Punch-Drunk On Real Estate In California
The Mercury News reports from California. “A new report pinpoints late 2006 as the time when the California mortgage market was most out of control — with some mortgage lenders acting so recklessly that two-thirds of the loans made during that time ended up in default. More than 9 percent of California mortgages originated from August to November 2006 have resulted in lenders filing default notices, according to DataQuick. By comparison, the default rate for all the loans made in 2005 is 4.9 percent, the company said, and for 2004, it was less than 1 percent.”
“DataQuick’s John Karevoll called mid- to late 2006 a ‘pocket of nastiness’ in the state’s lending industry, during which many lenders were making loans that had multiple risks — for example, no-money-down loans that also required no verification of the borrower’s income. As a result, too many borrowers could not afford their loans and have defaulted or been foreclosed upon. ‘This whole process, at least for a while there, just broke down,’ Karevoll said. ‘There was nobody out there minding the store.’”
“Said Dustin Hobbs of the California Mortgage Bankers Association, an industry trade group: ‘It’s no coincidence that these companies are out of business’ based on the lending standards exhibited by their default rates. But, he said, ‘There certainly is blame on both sides. Even borrowers who got loans they couldn’t afford, they have to take some responsibility as well. There’s more than enough blame to go around when default rates are that high.’”
“The median price of Silicon Valley homes has been cut nearly in half since peaking at $805,000 in summer 2007. But that doesn’t mean every home has lost that much value. In fact, a Mercury News analysis shows, home prices in some Santa Clara County neighborhoods least affected by the foreclosure crisis have fallen less than 20 percent. In neighborhoods where foreclosures are commonplace, prices have dropped 50 percent or more from their apex. And the foreclosure problem is not over.”
“The number of notices of default sent in Santa Clara County rose 95 percent in the first quarter of 2009 from the previous quarter, to 4,090 filings, following a period in which legislative changes and voluntary moratoriums had slowed the march to foreclosure. It’s unclear whether rising mortgage defaults will result in enough foreclosures in California’s more affluent areas to further depress prices in those places, said DataQuick’s Andrew LePage.”
“‘The numbers (of foreclosures) are still really small in the higher-cost coastal areas,’ including Santa Clara County, he said, compared with inland counties, ‘but it’s got to be watched, because at some point it could be a much more significant part of the inventory.’”
The Tribune. “More San Luis Obispo County homeowners are struggling to keep up with their mortgage payments. A total of 538 default notices were filed in the first three months of the year. That’s a nearly 40 percent increase from the first quarter of 2008 when 385 default notices were recorded, according to MDA DataQuick.”
“Foreclosure activity in San Luis Obispo County has been on the rise steadily in recent years, spiking last year with 784 trustee’s deeds recorded, versus 267 the previous year. Foreclosures accounted for 36 percent of resale activity in the county last quarter, up from 22 percent the same period a year ago.”
“Foreclosure resales accounted for more than 58 percent of all resale activity in California last quarter, a 33 percent jump from 2008.”
From KSBY. “Last year was a tough one for Santa Barbara County, now economists are weighing in on 2009. The UC Santa Barbara Economic Forecast Project…report shows that median home prices dropped 54 percent in 2008 but home sales increased by 20 percent. Retail sales fell by four percent, and commercial construction dropped by more than 12 percent.”
“‘If you can’t find people to rent your space, especially retail, why build it and why put the money out?’ said developer John Will. Will is already feeling the pinch with a project in Orcutt. ‘We’ve had three retailers pull out of it because they don’t want to take a chance in this economy either,’ Will said.
“Business is booming in a new shopping center in Santa Maria, but Will is quick to point out it is the product of better times. ‘Projects you see currently under construction right now were started in 2005 and 2006,’ said Will. ‘We only have one project we’re going to do after this one, then we’re going to sit tight for a couple years.’”
The San Francisco Business Journal. “In recent years, Pleasanton Rentals President Sherri Creighton and other small business owners have relied on the SBA’s 504 loan program to buy the commercial property in which their businesses operate. These business owners saw buying property as a means to capture the rent or lease payments the business was sending to a landlord and essentially make those payments to an entity controlled by the business owner. The plan was to build equity in the commercial property that might eventually provide retirement income for the owner.”
“But those carefully laid plans have gone awry. Now stretching to make the monthly mortgage has taken a personal toll on Creighton as well as a financial one. ‘Sleep has not been my friend lately,’ she said, likening her current troubles to those her father’s rental business in Texas suffered during the economic collapse of that state in the 1980s as oil prices plunged.”
“‘Everyday we get calls from troubled borrowers asking what we can do to help them,’ said Barbara Morrison, president of San Francisco-based TMC Development, which helps small businesses secure SBA financing to buy commercial real estate. ‘They’ve been hit by this perfect storm of an economic downturn.’”
“Like those servicing residential mortgages, Morrison says these commercial loans have been securitized and sold to investors, so there’s little they can do in the way of loan modifications. ‘Commercial mortgage foreclosures for owner-occupied buildings isn’t on anyone’s radar screen, but it’s more devastating for the community,’ Morrison said. ‘The community loses the business, employees lose their jobs and down the road become residential mortgage statistics.’”
The Press Democrat. “One gauge of the slumping economy is the growing number of courtesy calls self-storage site managers make to remind tenants to pay the rent. Leading the list are construction workers, sales representatives, restaurant owners and other self-employed workers struggling to keep their businesses alive. ‘They’re not ignoring their bills. They’re responsible. The bottom just fell out. It’s a sign of the times,’ said Brian Lane, site manager for Stor-N-Loc in Santa Rosa.”
“Helping fill the void are refugees from the sinking housing market — homeowners who lost houses to foreclosure. ‘There’s quite a few families. They just pile their stuff in here,’ said Les Kiracofe, site manager for Santa Rosa Avenue Self Storage.”
The North County Times. “Lenders appear to be inserting language into short sale contracts that allow them to sue for any ‘deficiency,’ or the amount lost by a bank by selling a home for less than the mortgage —- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners.”
“What’s more, the nation’s premier credit scoring firm says that short sales and foreclosures are equally damaging to credit scores. Yet short sales have surged in popularity, as homeowners struggling with falling values and rising unemployment seek a way out.”
“It’s not clear how many short sales in fact fail to protect former homeowners from subsequent collection efforts. But local real estate attorneys and other professionals say such vulnerability may be widespread. The North County Times obtained a short sale contract issued by Countrywide Financial Corp., which together with parent company Bank of America services roughly 20 percent of the mortgages in the nation.”
“The contract warned the homeowner, who owned a house in El Cajon, that Countrywide ‘may pursue a deficiency judgment for the difference in the payment received and the total balance due … ‘”
“Keeping up with mortgage payments —- and thus keeping the house —- is getting harder for thousands of families in San Diego and Riverside counties, where unemployment rates shot into record territory in March. Meanwhile, home values have plummeted more than 40 percent since 2006, leaving roughly one-third of San Diego County mortgage holders ‘under water,’ according to First American CoreLogic, a data firm.”
