SL's Water Cooler - March 2007 (part 2)
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Some weekend reading:
- NY Times: Crisis Looms in Mortgages
- LA Times: Loan turmoil closes doors for buyers
- Countrywide ends no down-payment lending
Some say the cooling housing market's impact on the high-rise projects has been overstated. Lenders leery of financing projects in smaller cities like Sacramento -- not lack of demand for luxury downtown living -- have delayed the start of construction on Denver-based BCN Development's Aura tower, according to BCN President Craig Nassi.
- Sierra Sun: Experts: Home ownership options still exist:
“Today there are more options than there have ever been in the real estate market,” said Kathy Harry, broker and branch manager at Prudential California Realty Truckee. "It’s a good time to buy because there are a lot of programs, loan products and properties out there. It’s as good as it’s ever been."
New financing options such as 40-year and second mortgages and credit reports that don’t verify income are helping local people buy their first homes. "You have to be creative sometimes, and in this market you have to be more creative," Harry said.
In Sacramento, the paper and local tv news, together with the national-level media, have been beating the living stew out of the Market for the past 2-and-a-half years. Every week, a new headline in the paper, "Housing Bust Looms," "When the Bubble Bursts," "Housing Bubble Getting Bigger"... The headlines are inflammatory and prejudicial....
- Realty Times: A Big Thumbs Up:
What's in store for the real estate market in 2007? Will this year be a good time to buy? As Northern California's most comprehensive real estate organization, JC & Associates with RE/MAX Gold keeps its fingers on the market's pulse-and its latest assessment gives the 2007 market a big thumbs up. JC & Associates, in fact, sees current conditions as "virtually ideal" for buying now.
26 comments:
You'all have a good time this weekend as I'm "off the grid".
Don't take too many downers.
I'm with an A paper, alt-a bank: There is almost no business left in Sacramento for our kind of wholesale mortgage company, with sub-prime going south who will do loans for this market? We won't. LTV's are just too high for our comfort.
I read the articles and I'm frankly amazed at the chutzpah of the RE ones. OMG, the horrible anti-RE press is "spinning" the current market conditions! Now is the time to buy!
So, ok, I did a bare minimum research: I browsed the Bee's MLS ads for ED county-EDH. I tried to find homes that were honestly comparable to the one I'm currently renting (3bed, 2.5 bath, 2 car, corner lot/mature landscaping, probably a "light fixer" as it needs new carpet, cabinets and tile work. It's not falling apart, just dated and worn. Basically a solid house, with a drop-dead gorgeous yard.)
My rent is $1500, and again (to be honest) I think I'm paying more than I could be. I saw a house that had this one beat by a mile for $300 less on rent a couple weeks ago.
However, even lowering the interest rate to 6.125% on the lowest comparable home priced (hardship! must sell! priced way below comps! a steal!) at $399,999, the payment still comes to over 1k more for a house that needs more work and has an ugly yard. (I actually went and looked at this house, since it's so close.) I figure I could end up saving a few hundred on the federal tax break, but I've no idea what the property taxes are -- so it might be a total wash there for all I know.
So, my very casual assessment leads me to believe that I am still far better off renting. When the plumbing causes problems here, the roof leaks, or the fence falls down, the owners have to fix it. And I'm still paying at least $500 to $1000 per month less than I would be to own.
oh, btw
Just to make it clear: I'm serious about wanting to own, when the price is right. I hate moving, and I don't want to do it ever again. I've been browsing the Bee's MLS nearly every weekend (it's actually a Sunday habit with me now) for 2 years, including the year that it took me to decide to sell/sell my condo. My FICO is 780, and other than my car payment I'm debt-free, with a very stable career making between 90k and 100k per year.
I think I'm pretty much what the market has left for buyers, it hasn't convinced me to buy at these prices, and good luck with those "creative financing options"!
36 liar subprime mortgage companies have bit the dust since mid December according to the mortgage imploder.
Anybody who buys now is a fool, look at all the liar loan companies going belly up, if they can't make loans then it only means the housing market is going to fall hard. Were talking major housing doom.
Were on tack for a 50% decline by 2009.
Housing doom 2007.
