000. Plus area is quite dismal, hot nasty & smoggy 8 months of year. That is the entire IE weather pattern BTW.
Rialto, most of fontana, San berdoo Metro, much of riverside metro, colton, parts of redlands, most of Ontario & Chino, are simply wasted ragged decrepit IE mixed-use pitzones, with polluting industries, roaring truck traffic and ecology- destroying truck & warehouse facilities, lots of illegals and gangs, Nasty yellowish 100% sweltering heat in summer, ragged upturned trashed- out rural lots and crackerhomes, ect.
Simple rule of thumb: avoid buying in area bounded by the 15, 10, 215 and 91 fwys. This is the inner IE ‘wasted’ zone, though not exclusive as much of rest of IE has similar environmental/urban/ population nightmare scenarios such as described. …
The high desert victor valley-nothing worth more than $100,000 tops. ‘
peter m - Have you ever considered writing a tourist guide to greater Los Angeles?
“Development of the Foothill Walk properties in Upland began with 72 townhomes in early 2006. ”
Back ten years ago that part of upland was mostly open fields and the foothill old rte 66 thru there was quite ragged with old beat up shops, junk car dealerships, roadside cheap malls & liquor stores,ect. Being adjacent to montclair is a big minus , and upscale Claremont is thankfully separated from Upland by the LA county line and the San Antonio Wash flood channel.
Last i went thru upland (2007) along the main drag- Euclid ave
( off the 10 fwy)- the entire neighborhood was in process of rapid degentrification-the Pomona effect. The 80- year old former craftsmen homes along that blvd were somewhat ragged , and the entire hood was underserved by the nearby puny city hall, itself showing decline.
Upland was always a sort of butt-end blue-collarish backwater section of the IE, and has had a continuous influx of immigrants and gangs as has much of that area along the 10 fwy from Pomona east to Redlands.
Those buyers of Foothill walk just overpayed by $150,000.
“Katie Distelrath is jumping in. ‘This is definitely a buyer’s market if you have the means to purchase,’ said the 22-year-old.”
“Distelrath closed escrow on a townhome at Foothill Walk in Upland on March 14, thanks largely to her mother who co-signed on the $339,000 property. ‘I fell in love (with it),’ Distelrath said.”
Of course the 22 year old did not have the “means” to purchase ‘herself’. Mommy shelled out the bucks, no matter life has a way of teaching lessons in time.
Agreed. See my comment on co-signing. DO NOT DO IT!!
I have a friend who co-signed on her **ex** son-in-law’s over $800K mortgage. SIL is a no-good, cheating, druggie loser who job hops — if he has a job at all. No way could he support that kind of a mortgage.
When she told me she was going to do it, I tried desperately to talk her out of it. She didn’t listen.
You can guess what happened next. (didn’t make it even a year)
I think some people don’t understand the material consequences of co-signing. They think it’s just like verbally vouching for someone.
I wish Katie would learn a lesson. Unfortunately, her mother’s loss won’t hurt Katie until inheritance time comes around. Why does this piss me off so much?
–
Come on, realively rich people’s kids have the right show off. Earning your life-style is so old-fashioned.
Jas
Inherience is not mandatory, she could spend all the money before she dies or exclude Katie from the will, it’s her choice. But it’s no reason to waste your parent’s money. That’s one reason I want to buy the cheapest house, I want to catch the smallest possible knife. I would rent except it costs far more to rent than buy unless the houses happen to be $500k+
I have yet to live in a house that loved me back.
My homes always seemed to give me “Tough Love”
I don’t have the means either and I am not going to let my dad catch a falling knife. I don’t have this entitlement mentality. I would rent but most houses under $150k actually cost more to rent than own, bummer
From the Sun link above:
“”Distelrath is a USC graduate. She is an associate teacher at Foothill Country Day School in Claremont and works part time at Nordstrom in Montclair.
She lives in the townhome with a good friend and her Yorkshire terrier, Lucy.
“It really feels like urban living,” Distelrath said.
She also is taking advantage of the pool and spa available to residents.
Beazer also offers a “Hometown Hero Discount.” A 3 percent discount off the purchase price is offered to military personnel, law-enforcement officers, firefighters, teachers and medical professionals, according to Leitch.”"
I have no idea what this young lady earns, but it is telling that she works a part time job and has a “good friend”.
Hopefully, said friend pays rooming expenses, Lord knows the dog doesn’t earn a keep (save for the love).
Leigh
Well, a yorkie probably doesn’t earn his keep but I think of my 85 pound foxhound as a home security system with teeth.
“”Well, a yorkie probably doesn’t earn his keep but I think of my 85 pound foxhound as a home security system with teeth.”"
I love dogs. Foxhounds have a beautiful coat. And they are loyal.
They are protectors - funny, the master is loyal too.
“ For Distelrath, it was all about location, location, location, when it came to her purchase.
“My mom is a mile and a half away, my dad is only a mile away, my sister is in Alta Loma and my older brother lives in Upland,” she said. “As you can tell, I’m a family girl and I like being close to my family, so this was perfect.”
I don’t think “location, location, location” means what you think it means, Katie…… Unless a future sale of this place will include an adoption.
Sales are like totally, grodie to the max.
“San Fernando Valley home prices fell again in February, selling for 14 percent less than a year earlier, and sales plunged 32 percent, according to a report released Wednesday.”