“The figure is higher in Southwest Riverside County; three of every four mortgage holders in Lake Elsinore is under water, for example.”
“It’s possible those lenders won’t sue the borrowers at first because ‘that’s why they’re in a short sale anyways, they don’t have the money,’ said Susan Anderson, manager of the Coldwell Banker real estate brokerage in Vista. So banks ‘are saying, ‘Down the line, if you have the money, we’ll go after it.’”
“Lenders might include a clause in a short sale contract that releases the lien but creates the possibility for a lawsuit to collect debts at a later date, said John Brady, a San Diego attorney. Effectively, lenders will try to transform a purchase-money loan into one in which the bank can sue to collect, Brady said.”
“‘They’re being sneaky,’ he said. ‘They’re trying to keep the door open to be able to collect on any deficiency.’”
The Union Tribune. “It’s Tim Kelley’s job to promote Imperial County as the future, as a hub for business, as the renewable-energy capital of the world. An optimist, Kelley said the area’s high unemployment rate has an upside. ‘I’m not saying it’s a good thing,’ he said. ‘But it does mean you have a work force.’”
“During a three-hour tour, Kelley noted promising commercial sites, three times pointing to curbs and gutters as selling points. He called everyone’s attention to a new Super Wal-Mart on one side of the street, while a former economic staple, Del Norte Chevrolet, sat shuttered on the other side. During a stop at a vacant 48-lot parcel, developer Dan Holbrook greeted one of the two-dozen passengers, asking, ‘Are we punch-drunk on real estate yet?’”
“Imperial County had 1,000 developable lots eight years ago when the country last rebounded from recession, Kelley said. Now it’s ready with 60,000. Kelley acknowledged his road ahead is rough. ‘You can’t really say, ‘When you’re in Imperial County, drop by my office,’ he said. ‘It’s not a destination site.’”
The Press Enterprise. “Fortune finally is smiling on renters who, for years, could not afford to buy a house as they watched home prices escalate ever further beyond their reach. In November 2006, the median price of homes in Riverside and San Bernardino counties peaked at $405,500. Since then it has plunged more than 57 percent to $173,000 in March, weighed down by foreclosures that represent more than two-thirds of sales, states research firm MD DataQuick.”
“‘Prices and mortgage interest rates now are so low that the monthly house payment is approaching the average rent in the Inland Empire,’ said Delores Conway, director of USC’s Casden Real Estate Economic Forecast.”
“That means many more renters can grab for the ring of home ownership as long as they can qualify under more-demanding lending standards. In a weakening economy, another key consideration is that they have jobs that they feel confident of keeping.”
“Last weekend, Simoun Davis and his fiancée, Felmarie Cipriano moved into the first house they could call their own. The single-story, four-bedroom house they bought for $115,000 on a cul de sac in Moreno Valley is just big enough for their two daughters and Cipriano’s mother to each have a bedroom. Their 3-year-old son will bunk with his parents.”
“‘We can’t imagine finally getting a house because three years ago we were just dreaming,’ said Cipriano. Her happiness was a little dampened, she said, by knowing that the previous owners had been foreclosed on. ‘I felt so sad for the people who lost their house and now we bought it,’ she said.”
“If it wasn’t for her boyfriend’s financial discipline, she said, they also might have bought a house that was too expensive for them in 2003. She said the only way they could afford a house then was if her brother joined them, but he declined.”
“When they started house hunting again in January…they decided to move inland where real estate prices are lower than on the coast. They face a long commute to their jobs, up to an hour-and-a-half each way, depending on traffic. Davis said although the couple was financially qualified to buy a $250,000 house, they decided to pay less to avoid financial stress and have time to relax and play with their children.”
“Their monthly house payment of $900, including taxes and insurance, is less than half their previous $2,200 monthly rent. And in a few years they hope to have built up equity and buy a better house, possibly back in Orange County. Cipriano said when they tell friends who have been through foreclosure that they are buying a house, ‘They say we are lucky.’”
The Inland Valley Daily Bulletin. “Economists and real-estate agents are counting on homeowner affordability to stabilize California’s housing market mess, but Bruce Norris couldn’t disagree more. Owner of The Norris Group, a Riverside-based real-estate investor and financial broker for other real-estate investors, Norris says it’s not what a home shopper ‘can afford to pay’ that’s key in turning this market around - it’s what they’re ‘willing to pay.’”
“He’s bucking the popular belief that a 5 percent or 10 percent price drop on Inland Empire home values will usher in the market’s bottom. Think 20 percent or maybe more, he said. ‘It’s because of the 1004 MC form,’ Norris said. ‘It’s very dangerous.’”
“This ‘market conditions addendum’ for appraisers to use - enforced April 1 by the mostly government-owned mortgage investors Fannie Mae and Freddie Mac and loan insurer Federal Housing Administration - might thrust the economy’s fragile mortgage system from its depressed state to something much worse, Norris argues.”
“The new addendum says a house must be appraised at the neighborhood’s median home value instead of market value, as long as the home is located in a downward market and as long as the mortgage is a Fannie Mae, Freddie Mac or an FHA-backed loan. Median home values in certain neighborhoods are taking a beating these days because their prices are skewed by dozens of foreclosures - which means nonforeclosed homes are slated to get hit by a double-whammy price-depreciation phenomenon.”
“Norris has already seen values stated on local home appraisals drop 20 percent in the past 3 1/2 weeks. ‘If this plays out, things will get much worse,’ Norris said. ‘We’re going to devalue the loan portfolios of almost every lender in the state of California. This could crash the system - it really could.’”
“Norris thinks a speedy free fall in home values wouldn’t draw buyers - it would erode the last bit of confidence remaining in the already-battered home shopper psychology. Money currently sitting on the sidelines could camp there for years because of fear. Not only that, but the foreclosure pipeline is so backed up that banks could collectively end up losing billions more if they sold their foreclosures at even worse penny-on-the-dollar prices based on median home appraisals rather than market-value appraisals.”
“With plenty of historical numbers on his side, Norris said he made presentations to homebuilders and real-estate professionals in early 2006 and predicted the housing market crash. Few believed him…The first sign to watch out for at a market’s peak is when affordability reaches historical lows. ‘It’s an indication you’ve reached the peak and about to head the other way,’ Norris said.”
“The other is migration. When California residents start jumping ship and moving to nearby states, just like they did in 2006, it’s a red flag, he said.”
