Saturday, November 29, 2008

Sacramento Real Estate Market - November 2008 Water Cooler

Post off-topic links, observations, and stories about the Sacramento real estate market here. Please read the comment policy before posting.

104 comments:

Rich said...

On Friday, JPMorgan Chase became the latest big bank to pledge to cut monthly payments, by lowering interest rates and temporarily reducing loan balances for as many as 400,000 homeowners.

http://www.nytimes.com/2008/11/01/business/01modify.html?em

emphasis mine.

uh, what? 'temporarily' reduce loan balances?

Jacob said...

Probably means that they wont charge interest on part of the principal (but it may still be accumulating), later they will add it back or when you try and see you would still owe it.

mopar777 said...

My prediction for Tuesday: McCain concedes at 8pm PST and Obama wins by the biggest margin or any democrat since Lyndon Johnson in 1964.
I heard rumors over the weekend that Fats and Tahoe Joe's are closing here in Folsom. Can anyone confirm?

mopar777 said...

of any democrat

mopar777 said...

Further predictions: Obama will figure he has the power of a mandate and will move to far to the left too fast, just as the Clintons did. Hubris will be his undoing. Those responsible for the financial meltdown will be vigorously prosecuted, convicted and perhaps have their assets seized. Fuld (Lehman) and Sullivan (AIG) will be the Haldeman and Ehrlichman of our time.

a_builder said...

Masque in EDH is closed (that's the high-end prostitution/swinger joint in the raley's shopping center where all the EDH MILFS hangout)

RV6Flyer said...

"Masque in EDH is closed (that's the high-end prostitution/swinger joint in the raley's shopping center where all the EDH MILFS hangout)"

I know, totally sucks. I need to find a new place to take my out of town clients to.

RV6Flyer said...

"I heard rumors over the weekend that Fats and Tahoe Joe's are closing here in Folsom. Can anyone confirm?"

Good riddance to Trader Joes, the place sucks. Flaming Liberals with no palette shop there. About the only place to get good ingredients is Corit, or Taylors on a long shot.

That will be the second Fat's closure in two years. Without the political mafia supporting them on L St, they are nothing more than a fancy strip mall Chinese restaurant. It's all about privacy and image, something people in Folsom are not looking for.

jason said...

"Good riddance to Trader Joes, the place sucks."

It is Tahoe Joes not Trader Joes that is closing. Trader Joes is quite strong.

anon1137 said...
This comment has been removed by the author.
anon1137 said...

I'm hoping for an Obama landslide. This has been an incredibly long 8 years.

Diggin Deeper said...

Looks like the Dems get their time in the hot seat. Too bad all the money that could've have been set aside to drive their agenda has been spent, is getting spent, or will be spent, by the time the new administration gets the keys.

Expect at least a $1.5T deficit next year without a dime being set aside for all the new social programs promised. Expect that the interest, alone, to service the new government debt levels, will run close to $250B per year. Not long ago, the same $250B would have been the govt's annual budget deficit. Now it's a mere service fee on where we've come.

Count on tax increases, even on those making minimum wage, or low to middle income. Falling revenues at local, state, and national levels will be met with higher taxes to prop up the needs of the greater community. The only way to raise revenue is to raise taxes.

Count on more foreclosures, business failures, job losses... repeat, etc.

Count on a massive infrastructure rebuilding program, setting aside hundreds of $B's of new deficit spending, to repair/rebuild our highways, bridges, buildings, etc.

Welcome to the New New Deal.

smf said...

No, there will be NO NEW TAXES...

...what we'll see is an increase in 'fees'...

...mark my words.

patient renter said...

I heard rumors over the weekend that Fats and Tahoe Joe's are closing here in Folsom.

I hadn't heard these, though I should note for those who haven't noticed that Black Angus just closed a week or two ago.

Good riddance to Trader Joes, the place sucks.

I think you're actually the first person I have ever heard that dislikes Trader Joes. That place is pretty much universally beloved.

Expect that the interest, alone, to service the new government debt levels, will run close to $250B per year.

We're heading into dangerous territory. The moment we are unable to service our debt, the game ends. But as you said, I'm sure we'll have tax increases.

...what we'll see is an increase in 'fees'...

what do you have in mind?

Diggin Deeper said...

Smf...just because the rhetoric used for vote pandering says no new taxes for anyone making over $250K (or was it $200K or $100K or?), it means nothing once the elected get into office. Mark those words...

What do you consider fees? They're just another tax hiding behind the fee concept...

smf said...

DD -

Yes, I know. I still recall the Clinton middle class tax cuts, that turned into a tax increase. I won't hold my breath. But it bothers me that it all points out that I will get a pretty good hit.