I am laughing at that one, too. My VN friends thought their place was actually worth one million! Uh Huh! Who cares if you live in the nice section of VN? It is still a barrio.
I tried to get them to sell last year and was basically told to shut up.
The Southland Assoc. Of Realtors (Balboa @ Sherman Way) did a PR market blurb on KNX News Radio tonight, that housing prices are up 5%, and things are looking up for the SFV housing market.
“The Southland Assoc. Of Realtors (Balboa @ Sherman Way) did a PR market blurb on KNX News Radio tonight, that housing prices are up 5%, and things are looking up for the SFV housing market”
That was for used SFH’s only. The median was skewed upward by preponderent sales at the high end, which are moving only because sellers in the high end west valley areas are now dropping prices from 1 million down to $700-800,000 or so, which still skews the median prices of all sales of used SFH’s . The amt of feb sales, 350 or so, is so small as to be meaningless. As soon as the foreclosure sales in the east butt-end sections of the valley are recorded in march-april u will see significant median price declines in the valley .
If they included condo sales in those figures the prices would no doubt show a sharp drop overall as condo prices are tanking rapidly in the SFV.
Data point: My neighbor made an offer on a 2.7 million (asking) dollar house in Playa del Rey — new remodel spec home with four stories, elevator, lots of glass and ocean views. He lowballed at 40% off. Offer ACCEPTED. Good deal all around, I think. Love what this will do to comps.
mission acCOMPlished…
“Love what this will do to comps. ”
One would hope… but 40% off — are some are going to call that an “outlying” transaction? The numbers make this look like a bank sale, LOL
Sellers will call it an outlyer, but buyers will insist. “I want 40% off too!” Hee hee. This is fun.
That house musta been way overpriced to begin with. I was thinking of offering 2/3 of asking(if asking price isn’t ridiculous) otherwise I will pass and move on to the next house.
Me too. Airport del Rey is overrated and maybe just maybe a huge house off the beach with views is worth one mill - max.
They bring mountains of sand in for erosion in the winter and the sound is awful. My friend had a condo on the beach = Vista del Mar. Icky.
Yea, I was thinking the same…40% off means about 1.8 to 1.9 either way he paid about a million too much for that area…
Hey Plastic, what’s the address on the home? Thx.
Will post when the sale goes through
“Santa Clara County assessor Larry Stone said the biggest problem affecting the housing market is credit availability.
No….it’s high prices buddy…..
Ever notice that the MSM keeps referring to it as a credit crunch? It’s more like a high price crunch.
More like:
I got mine at the TAF window ~ na nee na nee boo boo.
Gosh,
Leigh
if he wants to rent it out i could go as high as $2500 @ month.
Daly City is fog USA. Houses are built so close to each other; only a playing card can pass between the exterior walls.
WTF is so magical about the Bay Area anyway? It’s cold, it’s expensive, it’s overly yuppified, it has tons of earthquakes, and traffic sucks.
I’m not saying it doesn’t have its charms, but why would it cost twice as much to live there as anywhere else (outside of Manhattan)?
San Jose is warm to hot, rare to have an earthquake, only rains in the winter. Beach or mountains in either direction. Expensive as hell and traffic does suck but the damn high tech companies insist on locating here.
San jose sucks. Those ugly brown hills. Lousy traffic. Group of teens and young men all wearing the same colored shirts and hats (gangs anyone)
I love the clowns who bought houses on the hill sides with big water tanks perched on top of the hill. I would feel real safe in that house when an earthquake hit. Drown 400 feet above sea level in the desert during an earthquake. That’s one for CSI.
They have squirrels you get to feed as a part of your buyers contract.
Do you live in the Bay Area? If so, where? West San Jose/Cupertino/Saratoga/Los Gatos and up the Peninsula are some of the nicestneighborhoods around. Weather is generally fantastic–you get warmish summers, generally good winters, and a spring and fall (although nothing like the East Coast). Traffic can be bad, but really is specific to your commute. Around town is,in general, not that bad–’”freeway” commuting can suck.
And what is so great–food, culture, weather, proximity to beach/mountains, beauty, smart people, jobs, safety, and a general feeling of living in a great place.
So I am a partisan. If you can afford it, hard to beat.
“Katie Distelrath is jumping in. ‘This is definitely a buyer’s market if you have the means to purchase,’ said the 22-year-old.”
Ahh. The wisdom of experience.
And, she didn’t have the means to purchase. She had to get her mom to co-sign. Well, she (and her mother) will gain some valuable wisdom from this experience.
Let me get this straight once and for all. The idea of a co-signer, or what people think it is, is the biggest heap of steamy bull ever. Someone a long time ago invented the idea so that the person really on the hook would feel warm and fuzzy about signing their life away, that somehow being a “co-signer” alleviated the risk. Sorry. Let me tell you mom, in the lenders eyes you’re borrower #1! The daughter is the co-borrower. Something goes down and daddy’s little girl decides owning a home sucks, well she gets to dance off into the sunset with hammered credit. Mommy, on the other hand, is the one the banks will be calling. Baby girl obviously needed your income and your assets to qualify the deal. So if your income and assets are backing the deal, guess what? HOSED!