The Democrat Herald. “When I worked as a real estate inspector in California in the early years of this decade, I was continually amazed at cost of houses, which never stopped rising. ‘Where are all the rich people who are buying these houses coming from?’ I asked a realtor as I completed an inspection of an older, not-particularly special, three-bedroom house she was selling for a cool million dollars. ‘These buyers must be taking on a $7,000-8,000 per month mortgage payment.’”
“She explained that most people buy a million dollar house by selling a $750,000 house, thus taking on a $250,000 mortgage (roughly a $2,500 monthly payment). They bought their $750,000 house when they sold their $600,000 house, taking on a $150,000 mortgage. And so the transactions went until the lowest-priced houses — which at that time in California cost around $200,000 — were purchased by first-time home buyers.”
“For people to ‘move up’ into ever more-expensive houses (touted as better investments because their price kept rising ) others had to keep coming in at the bottom of the market, buy the cheapest houses, then sell them and buy at the next level up. ‘But many people who don’t own a house can’t even afford a $200,000 house,’ I said.”
“‘Oh, they can with the right type of financing,’ the realtor answered, putting the million-dollar offer for the house I’d just inspected into her $500 leather portfolio. ‘No money down, adjustable rate mortgage . . . creative financing is easy for low-income people to get. Can you have that inspection report for me tomorrow?’”
“‘Sure,’ I said, feeling embarrassed about my foolish concerns for the housing market and people’s growing debt. Realtors and bankers obviously understood finances much better than I ever would.”
“Fast forward to the Obama economic team’s desperate attempts to return today’s economy to its mid-2007 condition, before the housing bubble broke. One of their principal concerns is to get credit flowing again so people can resume their pattern of consuming by borrowing — going ever further into debt.”
“Perhaps Obama’s economists think pushing consumer debt is the quickest way to restore the economy and avoid the pain of a complete collapse. Perhaps they are malevolent agents of Wall Street, helping the bankers use homeowner debt as speculative tender while the homeowners’ equity and net worth dissolves. More likely they’re misguided: they think that the economy as-it-was is the only way it can be.”
“Do we really want to go back to an economic system that can only grow by driving us ever-deeper into debt, setting up another — possibly worse — collapse? Or do we want to build a sustainable economy.”
“It’s said that if the people lead, their leaders will follow. In our current situation, the best way for people to lead is to refuse to go further into debt and to gradually increase the equity in their homes — and their outright ownership of cars and other goods. We can use a growing equity-to-debt ratio to stabilize our lives and, eventually, anchor the economy.”
‘Norris thinks a speedy free fall in home values wouldn’t draw buyers - it would erode the last bit of confidence remaining in the already-battered home shopper psychology. Money currently sitting on the sidelines could camp there for years because of fear.’
IMO, Norris is making a good point here. As we’ve seen, there have been pools of knife-catchers with each new industry or government program. But as many said years ago, the bottom won’t likely be reached until the market has run out of these folks. Throw in the silly moratoriums (which are over, BTW) and other manipulation practices in the foreclosure market, and it is easy to see mountains of inventory all over the country.
In Texas in the 80’s, fear did enter the real estate market on every level. And it didn’t go away for many, many years.
Fear is good when you talk about a 30 year financial commitment to service a debt that is in excess of your liquid reserves.
So far as I can tell, the effort from the top is all about alleviating rational fear and encouraging fence sitters to jump in and buy before prices bottom out.
Yep. I voted for Ron Paul because I wanted to see the look on everyone’s faces when the President of the U.S. of A. said “You got yourselves into this, get yourselves out of it.”
I had hoped that Obama would chart a course of national and personal deleveraging, but it doesn’t appear to be in the playbook. Most of government is bickering about how to force more credit into the marketplace and not about restoring sanity and soundness to the economy.
I listen to Bruce Norris every week. His guest this past week was a tax preparer. She said, based on the returns that she sees, most Americans are one paycheck from bankruptcy.
There really are huge differences between those who have little or no leverage and considerable savings, and those who have considerable leverage but little or no savings.
The latter would probably by now, be a paycheck or two from financial illiquidity and disaster/bankruptcy. What fear must grip them at times. How sleepless many nights must be. How depressing many of the predicaments they must face, and the decisions they must make.
The former, however, notice fewer crowds at the mall, fewer cars on the freeway, softening prices for many things, quicker deliveries, quicker appointments, and less waiting in line. They have less hassle in their lives and probably sleep better.
boob
Yikes…sorry about that. This wasn’t supposed to go through…not calling you a ‘boob’ Ben…
/slinks away embarrassed
(next time I’ll stick with “test” like everyone else, and not hit “Add Comment” when I don’t mean to)
Darn I feel stupid…
z’okay. I like boobs.
That’s funny, drumminj!
“She explained that most people buy a million dollar house by selling a $750,000 house, thus taking on a $250,000 mortgage (roughly a $2,500 monthly payment). They bought their $750,000 house when they sold their $600,000 house, taking on a $150,000 mortgage. And so the transactions went until the lowest-priced houses — which at that time in California cost around $200,000 — were purchased by first-time home buyers.”
SUMMARY - It’s just a ponzi scheme that will implode once appreciation prevents new entrants from emerging that can actually afford the debt service.
Tim,
Point taken, but housing has/had… worked on a “move up basis” for a long, long time. Most couples don’t buy their dream home ‘first’.
And that’s where things starting getting totally off kilter? When you have 20-something’s in 400/500k+ homes, you absolutely KILL your normal entry-level market. That’s when they had to find illegals to fill that void.
I’m not going to argue whether or not it was a Ponzi, but if it ‘was’ then moving people to the top out of the pyramid right out of the gate sure seems like a strange way to run a ponzi?
Back around 2005 I read an article in the Modesto Bee about how the real estate market was already running out of steam, and realtors were getting their second wind from Mexican immigrants who would have multiple families buying and living in one house. I can’t imagine what living conditions were like for those buyers. One family per room?
shibbo,
And again, I don’t think any among us is trying to make this a racial issue necessarily. It’s just that when you’ve got a Ponzi to feed..? Race/color/creed etc. have no particular importance.
I have no doubts that the SAC/Modesto markets were running out of steam? I’m not even sure 2005 wasn’t past the point of no return. I ‘can’ say that every-stinking-purchase/flip/flop only added… to our current woes!
“Compressing the chronology” ( and thank you sfbubblebuyer ) certainly made matters worse. While attempting to bubble-sit we had a 20-something couple below us renting while building simultaneous homes! A dream house for them ( after all they’d been in their FIRST home for all of two years, …with no children ) AND a home for her folks! Nope, no phantom demand here!?
Tim is absolutely correct. We issued more debt against homes than cash exists to pay it back? Were we leveraging our donor organs as well?
And the ‘move up’ mentality used to be drawn over decades. Buy your starter house with a downpayment and fixed loan… about a decade later when you’ve got kids getting too big to fit in a closet, or a sock drawer, ‘trade up’ for an extra bedroom or two. When the kids get big enough to cause physical damage to each other, trade up to a bedroom per kid type house.
