Wednesday, September 10, 2008

'If you make $2,500 a month, you certainly should be out there looking to buy a home'

From the San Diego Union-Tribune:

Consumer belt-tightening has led some diners to curtail their visits to fancier eateries, providing a new stream of clients for Rubio's, [president Dan] Pittard said.
...
In addition, Rubio's has been finding its own islands in the storm, opening stores in metropolitan areas that have been hit hard by the mortgage crisis, such as Sacramento.

But one of Rubio's best-performing new restaurants is in Rancho Cordova, a well-to-do Sacramento suburb that has so far avoided being dragged down by the wave of foreclosures and unemployment.

“Even in metropolitan areas that have been adversely affected by the subprime crisis, some trade areas are just fine,” Pittard said. In other words, there are some islands out there. All you have to do is look for them.
From the Sacramento Bee:
As the economic downturn deepens in Sacramento, three more area employers have instituted layoffs in recent weeks. The cutbacks are all in Rancho Cordova – at Aerojet, Wachovia Bank and failed mortgage lender IndyMac Bank – and affect 247 workers in total, putting further pressure on the metro area's economy.
From InsideBayArea.com:
San Joaquin County set a record with 18,158 defaulted tax bills, reaching an 8.5 percent delinquency rate.
From the Modesto Bee:
"Qualifying for loans has never been tougher," said Paul Carroll, owner of Carrollton Mortgage Co. in Modesto. "We have to prove everything now." Lenders no longer approve "no documentation" loans, which were common a few years ago. Now borrowers must demonstrate they can afford loan payments, verify their income and have decent credit scores.

For those who qualify, Carroll said home prices are cheap and mortgage rates are low: "If you make $2,500 a month, you certainly should be out there looking to buy a home."

Many investors are doing just that, and their loan rates also have dropped about half a percent since last week. "I'm setting up investor pools to buy a lot of houses, and I mean a lot of houses," said Mike Zagaris, president of PMZ Real Estate in Modesto.

23 comments:

Patient Renter said...

Qualifying for loans has never been tougher...We have to prove everything now...Now borrowers must demonstrate they can afford loan payments

Man, that's rough.

Husmanen said...

Lets see here. PITI (30 yr, 20% down, 6%) for a home price of $200k is about $1500 per month.

After adjustment for tax deductions, say 20%, that makes the monthly cost about $1200 per month.

A $200k house would take about 50% of your monthly gross income. Might need to start looking a lot lower, and pressuring the market.

What was the median in Sacto again?

Max said...

Rancho Cordova, a well-to-do Sacramento suburb

Wow, guess they've never been to Rancho, eh?

RV6Flyer said...

$30,000 a year is essentially minimum wage in this economy. That kind of rhetoric and mentality is what got us into this mess to begin with.

smf said...

That house payment assumes you have no other debt or commitments. Doesn't leave you much financial wiggle room either.

Buying Time said...

"Man, that's rough."

Took the words right out of my mouth PR. It seems the irony is lost on those in the industry.

Jacob said...

Now borrowers must demonstrate they can afford loan payments, verify their income and have decent credit scores.


What is the world coming to... You mean I have to buy a loan back? And the bank wants me to prove that I can before they loan me all this money? WTF!!!

If you make $2500 you should be out buying? Well let's see. I'll assume that is after tax income. So you can afford about $800 a month for a mortgage. So at 6% you can get $150k loan max. So what home are you actually going to buy?

Jacob said...

What was the median in Sacto again?

Sac is $46k
Sac County is $54k
US average is $51k

But the houses here are double the average even though the income doesn't support it.

Jacob said...
This comment has been removed by the author.
Jacob said...

Source: http://www.muninetguide.com/states/california/municipality/Sacramento.php

Diggin Deeper said...

"So what home are you actually going to buy?"

A trailer! Ooops...manufactured home!!!

Jacob said...

lol, back in 04 when I would dare look online for a home in the 200k-300k range there were usually none, but once in a while I would see a mobile home, or manufactured home or whatever you want to call it.

I'll stick with my apartment for now.

Wait for the wheels of the economy to fall off after the elections. Still have the Alt-A mess to deal with.

Calculated Risk has some info on a Lehman conference call, Alt-A delequencies are at 18%.

We're just getting started.

Buying Time said...

"I'm setting up investor pools to buy a lot of houses, and I mean a lot of houses," said Mike Zagaris, president of PMZ Real Estate in Modesto."

So he buys lots of homes in Modesto...then what? Fixes them up....only to flood the rental market with homes?

You don't seem me out buying lots of crude oil even thought its 30% off its peak price.

soldout said...

"I'm setting up investor pools to buy a lot of houses, and I mean a lot of houses."
Perfect...bring back the biggest reason for the bubble in the first place....except this time I will gloat to see these speculators go bankrupt. Most of them never did an honest days work in the first place. Plus they have no idea what else to do with their money since this strategy is all they know. Let karma take its course.

neverborne said...

Hmm... mean and median prices increased MoM in August.

I close in 7 days.

Do I get a gold star for perfectly timing the bottom?

See you guys next time there's a bubble!

Jacob said...

MoM data is irrelevant. YoY is what you need to look at.

neverborne said...

Well since I'm buying a house... now, YoY data is irrelevant. Next year I'll look at YoY data and it will mean something to me.

People who think price increases in this market are irrelevant, are irrelevant. ;)

Jacob said...

I don't think anyone thinks price increases (or decreases) are irrelavant. They are very relavant.

But the increases were not sustainable.

Congrats on your new place. If you found the right home and the right price then good for you.

anon1137 said...

Qualifying for loans has never been tougher...We have to prove everything now...Now borrowers must demonstrate they can afford loan payments.

Man, that's rough.


But I notice that they didn't mention anything about a downpayment. One step at a time, I guess.

Diggin Deeper said...

"Calculated Risk has some info on a Lehman conference call, Alt-A delequencies are at 18%."

Probably one of the last conference calls we'll get from Lehman. Looks like the market's foreclosing on WaMu and Lehman at the same time. It seems they just can't find anyone wiling to buy their stories or loan them any more money....

Deflationary Jane said...

Great point BT! Look at what the end of subsidies and demand destruction is doing to the light sweet trade. Can you imagine what the spectulators who timed the oil futures wrong are feeling these days?

So if people keep moving away and unemployment keeps rising, we have demand destruction for area housing as well whether rental or purchases. It was bound to happen.

Now considering the portfolios of Wachovia and Wamu and the types of loans they specialized in, I expected Wachovia to go belly up before Wamu. I find this very interesting.

Regarding the last thread, the only corp shares I still hold are Amazon and Ebay but those were bought wayyyyyyy back almost at original issue. Those are my only longs.

BT and Cmyst - don't forget I'll be back in mid Nov. We seriously need to do lunch >; )

Buying Time said...

Looking forward to it DJ!

Speaking of meeting offline...I was really looking forward to hosting a housewarming party in 2008...sigh. So far its not looking promising.

norcaljeff said...

$2500/month won't get you a home in Omaha. These people ought to be selling used cars.

If they start qualify people on loans based on if they can afford to pay it, that's bad, what about people who aren't even willing to pay even if they can afford it? I think it makes lenders pause even further. Anyone still calling a bottom this year? LOL