Yep, and the Co-signer will be the first one looking for a means to get out from under the burden as soon as Sunshine decides that being a Homeowner isn’t as much fun as she thought it would be.
It makes Momma and Daddy real proud whenever Sunshine gets her own home at such a young age. Really it does. It is all they talk about to anybody that will listen. And it makes Mom and Dad really, really mad at the world whenever they are actually expected to honor the contract they signed for their Lil Sunshine.
There’s one of those houses right across the street from me. Daddy bought it for her to live in while she attends the University of Arizona. And Mommy bought her a used Jag for that grueling commute to school. (The UA is less than two miles from here.)
Alas, Princess and her roommates do not know the meaning of commonly used homeownership terms like “yardwork,” “picking up the trash that blows in,” and “putting junk out for the Brush and Bulky pickup.”
I pity the fool who marries that worthless pos.
What may be even worse is the possibility that Miss Sunshine, as “principal” borrower/mortgagor, is able to HELOC or refinance the property in the future without Mum’s consent, as Mum may only be a guarantor.
Depending upon local consumer protecion laws, Mum’s liability may only be limited to the original sum guaranteed, or the guarantee may legally extend to all debts of the Principal borrower, including credit cards and car loans!
You can get nailed on the co-sign deal. My parents did when I was in high school. They made the mistake with a relative (my cousin) who supposedly was the most responsible and reliable member of our family. After a couple of years my cousin decided to just leave, filed for divorce, left town one afternoon with his GF.
It took my father a couple of years to get out of that fiasco (plus a nice sum of $$$s) but he finally sold the property. And was he PI$$ED. But more at his own stupidity in this than anything else.
“Sorry. Let me tell you mom, in the lenders eyes you’re borrower #1!”
My grams was gracious enough (91 yo) to help me understand the good vs evil with credit at the tender age of 15.
We had a Kaufman’s (sp) card together. Of course I knew (she told me loudly) she was on the hook as #1 borrower.
I respect her so much. I did not violate her trust. We made small purchases and I paid loyally - on time was the lesson - before the bill was due.
There is a difference between teaching, mentoring vs here ya go.
Sad, many are the former.
Leigh
er…that would be latter.
My editor is off on Thursday.
No, she wont. She has probably little to no skin in the game (how can option-ARMs still exist? what the F is our gov doing bailing out builders and banks and not putting a stop to future risk). We need to sack some politicians over this, then, and only then, will they get the message.
I wonder what would happen if the term “co-signer” disappeared and was replaced with “borrower/mortgagee #2″.
Same question if home equity loans were referred to as “mortgage #2). I think they were once called “second mtges”.
You have to wonder about a paper quoting a 22 year old getting a co-signed loan on the state of the housing market. Either the reporter is a complete fool or they could not find a better buyer ?
I’m fairly convinced that the pool of buyers capable of buying a home right now as fairly small. How many people do you know that did not read the housing bubble blogs where smart enough not to get involved in this mess ? In my opinion 90% of the potential hom e buyers for the nest five years where wiped out. So assuming ownership rates go from the current 69% back to 62% in 1992 with the coming recession. And lets assume it decreases at 1% a year.
We basically have no home buyers for the next 8 years.
So I don’t think assuming that the population of real capable home buyers has been reduced by 90% is all that far off the mark. Not to mention homes lost to HELOC’s by buyers using their homes as piggy banks. The people will not be move up buyers of the future.
So the question is are their really all that many people setting on the fence ? I don’t think so.
I agree. And those who still reside on the fence only do so because they have been impaled by the sticky post of underwriting, so they won’t be getting off any time soon.
This is why I keep telling there is yet hardly any credit crisis, pay-option money still plentiful to give to 22-year-olds with no nickels to rub togethers. Mortgage rates are historically low as well.
‘In every downturn when the market has flipped back over,’ she said, ‘the prices have gone back up.’
Genius. Thanks for stating the obvious. Now, Ms. RE “expert,” can you predict when the market will “flip back over”?
Notice she didn’t say whether she was talking nominal or inflation-adjusted prices. Nominal, sure, they will probably get there eventually. Inflation-adjusted, never.
I doubt she would comprehend the difference.
I have a theory about home price rise and fall. Let me expound. Feel free to turn on your flamethrowers.
My theory is that the areas that saw more price run-up will see more price run-down. And the areas that saw less price run-up will see less price run-down. Hopefully this is not too controversial, it seems to jive with the “reversion to the mean” conventional wisdom.
I looked up median prices in 2000 to 2005 in various Silicon Valley cities. That was the most recent I could easily find. Median price is certainly imperfect but probably close enough. Cupertino, Los Altos, Saratoga, and Palo Alto all saw 53% runups during this time. San Jose saw 59%. I suspect that the Central Valley towns saw much more, but I do not have any evidence to support this. Based on this, to get to 2000 prices would require a 33% run down in those areas. But a higher run down in San Jose, and even more in the Central Valley.
So the crux of my theory is that the decline will be less in the more expensive areas, since the uptick was also less. Possibly the less expensive areas were more subject to inappropriate lending.
This theory is consistent with what I’m seeing, which is little decline in prices in Cupertino, Los Altos, Saratoga, but significant declines in East SJ, Morgan Hill, Gilroy - supported by the article’s quote from the county assessor above.