Then pay that house off before you retire, or ‘trade down’ once the kids are gone and live a mortgage free retirement.
The last decade, people were trading in their houses faster than their leased BMWs. Buying a 2-bed condo, 2 years trading into a 3-bed house, 2 years trading into a 4 bed McMansion, and 2 years trading up to a ‘mini-estate’ out in the boondocks away from every major employment center.
Also, this “move-up” theory only works if wage inflation is prevalent. I’m thinking those times are behind us, at least for a long while.
CA Renter,
Well yes, absolutely. And it ‘did’ work for the better part of 200 years. A corresponding increase in home values along… with wage increases! It’s so crazy it just might work! But absent that, we can always substitute crazy financing?
At a certain point it became irrational to assume that available cash could cover debt service. Thus, it had to collapse eventually. In the meantime, it was fueled by encouraging new entrants whether first time home buyers or repeat purchasers. People were betting on a stream of greater fools that would allow them to escape before they crashed and burned rather than fundamental economics. Thus, I am not sure what there is to argue about.
” People were betting on a stream of greater fools that would allow them to escape before they crashed and burned rather than fundamental economics. Thus, I am not sure what there is to argue about.”
Very well stated…
“It’s just a ponzi scheme that will implode once appreciation prevents new entrants from emerging that can actually afford the debt service.”
Hence the frantic (if somewhat stealthy) efforts by top US economic policy makers to try to reflate housing prices. Because collapsing Ponzi schemes are never very much fun, especially if you are in high office at the time of their collapse.
Good to see some local coverage.
Have others in the central coast noticed a gradual shift in opinion regarding future expectations for the local housing market? For years, the general message I have heard has consistently been “Now is a good time to buy” (with isolated exceptions). But quite recently (maybe the past month or so?), the majority opinion seems to me to be shifting to the idea that it is good to wait.
Impressions?
Here’s what I see out of the Tribune; when they have bad news for the REIC, they run it in as bland and understated a fashion as possible; no juicy quotes or babbling UHS/economists. The only nearby paper that still does this is the Ventura CO Star.
If you say something bad about RE in Wisconsin, they strip you of your cheap beer, moldy bratwurst and crusty old Brett Favre T-shirt. Then they march you to the stateline and feed you to the Chicago Bears…after they hurt you alot.
Hahahahah!
Tell us more!
Say, doesn’t Wisconsin make many tasty cheeses? Or is that Minnesota?
Lots of little Wisconsin and Minnesota towns used to have little local cheese, butter or sausage ‘factories” or co-ops. Lots have disappeared but they still have still some good ones.
They also have some local sausage and beer places as well as the big names. New Glaris Brewing Co. makes Spotted Cow, Fat Squirrel and other beers..Motto, “You know you are in Wisconsin when you see the Spotted Cow”
http://www.swisstown.com/
I still cruise open houses in the San Fran bay area (peninsula area) and I’ve noticed in the last few months Realtors are actually conceding that prices are down. A few even admit that they’ll likely go lower.
None of them believe that the fortress will see the same haircut as the rest of the bay. But instead of just laughing about it never happening, they look uncomfortable and actually listen to what you say if you explain why you think they’ll go down that far.
I was in Capitola on Saturday. I looked at 2 open houses, but then stopped because none of them were giving cupcakes. I noticed that all the people looking at houses were balking at the price, and the real estate agents were encouraging people to make lower offers if they thought that was appropriate. One old, rotting, 1900-square-foot house had been cut from $3.2 MM to $1.8 MM, but no one was impressed with the new price.
I won’t go to anymore until I start to see cupcakes.
Capitola is one of my favorite places to spend the day.
Hey Slo_Bear, I live in Santa Maria. I am not hearing that type of sentiment yet. I always tell myself that when I do, that will be the right time to by.
…right time to by[sic].
Buy? Bye bye!
But that doesn’t mean every home has lost that much value. In fact, a Mercury News analysis shows, home prices in some Santa Clara County neighborhoods least affected by the foreclosure crisis have fallen less than 20 percent
Hooray! My oozing, pulsing, malignant tumor is waaaay littler than your oozing, pulsing, malignant tumor!
So, that’s like, super good news, right? Right?…Right?
Bwahahahaha!
So, that’s like, super good news, right? Right?…Right?
Stop tumoring me.
Don’t tumor me sis
Hahahaahaah! Funniness!
Itz Nod a Tooma !
(best Arnold impersonation)
Okay, that was a good impression, so even more funniness.
from mr Bruce Norris on SDCIA
On April 1st {just perfect in my opinion}, all FHA, Fannie and Freddie loans need to include form 1004mc.
This form asks the appraiser to declare if the property is in a declining area…California qualifies.
Then, the appraiser is asked to come up with “median value” for listing and sales.
Median value…that spells serious trouble!
We have a free newsletter that blasts this new practice and we are being interviewed by Fox News tomorrow morning on the subject. I intend to represent the investors side of the bargain and let them know in no uncertain terms this policy is flirting with disaster.
If the appraiser is no longer allowed to come in at market value, the dominos that will fall because of that decision are serious.
Lenders may give lip service to letting the appraiser determine market value, but they are making sure the review appraisal comes in lower than what a willing buyer will pay for the property nearly every time.
I have every repaired property we own in the buy sell/business in escrow. Many of the properties had multiple offers. We are ready to go to the mattresses to fight this “median” appraisal nonsense. We’ll keep everyone updated on what happens this month.
A friend had a property listed and had 8 offers. The highest offer was $260,000; the lowest $250,000. 8 offers! Shouldn’t that determine market value? The appraisal came in at $200,000. With a great deal of effort, it was raised to $225,000. This is what’s coming to a neighborhood near you right now!
“A friend had a property listed and had 8 offers. The highest offer was $260,000; the lowest $250,000. 8 offers! Shouldn’t that determine market value? The appraisal came in at $200,000. With a great deal of effort, it was raised to $225,000. This is what’s coming to a neighborhood near you right now!”
Banks are sitting on supply and it’s working. Inventory is low in San Diego and people are bidding up available properties like it’s 2003. A North Park house in SD got over 80 flippin’ offers. It’s was listed at $175k and the realturds said they expected it to go for “in the mid 200’s” The mid 200’s, for an old 2 br SFR on a teeny, tiny lot in a not-so-great hood, ridiculous.
Wickedheart,
And now for your worst nightmare realized!
After everything we’ve been through, decimating the stock/credit markets, jobs gone that won’t be coming back, ruined credit, ruined lives and we STILL…. wind up with expensive housing!!!