I always like to talk about 'fees' because that is what government uses to state that 'no new taxes' were raised.

There are plenty of 'fees' out there that are assessed to businesses. Fees whose costs are then passed on to the consumer.

HOUSE2008 said...

It comes down to services, fees and payroll. The public can't continue to expect the level of service they are getting without a tax increase. Also as a side note we can't continue paying out the high salaries to public workers such as the Fire department, Police, Sheriffs, Highway patrol & Correctional peace officers as we do.
A case in point is West Sacramento. The fire dept there already takes home 70k a year do to increase to 75k+ by 2010. Now, I ADMIRE their work but looking at the budget that city can't continue paying out money like that. When is enough enough? When ALL public peace officers make 120K a year & be eligible for retierment at 40 @ 100%? This is crazy. Mayors NEED to say no to the unions. The alternative is file for BK in the near future. On the flip side, when the economy comes roaring back, sure pay them their cost of living increases. It's like all of them are having a race to see who make a 100K base salary first.

Diggin Deeper said...

Government projects record borrowing needs

http://news.yahoo.com/s/ap/20081103/ap_on_bi_ge/financial_meltdown_1

"The Treasury Department said Monday it plans to borrow more than a half-trillion dollars in the current October-December quarter and another $368 billion in the first three months of next year."

"Major Wall Street bond traders estimate the government's borrowing needs for the whole year will total an unprecedented $1.4 trillion."

And we're going to allow the government to deficit spend us out of this crisis?

I'm going to short the 10 year and the 30 year Treasury bonds. Rates ought be pushing up to between 5-7% before too long...at the present rates of 3+ and 4+ %, there will be too many bonds for buyers willing to accept the artificially low rates of today.

Again, watch the mortgage rates continue rising in the face of the Fed Funds...As they rise, further deterioration in local real estate should continue....

patient renter said...

The public can't continue to expect the level of service they are getting without a tax increase.

It's worth considering that while the state's payroll increased drastically over the last several years, a good argument could be made that its services did not. If they did, then dealing with a budget shortfall would be as easy as rolling back excess services, but obviously that's not the case.

patient renter said...

I'm going to short the 10 year and the 30 year Treasury bonds

This is hard not to consider. What mechanism are you using (since short is such an ambiguous word nowadays)?

Rich said...

I would argue that we can't afford to keep spending nearly half of the world's military budget and expect taxes to not go up.

But nobody is going to promise to 'stop protecting us' and win an election.

patient renter said...

But nobody is going to promise to 'stop protecting us' and win an election.

Which goes to show that few politicians are willing to take on serious issues like this for fear of it costing them an election. Change, really?

Quote from Andrew Bacevich:

"They credit the president with having averted a recurrence of 9/11, doubtless a commendable achievement but one primarily attributable to the fact that the United States no longer neglects airport security. To argue that, say, the invasion and occupation of Iraq have prevented terrorist attacks against the United States is the equivalent of contending that Israel's occupation of the West Bank since in 1967 has prevented terrorist attacks against the state of Israel."

Diggin Deeper said...

PR..

Best to do your own dd on these two possibilities...

Rydex fund RYJUX for the inverse 30 yr bond and the TBT which is double against the 10 yr Treasury bond...

patient renter said...

Ahh, Proshares. Tnx.

Rich said...

PR, we've been reading the same author :-)

mopar777 said...

I've noticed a big jump in the number of 30-45 year old women on match.com in the Folsom area lately.
Many are really hot and showing plenty of skin in their ads. Is it the demise of Masque? Prostitution has always been a recession proof business.

patient renter said...

PR, we've been reading the same author :-)

I haven't actually read "Limits of Power" yet... too many books in my backlog waiting to be read. That quote I pulled from an article by Bacevich on LewRockwell.com, though it may have been an excerpt from the book.

rich, are you the same person who posts as rich on calculated risk?

Rich said...

"rich, are you the same person who posts as rich on calculated risk?"

Probably not. I read CR, but I rarely post. Not even sure if I have. Too active for me to wade through.

anon1137 said...

woo-hoo!! Obama's got it!

Diggin Deeper said...

Mopar....Good call on the election!

Wonder how the new administration is going to get all those new social programs underway? Guess they'll make a deal with BB and Paulson to continue to crank out the dollars until we all owe more than we could ever hope to pay back...

Welcome to the New New Deal.

Jennifer said...

Welcome to the USSA!!!!!! United Socialist States of America. God help us!

Deflationary Jane said...

I knew it was a done deal after watching 538's analysis in the last week.