What do you think? I would love to see a 50% decline in Saratoga but it seems that they did not have the level of run-up to get this run down. Also, you could argue that 2000 is not a good baseline as that was the tech boom. But much of the money made then still exists - people did sell some stocks and options in that time, and it did not all turn into Hummers. Some of it is in bank accounts, and even the part that went into houses can to some degree be used to fund trade-ups.
ok, flame on!
WOW! What original and innovative thinking!!
so is it worse to be flamed as a troll, or for being unoriginal?
it’s a fine line to tread. I guess the worst would be an unoriginal troll.
“My theory is that the areas that saw more price run-up will see more price run-down. And the areas that saw less price run-up will see less price run-down.”
As ex-nnvmtgbrkr noted, your theory is not exactly new. And generally, it is correct, but you have to be careful about applying it across the board to all areas. For example, some areas (like Detroit or Buffalo) may have seen prices rise due to the loose lending when, absent that loose lending they might have seen prices fall (due to falling population, bad local economy, etc.). Thus, while the place may look like it didn’t participate in the bubble as much as other places, it may in fact have participated more than the price increases show because the losses it would have otherwise incurred were masked. Also, in a correction, you should expect it to overshoot (not just revert to the mean). Finally, when looking at 2000 (or any other year) prices, you need to adjust the prices for inflation. Just my $.02
ditto Cleveland
Fundamentals drive things and those fundamentals shift around in peculiar ways. As long as wages stay high and jobs stay the bottom of the market may remain inflated relative to the rest of the nation. If crowding and high housing prices continue to squeeze local industry then the jobs will end up being created elsewhere.
The best thing to do is get the raw data from the Case-Shiller website for your area. Then create a second column and call it inflation. Start in 1987 with the index value and then add the inflation rate to the starting number. Then you can see how far it overshot. I have a nice chart that shows where compounded inflation of 4% should put the market today, and where it is based on Case-Shiller, so I know pretty well how far we have to drop. I use 4% instead of 2 or 3 because I believe the government inflation data is BS. I think 4% every year, on average, since 1987 is a decent estimate. And it gives me a nice, unemotional way to see when I should be buying.
Hi,
The problem is that case-shiller does not cover San Jose. Just that smaller city to the north, San Francisco, and some of its surrounding counties. I would love a county-specific case-shiller but there is not one.
Big V, thanks for the kind words. I am trying to not be a troll even while I present a viewpoint which is not necessarily in line with everyone’s here. I accept that I have a more optimistic view than many. I read this blog in part to temper my native optimism in fact!
Regarding Jas Jain’s point about options. This may even support my theory. Options generally go more to those closer to the top of the company. These folks are more likely to live in Saratoga than in East San Jose. Their income dropped in 01 but has rebounded since then with the stock market. If the stock market takes a 50% haircut then Saratoga will take a big haircut too. If not…
Finally, why would someone (me) want to live in Saratoga? One man’s boredom is another person’s nice family neighborhood. I would not have wanted to live in Saratoga at age 22. At 40 with a family things are different. Houses too close together? 10K ft lots are pretty big for here. Maybe too close together compared to acre lots in the Midwest but quite spacious compare to the average 6k lot in San Jose. But to each their own.
Regarding the well-traveled nature of the residents. At the open houses I’ve visited, probably 75% of visitors are immigrants. One may consider this to be a plus or a minus, but the newer residents have often traveled 1/2way round the world!
One might consider that those areas such as saratoga don’t see as much “Churn” as other areas that are mere stops on the housing stairway to ultimate dream home or location status. Once you’ve “arrived” where do you go ?
Saratoga is not very nice. It’s boring and has no ocean. People there are either old or a teenager. The houses are too close together. I’ve also noticed that a lot of people who live there are not very well traveled, like to the point where they don’t even know how to give directions just because they haven’t ever had to go anywhere new. I don’t think that people really aspire to live there, I think the place is just so weird that people who were born there can’t fit in anywhere else, so they never leave.
I don’t see the attraction to many of the expensive areas other than they have excellent school districts. On the other hand if one takes time to ride their bikes through certain areas of Los Gatos you’ll learn that the cheap crappy million dollar homes are at the base of the foothills right next to one another while the nosebleed houses are higher up in elevation and the higher you go the more secluded they are in the sense that the are located at the end of long gated driveways and not visible from the road. You can see them perched on the mountainsides from way down below in the merely out of reach to us commoners areas.
Uhh, where do you live? I grew up next to Saratoga and always thought it was a nice place to live. Decent lot sizes vis-a-vis other areas in the Bay Area, lots of smart, interesting people, and neat trees/parks. Maybe people do not want to leave because it is so nice…
Hi SiO2. First of all, let me say that I value your contribution to this blog. Unlike the trolls (which I hate), you actually bother to think. Now, down to the nitty gritty:
Jas Jain reported about a week ago that the higher-priced areas did, in fact, appreciate less than the cheaper ones. Professor Bear also reported that the rate of decline in expensive neighborhoods is lower, as one would expect. However, that lower rate of decline was not enough to offset the bigger purchase price. The top 1/3 of houses have gone down by about 1 or 2 percentage points less than the bottom 1/3 of houses, but the average price drop in dollars is higher.