Man I swear, if that turns out to be the case I may just pack it in. We’ve hung tough up until now but if that pattern continues, and it certainly ’sounds’ like it’s working to the bank’s advantage, we may take svc. jobs in LV or just go back to the P.I early! This would be the ultimate insult.
That about sums it up, DinOR!
We feel equally repulsed by all the housing/mortgage manipulations in the face of a seriously deteriorating job market.
Well, they listed it for way below market price, so of course it got bid up. The point is that it sold for less than it would have 2 years ago, and will sell again for even less in another 2 years.
Big V,
That may well be, it’s just that realtors can’t seem to let go of that “bidding war mentality” and that’s what upsets me. It’s still “homes as an investment”. Likely all investors anyway, how’s a young couple looking for a starter supposed to compete with that?
It’s what works for them, so who cares? This young couple of yours can wait a while because they are young. The seller will die first.
“so who cares?”
Fair enough question, and there -are- times where we probably all wonder why we even give a rip? But this isn’t about taking up 2 parking spaces. It’s about money, and lots of it. Likely borrowed money.
Haven’t we screwed these kids over enough? How many in SD alone will have ruined their credit/lives desperately trying not to get “priced out”?
A good friend in Menifee asked me if I could check on an apt. or a house for him ( disabled, no internet ) and I was shocked at how expensive rents still are! He sold his home in Feb ‘07 and promptly checked into a hospital and nearly checked out. He didn’t even know what -year- it was. I got him set up on SS disability but most rents “I” saw were between $1,000 and $1,200. Now if only rents had come down as much as home prices?
I had someone tell me he is evenly covering the expenses of his “investment property” with income from vacation rentals. According to him, this made it a “good investment.”
I didn’t ask, “what kind of “good investment” returns 0%??
Big V
You said “It’s what works for them, so who cares? This young couple of yours can wait a while because they are young. The seller will die first.”
I care. I was majorly bummed when my oldest decided to put down roots in Texas because San Diego was so overpriced. My first born is the most thrifty person I know. She can squeeze a dollar till George Washington hollers. She has considered coming home ( by home I mean San Diego) several times but it’s too damn expensive here. Rents are pretty much half your gross income.
thats what is happening in phoenix, the banks are listing the nice reo’s low and getting multiple bids, i bid on one a little over list but only after looking for a year and getting an idea of what i would pay in a certain area. anyhow, they listed for $78500, i went for $81000. They(freddie mac) came back and said give us the best offer, i went $82001! i figured i’d go a little more but not much and expected to not get the house. anyhow, inspection is on thursday and this is my second attempt as the first had too many issues at 77k. i get the 8k tax credit, some downside protection, and this is an all cash deal plus i like the house so i am jumping in! i will wait and watch and maybe buy a second…cash too if they come down more! no rush on the second and if prices rise i won’t buy a second one! i’ll be happy with one after renting for over 20 years and saving!
Congratulations, Jay!! Enjoy your new home. Please update us on how things work out.
Huh? Come again?
You mean that the bank wants to be sure that if in the future the value of the asset that they are loaning money against is lower and they have to take it back, losing money on the deal, then they want that in writing before hand, throwing a nasty wrench into the spring bounce?
What is wrong from a lenders perspective, or a buyers perspective about making sure that you are not buying into decaying home price climate? It seems to me, that if the appraiser is required to do due diligence and notice that the values of the properties are declining all around you, that the property that you are selling is also most likely going to decline in the immediate future, me as a seller, would want to know, and me as a seller will either come up with more cash to make up for the decline, or me as a seller, will just walk away, and live to fight another day.
Sorry, no sympathy here.
Oh, and I guess that you forgot the “”…
We are ready to go to the mattresses to fight this “median” appraisal nonsense.
I like your speech.
I bought a modest home in Ky. years ago under some HUD program. They came up with the “declining value” or “declining neighborhood” argument. Forget which. Anyhow, instead of having an impact on the appraised value, it prompted my bank to ask for an extra 10 percent down to do the loan. It did not lower the amount they were willing to lend; they wanted me to ante up more to assume more risk.
They all got it wrong anyway.
This was a historic district on the way up, back when the Lexington horse money was really flowing around town. When it wasn’t uncommon to see Wildcat basketball players at the Red Mile, wagering on the trots.
I digress.
Bruce is right on, as usual. He’s been predicting this crash for years and sold all of his property in 2005-6. I’m just waiting for the wave of foreclosures to move closer to the coast to buy (Los Angeles). I might have to wait until the payment option ARMs reset the next couple years. I’m surprised it’s taken this long, but it will get uglier in my opinion.
Bruce thinks we’ve got another 18-24 months of decline to go.
Cipriano, got their affordable house with only a one and a half hour commute each way. Wait til gasoline goes back up to $4 per gallon under No Drill Obama. hehehehehehe
3 hours a day when traffic permits. One stalled car on the freeway and its 4 hours or more. Insanity. I’d rather live in a shoebox than make the idiot McMansion-for-a-commute trade.
Oh yeah, we took a 7 and a half hour trip from SD to LA to see the Stones a couple of years ago.
“$4 per gallon under No Drill Obama.” You say both of those things as though they are bad. They are not.
Depends on your perspective, I imagine.
I’m inclined to agree with you, but let’s be honest - it’s your opinion - not a fact - that those things are not bad, based on your priorities and values.
And on that glowing review - Bruce will be at SDCIA again on May 12th. More info at www dot sdcia dot com.
And how many of those offers were people putting up their own cash?
Most “offers” are contingent on financing and financing is contingent on the appraisal. Therefore, if lenders and appraisers aren’t convinced the offers are bogus because most people are still buying property with money that isn’t theirs.
just be creative, in financing terms. the deal appraises at 225 but they offered 260, they get a first paper for 200K, you give them a second paper for 25K and they put 35K into the deal.
That gives them 15% equity, that gives the bank a solid first and
you give them a 5 year Note with a partial amortization schedule.
in 5 years they have to come up with cas to cover the balloon, or
refi.
“Then, the appraiser is asked to come up with “median value” for listing and sales.
Median value…that spells serious trouble!”
I don’t get it. DataQuick publishes median home sale prices for all of California on a monthly basis. Where is the trouble?
PB,
Lord willing the Home Valuation Act ( prohibiting MB’s from brow beating apraisers ) will put an end to this Tom Foolery? May 1st can’t come quick enough!
http://www.mortgagenewsdaily.com/forums/t/23709.aspx
Oh and are they having hissy fit over it! Only about a d-e-c-a-d-e late… but, whatever.
“A friend had a property listed and had 8 offers. The highest offer was $260,000; the lowest $250,000. 8 offers! Shouldn’t that determine market value? The appraisal came in at $200,000. With a great deal of effort, it was raised to $225,000. This is what’s coming to a neighborhood near you right now!”