As all you long-timers will guess, I'm thrilled with most of last nights returns. I'm looking forward to the run-off for Franken (Go get'em Al!)

I'm sorry I wasn't able to join you in SF, Average. You have no idea how much I wanted to go and meet your mother and her friend! Even the Louboutin's were chanting "we can do it" so I worn them to my polling place then to Ben and Jerry's for my tribute Cherry Garcia.

All that said, the big winnner for me of the night was the # of people that came out to vote. Friends were sending me pictures of lines streaming around buildings, full of under 40 folks and reports of a sense of commeraderie people even when they had been standing for 20 minutes or more! So many under 30 voters, so many people who had pushed aside apathy and stood in line. It's sappy but I get missy-eyed when I think about it.

I'm really looking forward to digesting the analysis on the turn out for months to come.

patient renter said...

Welcome to the New New Deal.


How can we have a New New Deal when we can't even afford the first one?

Diggin Deeper said...

"How can we have a New New Deal when we can't even afford the first one?"

We'll do as we've always done. Deficit spend until the symptoms go away and pass it down the line far enough to make it some other generation's problem.

Voter turnout was impressive, especially those first timers.

The mandate is pretty clear yet I really question what can get done in the meantime as we're likely to remain under heavy economic pressure all through Obama's first term. The poor guy's going to be baptized in fire the first day he sets foot in the White House. Kind of reminds me of the Jimmy Carter election. He came to office, without much experience, while the country was facing economic problems. Those problems worsened, and he was swamped 4 years later...He was a nice guy in the wrong place at the right time.

patient renter said...

Someone wrote a comment on a Sacbee article that this (Saclanding) is where all of the Sacramento RE snark is aggregated.

Proud to contribute to the snark :)

Rich said...

"Welcome to the USSA!!!!!! United Socialist States of America. God help us!"

How so? McCain's campaign kept calling Obama's tax plan 'socialist' but any non-flat tax is socialist in that sense. Rich people pay a higher percentage. Obama and McCain differ on what rates at what income levels, but both are 'socialist' in that they 're-distribute the wealth'.

patient renter said...

both are 'socialist' in that they 're-distribute the wealth'

exactly.

patient renter said...

Diggin - Re: the inverse T-bonds, the more I study this, the more I think that we'll see a ZIRP which leads me to want to hold off for a while. Unfortunately if we doing our best Japanese imitation, rates will be staying low for quite some time.

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

PR...I respect that opinion if deflation is where we're headed. In fact noted economist, Nouriel Roubini, predicts stag deflation, which would make cash instruments about the only safe haven. It would also mean that we'd be in the midst of a Depression, again something I don't believe we'll see. There's too much dollar flooding going on to allow a deflationary period to last for too long. During the last Depression, the government sucked liquidity out of the market and it resulted in a long deep period of stagnation. The opposite is happening on Bernanke's watch.

So the only other answer to me is inflation due to increased money supply which in turn increases T-Bond supply to monetize the added debt. It will simply come down to a supply and demand issue.

Kind of like our RE market here in Sacramento. Dramatically increase the supply of homes on the market and prices fall to meet the excess.

Watch the next Treasury TIC report upcoming. That should give another good indication whether foreign buyers are still willing to buy up our debt.

patient renter said...

Yea - long term we are in agreeance, it's just the short term where I am unsure. It's the possibility of (more?) deflation that makes me hesitant and as you pointed out, the uncertainty about what the appetite for US debt will be.

But I guess the uncertainty is why money is to be made speculating on such things :)

Rich said...

After big jump, pending home sales fall, again

http://www.msnbc.msn.com/id/27594801/

"Meanwhile, the [Realtors Association] is urging lawmakers to include assistance to the housing market in an economic stimulus package to be considered by Congress as soon as this month. The Realtors want to make a $7,500 tax credit for first-time homebuyers available to all buyers and eliminate a requirement that buyers repay the credit over 15 years."

I've been reading about this tax credit (http://www.federalhousingtaxcredit.com/) and my main question is, just exactly how does it help me get a house? I don't see the money until after I've filed my taxes, after I've closed. Unless lenders are willing to wait for their closing costs? I mean, it's an interest free loan, and I don't often check out the teeth of free horses, but, I need the down payment and closing costs before- not after.

All that said, as much as it would be nice for my personal sitution to not even have to pay back that $7500- how exactly is that fair to everyone else? Either I can afford to buy a house or I can't. I really don't need the government redistributing the wealth around on this, even if I am the recipient.

patient renter said...

as much as it would be nice for my personal sitution to not even have to pay back that $7500- how exactly is that fair to everyone else?