Comment by mrktMaven FL
2007-03-10 13:29:58
Here is a taste of what we were predicting roughly 6 months ago (sept/oct) and I think already some are bringing their mommies into the fray:
The day of apocalyptic reckoning is upon us. The perma bulls and Sheeple are quietly being laid to rest. Prime rib and racks of lamb for the doom-sayers. I hope you’ve got strong stomachs to digest the upcoming plague of market misery.
YOY prices were down for existing and new homes this past week and now this bombshell from the fed [Tigther lending announcement]. It may not save the Sheeple from yesteryear but it will steepen the fall of future housing demand. As a result, grown men will cower and cry, wring their hands, and plea for their mommies.
God help us all. The pain will be unbearable.
Comment by mrktMaven FL
Please post more enlightened commentary from internet crackpots.
Thank God for Free Speech in the USA...
sometimes it illuminates the absolutely stupidest people and allows these same genius' to expound on their idiocy!
"JC & Associates, in fact, sees current conditions as "virtually ideal" for buying now"
and there are some serious whackjobs roaming around the Sacramento Area
Ah yes, press hard enough and a perma bull will appear.
"JC & Associates, in fact, sees current conditions as "virtually ideal" for buying now"
JC & Associates is a real estate company am I right? What else would they say its not a good time to buy.
CEO D.R. Horton a huge homebuilder in the USA said the market will suck for the next twelve months.
Who to believe, blantant truth from D.R. Horton or some real estate company that will probably go bankrupt.
No this is not a good time to buy.
The sad part Chuck is that you think their is an army of buyers just waiting, but in fact there are very few buyers. Think about how the market falsely appreciated due to the easy credit of subprime. Now that easy credit is gone the buyers numbers will be halfed at least.
You Chuck are a wishful thinker, keep drinking the Kool Aid.
PS,
I think Chuck was saying that the RE complex here are the whack jobs >; )
If that is the case, then I apolgize. Lander I will try to tone it down and leave my rants for other blogs.
On SFGate:
Rent or buy -- timing is everything / Arthur M. Louis / Sunday, March 11, 2007
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/03/11/BUG08OI8UT1.DTL
. . . . I must agree that there can be situations in which renting makes more sense. The crowning example is when house prices get bid up way too high, and are about to fall or are already falling.
Even modest price declines can do enormous damage to your finances, because home purchases normally are leveraged. If you buy a house for $800,000, with a $160,000 down payment, and the value of the house slips 6 percent to $750,000, your equity in the house will decline from $160,000 to $110,000, or more than 30 percent!
If you have to sell the house when it commands a price of only $750,000, your initial equity of $160,000 will dwindle further, to around $60,000, after broker commissions and other expenses. No doubt that would make you wish that you had rented instead. It appears that we may be in that perilous kind of housing market right now, which is why I have been warning prospective home buyers lately to consider protecting themselves by making lowball offers.
Driving back from the airport yesterday afternoon, I had my radio on 1530(AM) and there was a "short sale expert" on the show who frankly didn't know what he was talking about (I speak from the perspective of a transactional insider who worked for a lender the last market downturn and was a decision maker for them relative to short sales). This joker was about 50% of the time incorrect. He obviously doesn't understand the effects of CCP Section 580b (anti-deficiency) or the fact that lenders today are going to 1099 you for forgiveness of debt.
All he talked about is the importance of avoiding foreclosure. Hey it your home is underwater and we are talking about purchase money encumbrances, foreclosure is probably the answer to avoiding receiving unwanted income in the form of debt forgiveness.
I guess what I'm saying is don't believe these so-called realtor experts. Seek competent legal advice on all but the most routine real estate issues.
From the Bee
A 27-year-old man was killed and another injured Friday night when someone walked up to their car in the parking lot of a south Sacramento strip mall and opened fire, Sacramento police said.
Lets face it crime in Sacramento is getting bad.
Anybody want to buy real estate in South Sac or Oak Park?
The people I really feel sorry for are the ones who over-extended in order to buy a crap house in a crap area like Oak Park, thinking it was their last chance to own. Let's face it, when those people lose their homes -- and many of them will -- it is only going to make the area that much worse. And who else in their right mind would ever think of buying there? The lenders are going to be holding a lot of vacant houses that they will only be able to unload for less than half of what is owed. In the meantime, there are vacant houses in an area of town in which vandalism and drugs are already rampant. No more zero down loans, and no more poor credit risks, so they will have to sell them to the old-fashioned "real estate investors" aka slumlords.