I fail to see the problem here. If you have 8 good offers then sell it to the one that can come up with the $50K to $60K to complete the offer and quit your belly aching! Now that you got it raised only 25K to 35K.
“We are ready to go to the mattresses to fight this “median” appraisal nonsense. We’ll keep everyone updated on what happens this month.”
“Go to the mattresses?”
I don’t think you meant to be funny, you seem serious about the topic you are talking about. But “fight” is not one of the two most popular things people do on mattresses.
The Godfather. Rent it.
“Lenders appear to be inserting language into short sale contracts that allow them to sue for any ‘deficiency,’ or the amount lost by a bank by selling a home for less than the mortgage —- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars for some North County homeowners. What’s more, the nation’s premier credit scoring firm says that short sales and foreclosures are equally damaging to credit scores. Yet short sales have surged in popularity, as homeowners struggling with falling values and rising unemployment seek a way out.”
Word gets out, walkaways explode. People working to sell their house are doing the bank a favor.
But I assume what is unspoken here is that these are HELOCK and Refi people, as CA is non-recourse on first mortgages. They wouldn’t sneak a right to sue for deficiency into a deal in which they have no right to deficiency if they foreclose, would they?
It’s an interesting bit of reporting from the NCTs. I would imagine that if there is some contracting involved in a short-sale, anything could be included. And why not? Lenders have an obligation to collect as much as possible.
Several people have mentioned that principal reductions are likely the only “modification” plan which has a chance to succeed long-term. However, if principal reductions were being performed by lenders, how would they have any chance at all to go after that money in the future? They wouldn’t. I would have to guess that this is why they offer new teaser rates on modfication loans with verbage to allow them to pursue deficiencies in the future upon a re-default. It seems as though they may not be offering the 2% fixed rate refi’s as a way to make money via principal and interest, but rather as a way to get people to open themselves up to future litigation. Just another reason to walk…
I was reading this, and can’t help but think this would greatly change the question if an underwater fb was deciding between a short sale and a forclosure, especially in the abscence of any sort of recourse loans.
If I were in this situation - it would take about .05 seconds to make the decision to send in the jingle mail.
There is no incentive at all to do a short sale in this situation.
Double thumbs up on the comment, WT Economist.
Methinks that “doing the bank a favor” will go out of fashion right-quick. As in, when the word gets out.
And I think that the word-horse has escaped from the word-barn.
“Lenders appear to be inserting language into short sale contracts that allow them to sue for any ‘deficiency,’ or the amount lost by a bank by selling a home for less than the mortgage —- opening the door to collection agencies and court judgments that can run into the hundreds of thousands of dollars…”
I wonder for how long? Three years? If smart the banks will wait to start these lawsuits so the word doesn’t get out about them. Can you imagine having finally gotten your life rebuilt, sitting down to coffee 2.9 years after losing your home in a short sale and getting a knock at the door to find a process server letting you know you are being sued for $180,000?
It’s a lot more work to do with a short sale over walking away on a foreclosure. Granted there are not a lot of victims in this whole mess (MSM articles aside) but the ones that at least try to do the better thing are the ones most likely to be screwed? Yeah, this mess just gets better and better.
I love it! Just when they get back on their feet, they get served for what they originally promised to pay! Never forget that they called us Jealous Bitter Renters, or JBS! Never forget!
Oh, the FB had an acronym for us? How quaint; they’re such posers.
You forgot already. It was Jelious and Biter Renters.
And I have noted in the ‘Flippers in Trouble’ sites that the next round of foreclosures have started.
You know, of those who bought those cheap homes to rent for a while before the prices ‘come back’…
Yeah, that house that you thought was ‘cheap’ at $150K was really worth only $110.
I’m seeing a plethora of those houses on the Tucson market.
Matter of fact, that seems to be most of what’s for sale near the University of Arizona. I’m guessing that the plan to get rich on renting to students didn’t work out.
Are these recent sales?
Because what I see are sales that are less than a year old, with much ‘cheaper’ prices than the high, and they have still managed to foreclose.
In some cases, they are houses that were on the market last year. I’m also seeing a lot of listings of what appear to be rentals. And I surmise that the owners are tired of the landlording game.
FDIC’s Bair Seeks to Expand Authority, Ending ‘Too Big to Fail’
The FDIC should be able to take over and shut bank-holding companies, insurers and other large institutions instead of just failed commercial banks, Bair said today in a speech at the Economic Club of New York. That would shield taxpayers from absorbing losses when government protects companies deemed “too big to fail,” a concept that should be “tossed into the dustbin,” she said.
DON’T go down to the basement lady, don’t open the door, listen to that Jaws Music….
http://www.bloomberg.com/apps/news?pid=20601208&sid=adTSfGIayj3k
‘pocket of nastiness’
Well, spin it how you want John but when you say “In comparison to 2005″ I’m sure that doesn’t count all those that jumped ship to re-fi in 2006? Or 2007… for that matter.
How were underwriting “standards” any more stringent in ‘05 or ‘04? Not seeing it. Probably only that they are less or yet to go underwater that paper from those years is performing any better.
good point, guidelines weren’t any tighter in 05 or 04. The differece is that the scumbags were able to refi again in 06, but in most cases, that was their last taste of the cooool.
“One gauge of the slumping economy is the growing number of courtesy calls self-storage site managers make to remind tenants to pay the rent. Leading the list are construction workers, sales representatives, restaurant owners and other self-employed workers struggling to keep their businesses alive. ‘They’re not ignoring their bills. They’re responsible. The bottom just fell out. It’s a sign of the times,’ said Brian Lane, site manager for Stor-N-Loc in Santa Rosa.”
I remember people in the 80’s recessions were living in storage rooms. Wonder if that is happening right now. A 10×10 storage room can go for 120 to 180.00.
I forgot to add 120 to 180.00 a month for a storage room.
The self-storage business is based on a single psychological principle: the average storage renter thinks they’ll only be using it for three months, but generally ends up using it for two years. Think about that. What’s the likelihood that the crap you don’t need on a daily basis is worth 3-4 grand?
I’ve been looking around at my stuff and wondering how much it would be if I sold it all off. And the answer seems to be settling in at around 3 or 4 grand.
The Backstory: Slim’s been trapped at the Ranch while working on a death march project for a client on deadline. And, man, am I sick of it. It’s giving me a major case of the “sell it all off and hit the road again” wanderlust.
I once rented a storage unit when I moved in with a girlfriend for a short while.
Three years later, when I finally realized that I really, really didn’t like her (and she liked me even less); I realized I had paid $1800 to store stuff that cost me about $1800 new. I should have just left it all by the side of the road.
I learned my lesson on that. I’m amazed how much stuff I have, despite being a chronic “purger” of stuff.
Husband’s company rented space for 8 years after shutting down an office. When they finally cleared if out, there was nothing of value in it.
