Wednesday, October 01, 2008

PMI on Sacramento: 96% Chance of Lower Home Prices in 2010

From the CVBT:

Increases in foreclosures and unemployment have heightened the risk of further home price declines over the next two years in the Central Valley, according to a report Wednesday from Walnut Creek-based PMI Mortgage Insurance Co....PMI’s risk scores translate directly into its estimated percentage risk that home prices will be lower in two years.
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The risk of future price declines rose across the Central Valley...Sacramento is...at 96.3 percent, compared to a first quarter risk index of 84.4 percent.
From the Merced Sun-Star:
"Our entire industry is fraught with rumor and innuendo," [bank spokesman Thomas] Smith said. "Rumors are pretty much rumors until it becomes action." Though County Bank, much like all other lenders, has been dealing with bad loans, he said he intends to be at his desk next year talking about how the housing market has recovered.
From the Sacramento Bee:
Call it another casualty of the Wall Street bailout. A hotly debated down payment assistance program that started in Sacramento and helped fuel thousands of home sales nationwide came to an end Tuesday. Last-ditch efforts this week in Washington by Sacramento housing giant Nehemiah Corp. of America and others failed to save the program, which needed congressional approval.
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In a region where some say up to 40 percent of first-time buyers are using the down payment assistance program, its demise raised alarms that it will trigger a noticeable slowdown in the capital region's real estate market. "I think we're going to see a dramatic difference in sales next month," said Jeff Johnson, Citrus Heights branch manager of Platinum Home Mortgage.

Others said it might not be huge, but "it will be meaningful and noticeable in the Sacramento market," said Andrew LePage, analyst for La Jolla-based property researcher MDA DataQuick.
From Globe and Mail:
Wyatt Kenoly doesn't have a lot of time to watch politicians haggle over the $700-billion (U.S.) rescue package for Wall Street or follow the stock market gyrations. He's too busy trying to stave off foreclosure of his home in Stockton, Calif. The monthly payment on his $425,000 mortgage is about to double to slightly more than $4,000. He and his wife bought the house in 2004, taking an interest-only loan that has been resetting at higher rates for the past couple of years. While the loan payments have soared, the value of the house has sunk and it's now worth about $240,000. The couple just can't pay the mortgage any more. “It is grim,” Mr. Kenoly said Tuesday after spending the morning negotiating with his bank, HSBC Bank. “We can only hope and pray.”

Mr. Kenoly's predicament reflects growing concern about the U.S. housing market and whether the problems that have plagued the sector are getting worse. Housing is at the root of the turmoil on Wall Street and at the heart of the proposed bailout package. Treasury Secretary Henry Paulson has said that even if the bailout is passed by Congress, everything depends on a recovery in housing. Experts say that recovery is far off.
From BusinessWeek:
American savers, take a bow. This is your moment of vindication. Your hour of glory. And you earned it (in a manner of speaking). You resisted the siren call of plastic teaser APRs, dutifully living within your means to store money for a rainy day. You never took out an interest-only mortgage. Never had to pawn the copper pipes from your exurban McMansion to pay the reset on your liar loan. Your credit score would have gotten you into Harvard at age 12.

Good for you! Your reward: injurious savings yields, inflationary rot, and election-season neglect, all served up with a dollop of institutional insecurity...All of which might be tolerable to the lonely and beleaguered saver if he weren't taunted daily by lopsidedly pro-spending, pro-creditor news stories. Forget about moral hazard. Forget about rewarding profligacy. Washington is hell bent on putting a floor beneath the housing market.
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Maybe savers' ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else.

7 comments:

Jacob said...

he said he intends to be at his desk next year talking about how the housing market has recovered

This is the recovery. The recovery is well under way...

I guess he thinks prices will be up next year. Good luck with that one. Although the median may start to rise as the upper end crumbles and gets more sales (at relatively lower prices)...

Maybe savers' ultimate vindication will arrive when and if every asset is so deflated, credit is so choked off, and misery is so prevalent that only those with cold hard cash can lob in lowball offers for homes, cars, and everything else.

By that time, I wouldn't even want to buy. Inflation will hit everyone, and I would much rather have money earning some interest than to be broke living paycheck to paycheck and getting squeezed at every end and not knowing if I will have a job tomorrow as well.

How about the government makes that $700B available for anyone to borrow at the FED discount rate of 2%. At 2% I would likely buy a home right now.

Patient Renter said...

How about the government makes that $700B available for anyone to borrow at the FED discount rate of 2%. At 2% I would likely buy a home right now.

Seriously, why do only banks get in on that action? Free market... Hah.

Deflationary Jane said...

"American savers, take a bow. This is your moment of vindication. Your hour of glory."

Thank you thank you - we'll be here until sometime mid-2010 >; )

sacramentia said...

2% mortgages for everyone! That would be great as long I get to be first in line. Can you image how much bigger the housing bubble could be with 2% money!

Jacob said...

And just to help out I would be more than happy to borrow a few million extra and would deposit it at a bank for 3-4%. And the bank would still get their money.

Win/win.

Diggin Deeper said...

When you see mortgages advertised at 2% interest rates, your savings have been depleted, there's a black market for goods and services, and the employment rate is running at 25-30%. But homes will be affordable for all.

STOP ROSEVILLE CRIME said...

So a 96% chance of a drop in 2010 is a prediction? Come on! Let's do 100% chance.
And in terms of the bailout, once again the irresponsible get bailed out by the people responsible not to get in these situations. And renters won't see one benefit from this bailout even though they will be asked to help pitch in to fund the clean up of this mess.