Another point that I think is important: Progression. Since housing crashes start with the 1st-time neighborhoods and then work their way up, we can expect the price decline to start accelerating in the pricier hoods a little later than they do in the cheap ones. I think we can also expect the price drops to continue in wealthy areas for a while after they have stopped elsewhere.
On another note, I have a theory about the high-priced areas not bubbling up as much. I think most of us agree that housing never got down to its expected bottom after the tech crash, since the housing bubble was what we used to crawl out of the tech crash. If that’s true, then you have to extend your analysis all the way back to, what, 1991 or something? I don’t have that data, but it would be interesting to see whether or not the same % disparity would be observed between, say, Palo Alto and South San Jose over 1990 to 2010.
–
Long-term, income growth is the single most important factor in home price appreciation. Since 1995, income growth in Silly.con Valley, at the high-end, was driven by Scam Options. If we have a severe recession and tech Scams go down 60-80% from the recent highs and remain there for a while the high-end homes in Silly.con Valley will fall the most and stay at the low levels for a while. Saratoga during 1999-2003 is a perfect example; huge price increase followed by big price drop. Most of the price appreciation in Santa Clara Co. in recent years took place bet Jan’04-Jun’05 after the recovery in the tech Scams during 2003-04.
Jas
–
I should have said employment and income growth.
Jas
At the end of the day.. its doesnt take 1,000s of engineers getting paid 100,000 or more to make the products work…
SV is a deflationary economy! the prices of goods and services always goes down year over year…
But more of them are consumed. Look around you, there’s probably 5 microprocessors within a 10 ft radius. Sit in a car, there’s something like 50 microprocessors or more. So it is true that the price per unit falls, but it’s also true that more units are used per year. This has been the case since transistors were invented in the 1947.
How many people had cell phones / ipods / tivo / nav systems / you name it 10 years ago? I don’t think that human inventiveness has stopped, so we will invent more things in the next 10 years. And not only things, but services. This blog is pretty cool. Didn’t exist 5 years ago. If I knew what would be available in 5 years… I’d make enough money to get that Saratoga house.
Now if one who follows the “imminent Mad Max” school of thought will find this is irrelevant. But as I said before I tend towards optimism.
Optimism is grand!
Many need an infussion.
Perhaps the key is balance.
Logically, how many people will be able to afford iPods, TiVO, cable, cells etc?
This I do not know.
Best,
Leigh
Hi SiO2:
Yes, Silicon Valley has high-income industry. That’s why house prices here have always been higher than elsewhere. However, as has been noted before, the income here still isn’t high enough to justify the prices, which is why they’re going down. House prices in Silicon Valley did not go up due to its stagnating wages, stagnating rents, or increasing unemployment. House prices went up here for the same reasons that they went up everywhere else: exotic lending. Saratoga will pay the piper too.
Does not mean it is not a nice place to live though…
Man, I need to lay off the G&Ts when I am just sitting home Friday night. No alcohol for the past few weeks on South Beach (it works!) and now I am looped.
I miss the Bay Area. Grew up in Cupertino/West San Jose, and have yet to find a nicer place to live…well, DC is pretty good. Laos is nice, with the 5 staff, mansion, and the $5 French lunches. But no comparison to the Bay Area. Would really like to visit Sonoma, have a drink at a winery (I like Sinsky), and then maybe shoot down to French Laundry for an excellent meal. Ok, realistically Bouchon, but a man’s got to dream.
Is income growth the biggest factor in ship price appreciation or commercial real estate appreciation? No, it is the factor in RENTS. Houses depreciate; they must be maintained or improved at great expense; many burn down or otherwise become obsolete. The amount people spend on housing is a function of nominal GDP which is equal to income growth; this is not at all equivalent to house price appreciation.
Another important consideration is the change in households in Southern California with the large immigrant influx (legal and illegal) who are willing to accept inferior housing conditions, i.e. 2 or more families to a house. Four persons earning 20k each w/o taxes can afford to pay more rent than two persons earning 40k each w/taxes. Plus the welfare benefits to the former. Rents are thereby higher, house price as a factor of rent thereby higher.
Chilidoggg:
The imigrants (illegal and otherwise) have always been here, so there hasn’t really been a change. Their presence cannot explain the bubble.
Let’s talk about corporate profits. Because of offshoring, corporate profits over the past 10 years or so have been off the hook. However, the consequence of offshoring is a weak US economy. This weak economy is now biting corporations in the ass, which is why corporate profits (and stock prices) are starting to go back down. Obviously, a country can not bail itself out of its own economic problems. Eventually, once the Democrats have completed their roll-back of the offshoring process, our economy will return and corporate profits will return too. In the meanwhile, executives living off of “scam options”, as you put it, will suffer reduced incomes, which they deserve.
The one thing that Pete Peterson, of Peterson Blackfoot inc? said in his interview was that,
Since reaguns rolled back the Fairness in 87 since then CEOmgmnt pay went through the roof, but more important the pay was stock/stockshares that could increase exponentially, however such should have been tied to the performance of a company and should have been Long term rather than the current short term and not tied to corp performance which makes the ceo/mgmnt types not the least bit interested with making the corp profitable all around.What Peterson also said was ‘that needs to change’.
Duh.
I would consider 1996-97 when there was no bubble as the base year. By 2000 prices already doubled, and then doubled up since then… so in many cases we are seeing 300-400% increases over
10 year period. Regardless that SV has been a tech maven for
several decades, we never have seen price increases until more recently… we will have to go down to 50% to get back to fundemental values. The credit bust has only made that more possible.
salaries have doubled since 1996 . . .