My self storage place has been boosting rent twice per year. At first the rents were pretty stable. I wonder if they’re trying to recoup the non payers via higher bills on the rest of us.
We rented ours to make our house show better while selling it, now we’re still renting that same little house, so we’ll keep the storage unit until we find a house we like.
The problem with stuff is that it’s hard to sell and hard to buy.
A while back I literally gave away a Lincoln welder and a Cummins Drill press. Try to find stuff like that used and in decent condition or priced according to condition.
Likewise my kayaks (14 years old) are worth squat on the open market because they’re old and out of production(put one on Craig’s list for $95), but to replace them would cost at least $300 each and the newer models are no more useful to me than my old ones.
I’d rather store my stuff.
—Blurb about some renters moving way inland to buy super cheap property— “They face a long commute to their jobs, up to an hour-and-a-half each way, depending on traffic. Davis said although the couple was financially qualified to buy a $250,000 house, they decided to pay less to avoid financial stress and have time to relax and play with their children.”
So they both commute 2-3 hours a day to ‘have more time for the kids’?
Sure, the article says they went from paying 2200 a month in rent to 900 a month for a mortgage, but SERIOUSLY, they’re going to commute 3 hours a day? Both parents?
I’ve always thought that this kind of ’super commuting’ puts a lot of stress on family relationships. Now that I have a 7 mo. old daughter (my first) I can’t imagine spending 3 hours a day commuting, let alone both parents doing it!
Yeah, I caught that as well. People’s rationalizations are so silly sometimes. They’ll love their new commute even more when gas hits $4-$5 a gallon again.
And here is one reason I’d never move to CA.
I have a 4 mile commute. I bike 2 - 5 days per week year round.
I see my kids before school and I eat dinner with them.
The CA lifestyle is wacked.
I work less than 3 miles from where I live. My wife’s job is about 5 miles from our house. Of course, we’re renting….
My wife and I live right in the middle of the San Fran peninsula. I’m less than 3 miles from my job, she’s about 5 from hers. It’s not hard to have a reasonable commute in the bay area. Admittidly, we’re spending just over 15% of our gross income on housing expenses, but we’re doing fine commute-time wise.
Agree sfbubblebuyer. I only liveed 15 minutes from my last job.
One of my previous jobs I was commuting to Livermore from Millbrae. 50 miles each way, 1 hour each way. 500 miles a week, 26,000 miles a year. I lasted a year. There are only so many different roads to drive on your way to Livermore.
I don’t know how other people have been able to commute long distances.
My hat’s off to you! I commuted about 34 miles one way for about a decade or so? Thankfully for us, my wife’s company moved -closer- ( not farther ) as was the case for most Portlanders.
Even though I walk to work now, I don’t judge those that elect to have longer drives. In many cases, it’s not by choice. You change branches or get a local transfer or dozens of other possibilities. Everybody ragged on Mrs. D for years but when the company moved 12 miles closer for her, and further for most everybody else, they want “compassion” and empathy and all that other stuff.
Like, you’re kidding, right?
We live four miles from my work and one mile from my husband’s work in California.
“Sure, the article says they went from paying 2200 a month in rent to 900 a month for a mortgage, but SERIOUSLY, they’re going to commute 3 hours a day? Both parents?”
To me it only works in their favor if they quickly find new employment around and near their new house. But they said they want to move back to OC, then they should have looked for a new cheaper rental closer to work and saved.
Congratulations on your daughter, SFBB!
Thanks! I’m already laying in supplies of shotguns and shovels!
long term long distance commuting can be dangerous too, lost a coworker w/ a 3 hr round trip last year, he was killed in a head on collision when another driver crossed the line….46 YO, was wearing a seat belt and the air bag inflated OK.
‘This whole process, at least for a while there, just broke down,’ Karevoll said. ‘There was nobody out there minding the store.’
Can’t say I recall anyone from DataQuick pointing out these problems back when there was no one minding the store, i.e., when it could have mattered.
PB,
Dog gone right. I resent their seizing on this “temporary insanity” plea altogether. Next year it will be 2005 that becomes the ‘pocket of nastiness’ and so on down the line.
Does he mean to imply that other than loans pencil whipped in “mid to late ‘06″ that those are the only ones we have to worry about? Oh God, if -only- that were the case!
“‘The numbers (of foreclosures) are still really small in the higher-cost coastal areas,’ including Santa Clara County, he said, compared with inland counties, ‘but it’s got to be watched, because at some point it could be a much more significant part of the inventory.’”
Liar.
Here is the bottom end of a foreclosure listing off the ForeclosureTown dot com web site for homes within 10 miles of the 95122 zip code, in the heart of Santa Clara County:
Go to Results Page: First Prev 164 165 166 167 168 169 170 171 (Displaying 3401 - 3413 of 3413 Results)
Address
Property Type
Beds Baths Price
TRADE ZONE CIR
SAN JOSE , CA
95131
Bankruptcy
TRADE ZONE CIR
SAN JOSE , CA
95131
Bankruptcy
FLICKINGER AVE
SAN JOSE , CA
95131
Bankruptcy
LEDERER CIR
SAN JOSE , CA
95131
Bankruptcy
OAKLAND RD SPC 526
SAN JOSE , CA
95131
Bankruptcy
OAKLAND RD SPC 526
SAN JOSE , CA
95131
Bankruptcy
OAKLAND RD SPC 526
SAN JOSE , CA
95131
Bankruptcy
OAKLAND RD SPC 526
SAN JOSE , CA
95131
Bankruptcy
LEDERER CIR
SAN JOSE , CA
95131
Bankruptcy
LEDERER CIR
SAN JOSE , CA
95131
Bankruptcy
ROYAL CREST DR
SAN JOSE , CA
95131
Bankruptcy
FOUR OAKS RD
SAN JOSE , CA
95131
Bankruptcy
OROLETTE PL
SAN JOSE , CA
95131
Bankruptcy
I like the following phrase; liar, liar, pants on fire
PGBS:
You have obviously never been to Santa Clara County, where the roses smell sweeter and the air is super-charged with extra oxygen. Don’t you know that that Santa Claranians are just more better than you all out in Rancho B?
-V
From the looks of that ForeclosureTown report I partially posted, Santa Claranians are a lot more bankrupt than Rancho Bernardians.
Santa Clara Co. will be in a world of hurt when the Alt-A debacle hits. Yes, the majority of foreclosures are on the east side of San Jose, but I suspect that’s going to change fairly soon.
The peninsula will also be crying bitter tears as Alt-A ramps up.
No bitter tears from me
I wonder what is going to happen when San Francisco goes bankrupt? The wages for city employes are off the charts high. They are probably staring at a huge amount of debt and burning through cash.
I would guess there is out migration due to high costs by businesses as well.
The crash should be epic there. Probably have an earthquke to finish things off. Alt A bay will get pretty ugly too.