When the present owners lose those homes, that's it for any kind of revitalization of Oak Park. A damn shame.
cmyst,
You make a good point, a lot of money went into Oak Park for revitilization, however a lot of that money was from government sponsored projects. So your tax dollars were used to develop homes in area that showed false appreciation and false hopes that subprime lenders gave that real estate will always go up. With hopes dashed many of these home owners who are stretched beyond their means will walk away from the mortgage and the house will join the the thousands of empty homes for sell or rent for years to come.
These area home prices should be half of what they are. Just think how much easier it would have been for a low income family to afford a home and pay so much less for debt service and property taxes. The false appreciation subprime caused will cause so many problems for years to come. That home could have been a safe haven, but now it will be an empty foreclosure blight.
Everything in moderation, especially in these areas that are so vunerable to abnormal price swings. A serious downward fall in home prices will cause a social nightmare that all of us will have to live with. Now those price declines are here and the social consequences will be so costly.
How does such dramatic home appreciation help anybody other than realtors and mortgage brokers higher commission and increase property taxes, how does that benefit low income or middle income families for that matter?
They say subprime is working mans loan. Why does the working man have to borrow at 100% with an ARM, when in the past he/she could have used a traditional loan product to buy a house that was only 3 x median income versus having to commit financial suicide to buy a home that is now 8X median income due to the false lies of REIC.
cmyst-
i'm in a similar boat as you are. just keep pluggin away and don't believe the so called RE experts. every month you stay on the sidelines the farther prices fall the the better chance you have of getting the home you really want at your price, not theirs.
Have you heard of the North
American Union that Lou Dobbs
speaks of on CNN..you can watch
it on "you tube" punch in
north american union lou dobbs
cnn and it will come up several
with several videos of Dobbs
talking about it.
Lou Dobbs says
Bush is planning on erasing
borders to Mexico and Canada
and we'll be called the North
American Union. Wonder how
that will affect housing prices.
My guess is they will tank. Bush
apparently is doing this by going
around normal legal channels.
Gawd you guys are depressing when left alone.
Go find a tanning booth.
Anyone see 60 Minutes tonight? Several hundred thousand Iraqis may be heading to the US as the war winds down. These are people (and their families) who helped the military depose Saddam and root out all those WMDs that were a threat to world peace. The same thing happens after every foreign war. I imagine CA will get our fair share of these immigrants - should help boost demand for housing in the central valley.
Sure, just like the Hmong have.
At least there'll be plenty of people to rent from the landlords in Oak Park.
How does such dramatic home appreciation help anybody other than realtors and mortgage brokers higher commission and increase property taxes, how does that benefit low income or middle income families for that matter?
I know, PS.
The funny thing about people who push for less control of the marketplace and "free trade" and all that is that they scream louder than anyone when things work out pretty much as any logical person would guess. Our incomes are not unlimited so home price increases are not a given thing, and if we don't have jobs in this country it really doesn't matter how much cheaper we can buy Chinese goods.
There's a great book called "American Theocracy" that (despite the title) goes into great detail on the "rentier class", which is the class of people who don't actually do anything other than make money off of money. According to the author, growth of this class is a sure sign of the imminent collapse of an economy.
The upshot of Iraqis moving to Oak Park is that perhaps they'll be able to put the "residents" in their place. I'm all for gentrifying that area if they can pull it off.
I love surfing the HGTV selling and buying blog. It cracks me up every day.
Here is someone's answer to the subprime meltdown as it affects the home market:
"quote:
What's going to happen if rates move a tad higher?"
"This is actually a good thing for the housing market as it is pushing people out of stocks and into bonds and by doing so they will continue to lower interest rates."
"All this is is a tiny blip from people panicking over ANYTHING. The Subprime market is a tiny little part of the economy and is basically meaningless in the big picture."
"Overseas jitters and any reason to pull money is the reason. It's the lemming mentality. The reason interest rates all across the board are NOT going up is because of housing, the economy is doing very well as a whole. This is nothing to be concerned about."
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