I buy your theory. I bought a home in Merced. It nearly doubled in one year. I looked on zillow and it reported the house lost $25,000 in the past month. I sold it 2 years ago.
‘A client can get a cheaper 5-year-fixed loan at 5.75 percent than 6.5 on an FHA.’”
————————
This is a pet peeve of mine. The 5-year “fixed” loan mentioned above is NOT a “fixed rate” mortgage. It is a hybrid-ARM!
It should be illegal to use the word “fixed” in the title of anything other than a true “fixed-rate” mortgage. “Fixed rate” mortgages are fixed throughout the lifetime of the loan.
I have to admit that, before this whole housing fiasco, I didn’t fully understand ARMs. I honestly thought the lower rate wasn’t so much a teaser rate, as it was the lower rate a bank was willing to lend at due to not being locked into a rate for thirty years. I thought that it was basically your rate at the time based on LIBOR or whatever baseline plus the spread the bank wanted for their money. I thought that as long as rates didn’t go up dramatically from your lower initial locked rate period you would balance out if you only held onto the home for seven years or so, especially if the first five were locked and you had limits to the size of annual increases in the rates charged. I am not saying that I would have wanted an ARM, I am far too risk adverse and conservative for that, but I didn’t realize how stacked these loans were against the borrowers.
The thoughts that a bank would put you into a loan at a rate that would definately not only increase, but take a huge jump as soon as your teaser rate expires is just frightening. Teaser rate? Who would have thunk that such a thing would be legal?
And yet Wachovia keeps on pushing their Option ARM loans, which are even more dangerous for most people than the standard ARM. Why? Because they know that they can book some mean profits for a while and if housing does turn around they will be fine. If the bet goes bad, well they are lumped into the too big to fail, so in the end it will all work out somehow.
Truly disgusting.
From the LA Times link above:
“”Wachovia completed its purchase of Golden West in October 2006, just months before the first wave of sub-prime lenders collapsed. About three-quarters of its residential mortgage portfolios are option ARMs. Unlike many lenders during the boom, World and then Wachovia always kept the majority of their loans, rather than selling them — a policy they said assured more caution in their lending.”"
This is a mixed bag.
So they are above the rest because they did not sell to WS secondary market, thereby more responsible for holding the loans on their books?
This will end well. I wish I had the stomache to short the stock.
Yeah, I’m risk adverse - Tx if you’re out there, what’dja think?
Leigh
Leigh,
Unfortunately, I was too early and had a pretty large short position on Golden West (World Savings) because even I could see that what they had in their portfolios was set to explode.
Then, Wachovia strolled in and bought them out. You can imagine the bloodied mess I was in after that, as that position was one of the largest I had at the time.
I did short Wachovia after that, and made some money (out for now), but it definitely made me fearful about shorting these stocks.
Now, with all the bailout talks, expect some buyouts/mergers, etc. — IMHO.
Be careful!
HI CA,
Not savvy by any means!
Shoot, I’m afraid of the dark (save for my handy dandy weapons - yes- they’re loaded!)
Did you happen to see the spectacle on CNBC? They were smirking and you could smell the lies, even if you were deaf.
I hope you find a position to short one of these…er…cheaters. I wish I had the courage, I’m a coward.
My instincts are great, my stomache - well - can’t do it!
Best Always,
Leigh
er…spectacle
Humble apology.
From what I have read here and other places, Option ARMs can look very good for a banks earnings for a while. The bank gets to count the amount that they add to the back end of the loan as profit.
But in a declining housing market does anybody really think that the dead money being added to the back end of these mortgages will ever be repaid once a full payment is required to keep the ever expanding water balloon from hitting the ground.
Don’t bet on it. Once those higher payments kick in, those FBs will be having a big yard sale and moving on to greener pastures.
To me Wachovia seems like the compulsive Gambler that is in so deep that a huge win is the only way they will ever be able to come out of their hole in one piece. Might as well take out that last cash advance from the credit card and either pull off an amazing recovery or let somebody else deal with your mess, because it will be far too big for anyone to ever dig out from under by normal means.
Priceless.
Interestingly, Dodge & Cox has taken a large position in Wachovia. Their long term track record in picking stocks has been good, so I am assuming they kicked the tires pretty hard before shelling out $2.4 billion for the stake.
See https://www.dodgeandcox.com/pdf/shareholder_reports/dc_stock_ar_2007.pdf
Oliver
Same here. When they started out back in the 80s I think they were like that. Rates had been really high so it was risky to get an ARM, but as it worked out, rates kept dropping and I thought wow if I’d had any guts I would have got one..but stayed with a fixed. I’d like to know when they went to this new high-rate, high-fee scam.
I think they’re working on making that illegal. It’s gonna be called predatory lending, I think. It really is predatory.
I think it’s predatory. But in this case, borrowers and home sellers are the carnivores and lenders are the prey. I think it should be outlawed - so that shareholders and bondholders don’t lose all their money to borrowers and home sellers via incompetent loan officers. Bank employees don’t lose money - bank shareholders and bondholders do.
I must disagree.
We qualify for many mortgage products.
Qualify - I believe this is key.