I really hate to be contrary, but IMHO, many of those people are now refinancing into cheaper fixed rate mortgages, so I think, and have thought for quite some time, that the impact will be way diminished. What do you think?
Most of them won’t be able to refinance into something they can afford.
Hi drumminj – this is a reply to your reply yesterday as I was even later to the game.
I totally agree with “most people who think they’re soaking the rich with taxes are simply soaking hard workers, small business owners, etc.” People simply don’t understand that every tax on the rich has filtered down the pipeline in time to the unrich (me as you so well put it.
) AMT is the perfect example. I think there is something besides “progressive” and “regressive” but darned if I know what it is.
How about we simplify? Taxes we agree with are “progressive” and taxes we disagree with are “regressive?”
Thanks for the response, San Diego RE Bear. t’s good we agree on something!
I can’t say I’m with you on using “progressive” for a tax structure we like, though, as I can’t say I’m a fan of progressive taxation. I understand the “fairness” argument on taxing income for basics of living, but I just can’t reconcile it. So how about we simply agree that we’re all taxed way too much for what we get, and that gov’t spending and taxes should be lower?
Spent yesterday in Carmel for breakfast and the Big Sur run. Talked to some local business owners: Jewelers said everything was doing great, even though I knew better. Some other owners (coffee shop) told me that some 40 businesses had gone belly-up! Pacific Grove is also losing businesses, and housing wishing prices are floating out in space.
Pacific Grove deserves a premium.
So it has finally come to pass that my wife is graduating from college, which was my original timelline to start looking a house. I’ve been a silent HBBer since waaay back, and have been following th housing bubble on Silicon Investor since 2003. So I’ve done my part by building a big downpayment and having absolutely no debt. I live in the West Side of LA, and I would be looking around Culver City, Venice, Santa Monica, Rancho Park, etc.
I’m looking for a SFR. Does anyone have experience in this market? Can you recommend a saavy real estate broker to work with? I’m not afraid of REO, and we are in no hurry to buy. I’d like to get in around 500k so I can get a conforming mortgage with about a 20% dp. Also, that is about 3x my salary, so its a conservative nut to pay back.
Here’s my advice…
(1) Wait another year. (You’ll be able to buy a better house in a better neighborhood for the same money.)
(2) Use this time to research schools and neighborhoods.
(3) Go to lots of open houses to define exactly what you want and make a list. Decide what’s negotiable on the list and what’s not negotiable.
(4) Use themls dot com to track asking prices.
(5) Use the dataquick link in the real estate section of latimes dot com to track actual selling prices.
(6) If you do the above, you won’t need a real estate agent to make an offer. If you make the low ball offer through the selling agent, the selling agent will be really motivated to convince the sellers to take it as the real estate agent gets both sides of the deal (entire commission). If you need help, hire a real estate attorney to review the contract.
(7) Perhaps pick up a book or two for first time buyers to familiarize yourself with real estate jargon so you’ll understand what they’re talking about.
Consider doing the above to be an investment in getting a better deal, thus you’re getting paid for the time spent. You don’t want to put yourself in the position of being led around by the nose by a real estate agent. A truly hellish vile thought.
Great advice. I did all and #6 was especially helpful in getting $ rebated back to me in escrow, getting concessions and repairs, and getting (what I think was) the lowest price. I do not believe another person ever got to see the property.
Didn’t exactly do #7 - actually took courses through the local community college and held a license for 12 years, mainly for the knowledge. Only sold one friend a home. Gave him half of my commission. Didn’t like slumming -
Gave up the obsession, profession, regression, whatever. I have morals.
Don’t pounce too quickly unless you have the stones and have had no previous episodes of post-purchase dissonance.
Good Luck!
Try unconventional search tools (i.e., don’t solely rely on Used Home Sellers or MLS listings). For instance, my wife pointed me in the direction of this web site last night, which lets one do a search of foreclosure homes within ten miles of whatever zip code you enter:
ForeclosureTown dot com
Even if you are not considering purchasing a foreclosure home, it is worth knowing what used home inventory is out there in the area where you are looking.
Get on line and familiarize yourself with asking prices. Then find out the sales prices and price per square foot. It’s very easy to do. Then lowball like crazy!
OK. So you are sitting on 100K and your salary is 150K+. Assuming you are for real, which I doubt, you should realize its still cheaper to rent in the high end areas.
Take a look at rentals on craigslist and then take a look at prices. Unless things are in the 10x~12x years rent, its probably not a good time to buy.
Venice and Santa Monica are still very very over priced, have high crime and LA unified schools. So, put the money into investments.
If your wife makes any money, you will probably get hit with the AMT so the mortgage deduction might not get you much.
Culver is nothing special either.
Doubt anyone will read this, but thanks eveyone for the replies. I’m for real, and I was hoping to get some good advice from the many smart people that post on here. I’d love it if I heard from mrincomestream, but I think he has moved on. Thanks again.
if you’re still there, anachronist, don’t be surprised if you make a dozen lowball offers before one is accepted. The odds are in your favor that eventually someone will have to accept your offer. And wait until later this year- more competition in the spring. And don’t fall in love with a freakin’ house!
Thanks. I think it was good advice to get out there and start looking, even if there is no intent to buy. A cursory view shows that most of what is on the market is still at wishing price level here in the Westside. I agree that we will see lower prices, but I am not trying to catch the bottom. At some point you just have to take your life off hold. My wife and I have been waiting and saving for 6 years now. But we still have some patience left in us.
Now that the California real estate market has sunk below sea level, I wonder what the next California bubble will be?
Prospectors hope new Calif. gold rush will pan out
By Tracie Cone | The Associated Press
April 27, 2009
COLOMA, Calif. - There’s still gold in California’s Sierra Nevada foothills, and a new rush is under way to find it.
Not since the Great Depression have so many hard-luck people been lured by prospecting, hoping to find their fortune tumbling down a mountain stream. The recession and high gold prices are helping to fuel the latest gold craze, especially among workers who have lost jobs.
“I guess there’s always hope. At home, I don’t have any right now,” said Steve Biorck, a concrete finisher who headed west because construction work dried up in Tennessee. Now he spends days standing knee-deep in an icy creek coaxing gold flakes from a swirling pan of gravel.
Miners who locate an unclaimed area can pay a $170 fee to the federal government for access to the public land. Most claims are along the 120 miles of steep granite outcrops and rushing riverbeds that are part of California’s Mother Lode, a narrow band of gold-rich terrain.
Paging Aladinsane!!!
My brother years ago owned a house in Angels Camp. What he found out is if he dug and found any gold on his property it didn’t belong to him. Companies had bought the mineral rights.
Same thing here
And it’s mostly clay below ground.
Dunno who owns subsurface rights her
Here
quiz
tst