Best,
Leigh
Actually, in most part of the world, there is no 30 year loan.
Just look at Canada, 10 year fixed is probably the most common.
The equivalent of a 30yr fixed in Canada is the 25yr, fixed for 5 years, resets and is fixed again for 5 years. This has now recently taken a back-seat to 30, 35, and 40yr versions as the “standard” mortgage as the bubble there hits it’s peak.
“A Lot More Value To Shed In California”
I knew homes weren’t worth a crap in California, but now sheds have more value?
The sheds were built better than the crap built during the bubble.
HAHA
LOL
Sheds have long held inner secrets, guess it must be “value”.
“If Wachovia cuts back, it could further disrupt distressed housing markets. ‘This product was the last remaining hope for the sub-prime borrower,’ said broker John Diamond of Bancorp Funding in Chino.”
This is not necessarily a subprime product. What this chump is really trying to say is this is the last chance for you to buy a home you cannot afford.This is your last chance to feel the thrust of the JT that everyone else is currently feeling. Why be left out? Jump in and take the beating of your life!
JT?
joshua tree
juicy thrashing
Jejunum Therapy
HBB running joke regarding the proper punishment for all REIC and sheeple who fed this mania is the JT insertion therapy. Ouch! Fitting the punishment to the crime appropriately methinks.
“‘Pay the difference between a rent of $1,200 and a house payment of $3,500 into a bank account,’ she said. ‘Then they will know if they can make the payment and in six months they will have at least 5 percent down.’”
HA! This poor mortgage broker just lost her realtor base with that comment. Actually, my best guess is she already lost it and has nothing to lose.
OT question for you all…Sorry to go so far off topic…
Let’s say I found a house that I wanted to buy and I was putting 40% down, with PITI being 28% of my gross (substantiated by my paycheck and my 2007 1040).
If I didn’t want use a bank, what would be my chances of finding “private money”, if I was willing to pay a 6% interest rate on a 30yr note? Are there private folks that do these kind of deals?
Same scenario, but let’s say I want to go to a bank, but I want them to keep it as a portfolio loan. Is it possible to make them guarantee to not sell it off? Would local bank ever go for that sort of deal?
Thanks.
Pen
There are some private lenders on this blog. I think most of them are charging around 10%, but your 40% down might decrease that. I think the bank will consider any terms you have for them, although I’m not sure you would personally benefit from having them keep it on their books.
Hard money loans are sizably higher % - much higher than 6% - much depends on the LTV/CLTV ratio (FICO, not enough information to give an answer).
Pen: “”Let’s say I found a house that I wanted to buy and I was putting 40% down, with PITI being 28% of my gross (substantiated by my paycheck and my 2007 1040).”"
From my LIMITED knowledge, you would also include 2006 1040.
Pen: “”If I didn’t want use a bank, what would be my chances of finding “private money”, if I was willing to pay a 6% interest rate on a 30yr note? Are there private folks that do these kind of deals?”"
Again, I’m no expert. Word on the street is 9%.
Pen: “”Same scenario, but let’s say I want to go to a bank, but I want them to keep it as a portfolio loan. Is it possible to make them guarantee to not sell it off? Would local bank ever go for that sort of deal?”"
I always insist the bank holds my note.
Why?
They want us to have skin in the game, as I want them to also. Get it in writing or go elsewhere.
Best,
Leigh
Disclaimer: I’m not an advisor.
I went to lunch today with 13 other tech workers from a company I consult to in Sunnyvale. Most of the engineers have PHDs. We ate outside in the sun after pushing several tables together and the topic of SF home prices came up. Everyone who chose to speak had elaborate and badly reasoned arguments for why home prices will NOT fall in SF. I was the only dissenter; bringing up Case-Shiller, SF’s mortgage loan leverage levels (Alt-A, Option ARM, etc.), falling prices all around the city and the affordability issue. The tech heads continued to insist that “now’s the time to buy” all the while looking at me like something unidentified moving in the bottom of a trash can. They are unreachable.
I meant to add this to Big V’s post below.
Engineers aren’t exactly known for their reasoning skills or emotional maturity. They like to “know” things. Once a thing is known, it cannot change. Well, be careful. When prices were still going up, it was harmless to be the nut who thought it would all change. Now that fear is in the air, you aren’t a nut anymore, your an A-hole. I’m still trying to undo some of the damage I did at work by speaking too freely (trying to save people). You just have to be careful who you talk to.
Well as an engineer, but educated as a mathematician/physicist I “KNOW” better.
Funny though, most of the engineers I know agree that all this crap is overpriced, especially in California. But then again they don’t have any vested interest in keeping home prices high.
“I’m still trying to undo some of the damage I did at work by speaking too freely (trying to save people).”
Sounds like emotional maturity to me.
“In the Santa Clarita Valley, the median home price fell 14 percent, or $80,000, to $490,000. Sales declined 34 percent, to 115 transactions.”
Association President Mary Funk, who works both valleys, maintains “this is a good time to buy.”
I am in a funk just reading her comment.
She’s a real valley girl
“Silicon Valley still follows the boom and bust. The challenge is to continue to find new things,’ said Stone. ‘Everything happens in Silicon Valley first, fastest, good, bad, up and down.”
Do you guys have ANY IDEA what it’s like to live amongst people like this? ANY IDEA? At least in LA they’re beautiful, so you don’t have to actually listen to them when they talk. At least in San Diego they’re young, so you can convince yourself that they will humble as they age. But here, HERE, they are old, educated, and, yes, UGLY!!!! The girls are fat, the guys are bald, they all think that iPods and camera phones are actual TOPICS OF CONVERSATION. I can’t stress to you enough how unnervingly, undeservedly, and preposterously ARROGANT these nerd balls really are.
I’m guessing that the folks living in Marin might have a good idea.
Ah come on, it’s not that bad here. We may be ugly, but we actually produce something real in this country.
What makes this such a classic is Stone being completely behind the curve. Silicon Valley is one of the last to fall and as such will probably be one of the last to recover, again as usual.
Driving industrial innovation means not only being surrounded by maleadjusted geeks, but all the downside of extreme chaos as well. Unfortunately even a prolonged recession and severe property price correction probably won’t shake these people because they will cling to the technology industry somehow and prices will still be high as long as inflation isn’t taken into account.
–
I do have an idea based on having lived there. Many are classic bubbleheads and it is hard to explain to them what the reality would be like when there are no more bubbles to blow for a very long time.
Jas
“‘Pay the difference between a rent of $1,200 and a house payment of $3,500 into a bank account,’ she said. ‘Then they will know if they can make the payment and in six months they will have at least 5 percent down.’”
Exactly. Anyone who earns enough to save $2300/month after paying the rent will have 20% down within 2 years. Everyone else will be excluded from the housing market, which works out quite well for the saver.
I read this headline and thought to myself…”Ben cherry picked this one for me!”
Okay Ben, I get the message.
$2300/month x 24 months = 55,200 that isn’t even 5% for you average palo alto 3bd 2bt 1800sqft 6000sqft-lot home
But it will be 20% down for your average SillyCon Valley starter home in 2 years. Not a crapshack, either.
An average house will be $276k in two years? That’s mid-80s pricing. 1999 median was about 350, 1992 through 95 was about 300.
I’m talking starter house, but not ghetto house.
makes sense. I realized my error shortly after typing.
I think for many around here, starter house is actually a townhouse or condo.
““Several mortgage brokers said they recently received an e-mail from Bank of America informing them that, starting this week, some products would no longer allow a 5 percent down payment in San Diego County.”
“Some mortgage analysts said they expect the housing market to further deteriorate as other banks follow suit —- if they haven’t already. ‘I think you’re going to see this as a definite trend, and that’s going to serve to deepen this crisis,’ said Dave Hopkins, a mortgage broker with a firm based in Rancho Bernardo.””
Uh, those types of loans are what started the whole bubble mess. Banks can’t allow those loans or there will be a high % of foreclosures!
““Katie Distelrath is jumping in. ‘This is definitely a buyer’s market if you have the means to purchase,’ said the 22-year-old.”
“Distelrath closed escrow on a townhome at Foothill Walk in Upland on March 14, thanks largely to her mother who co-signed on the $339,000 property. ‘I fell in love (with it),’ Distelrath said.””
Unless she got lucky and landed a dream job straight out of college, she and her mother are going to have financial problems. They caught a falling knife. Incidentally, I refused my dad’s offer to help me afford a Florida house, it’s a ripoff!
Let’s poor some gas on the fire
http://news.yahoo.com/s/ap/20080404/ap_on_re_us/prisoners_early_release;_ylt=AnqS3.3DQL74AHlbKrw15bis0NUE
States plan to release violent criminals. Now how does that formula go?
Violent inmate release + crashing economy + rising unemployement = anarchy.
Why don’t we just legalize marijuana, much safer and we could tax the crap out of it.
why does “and tax the crap out of it” always follow “legalize drugs?” Legalize pot, criminalize alcohol and tobacco, and don’t tax it.
No. A shirt on sale at Macy’s is an impulse buy. A house you’re supposed to think about.
“The couple ended up buying a model home. ‘It was an impulse buy,’ Andy said.”
Previous was in reference to this.
Dude, where’s my post?
I tried to post links to a great YouTube video on foreclosures and Alt-A lending in California, but it’s stubbornly refusing to show up.
Look for user markmti — there are two videos. Both are great.
“North County sales over the last three months are almost 50 percent lower than the same time two years ago, according to a real estate association report. ‘It’s been extremely challenging for us to qualify buyers,’ said Yamila Ayad, a San Marcos mortgage broker who specializes in low-income buyers. ‘It’s killing everybody.’”
North County prices and low-income buyers don’t mix.
All of you ragging on the 22yo is pure envy. She’s probably a multi-millionaire from some invention she made when she was 17 and has 20 patents already. She’s just keeping a VERY low profile!
“‘When banks foreclose the property, they have to notify (the) city so houses don’t become a place to have a rave party for kids or so that the homeless don’t occupy them,’ Desert Hot Springs City Manager Rick Daniels said.”
Two questions: If they occupy an abandoned home, can we still call them homeless? After all, they aren’t paying any less than the previous occupant did.
How soon before we see a bunch of teen movies about a series of parties in forclosed houses?
I like san dimas and upland a hell of alot more than neighboring pomona. I thought about buying a home in san dimas but decided that just because its 30 percent off peak
doesn’t mean it wont become 50 percent off peak.