It's not. It's the definition of inequality. Homebuyers benefit, everyone else pays.

RV6Flyer said...

http://www.bloomberg.com/apps/news?pid=20601093&sid=aQhOlWCOHawM&refer=home

This is a great read.

"Nov. 7 (Bloomberg) -- The worse the economy gets, the better it is for Jordan Tabach-Bank.

``Business is booming,'' said Tabach-Bank, the chief executive officer of Beverly Loan Co. in Beverly Hills, California.

Beverly Loan is a pawnshop. Not just any pawnshop, but the kind that caters to people who hock Cartiers, Harley- Davidsons and Oscar statuettes when they need cash."
"At Tabach-Bank's shop, ``confidential collateral loans,'' as they're called, have been made on art works by Pablo Picasso, Andy Warhol and Jean-Michel Basquiat. Amounts loaned range from several thousand dollars to ``six- and seven-figure deals,'' he said, with clients using the money to cover the mortgage, make alimony payments or finance cosmetic surgery."

Diggin Deeper said...

"I really don't need the government redistributing the wealth around on this, even if I am the recipient."

We've mandated a "spread the wealth" "change" in this country.

http://www.carolinajournal.com/articles/display_story.html?id=5081

Now this is really spreading it around...even 401K's and IRA's are being threatened....

RV6Flyer said...

I wouldn't get too worked up about it. They received testimony from 5 different experts, all with vastly different ideas, on how to improve on the retirement issue in the US. So many American just don't save enough and SS will no be able to handle the needs.

You can get the whole transcript here:

http://edlabor.house.gov/hearings/fc-2008-10-07.shtml

Diggin Deeper said...
This comment has been removed by the author.
Diggin Deeper said...

I would agree...Too Draconian and not likely so early in a new Adminsitration...the people would go ballistic...but the interesting thing is that there are those (experts if you will) that actually throw this up as an option...and since we really don't know where all this credit mess ends or how much of the govt's resources will be adminitstered, nothing appears to be "off the table". It's amazing just how difficult things have gotten over the course of a year.

Just this morning AIG has been recapitalized again...going from and $85B bailout to one that's now $150B with no guarantees that's it from here.

Fannie Mae loses $29B in the quarter, again ...no end in sight...it's interesting that Fannie's losses were single digit billions for the year, until the govt stepped and bailed out them out. Now they're losing $30B a quarter????

GM and Ford burning through cash with their hands out for govt assistance, and Circuit City files for Ch 11.

Just another day at the office...

patient renter said...

From TBP:

"Fannie Mae and Freddie Mac are expected to announce plans today to speed up the modification of hundreds of thousands of loans held by the housing finance giants."

...while at the same time coming to the government with their hands out. So translating:

FNM and FRD are expected to announce plans to speed up the giving away of taxpayer money to hundreds of thousands of home buyers who bought homes they could not afford.

If this is such great policy, why stop there? Why not give away money to pay for everything that people bought but cannot afford? TVs? furniture, jewelry, clothes, cars? boats? toys? credit card debt? If paying for houses is our grand plan to make the economy better, why not just pay for everything? Money grows on trees! Spending equals prosperity! This time is different! Up is down! The sky is red!

We're dooming ourselves.

wimpyVO2max said...

One of the major symptoms of an economic depression is deflation and unemployment. So, how are we doing?

1. Unemployment is rising. Now 6.5%, was 5.5% only three months ago.

2. The price of homes are deflating.
3. The price of stocks are deflating.
4. The price of corporate bonds are deflating.
5. The price of oil is deflating.
6. The price of gasoline is deflating.
7. The price of copper, wheat, corn and aluminum are deflating.

In a deflationary environment, wages contract. How about that, Arnold orders up a pay cut for state workers. Which means they will have less income to qualify to buy a home, which puts more pressure on falling home prices to keep falling. And the deflation spiral continues.

Deflationary Jane said...

I've been saying it's deflation for a while, but eh! what do I know? >; )

This is just too big to inflate out of.

What I want to know is how the unwinding of the commodities futures went and who took those baths? I haven't heard much on this yet.

RV6Flyer said...

"What I want to know is how the unwinding of the commodities futures went and who took those baths? I haven't heard much on this yet."

It has mostly been hedge funds and retail commodity funds/etf's.

Buying Time said...

On a housing related note...thought I would share that the market stress signs that I track are way way down. Not sure if this is due to the new legislation in CA, or to workouts....but the tide of NODs has slowed to a trickle, and is now about half what it was 2 months ago.

This is big, as it will mean less foreclosures during the "spring selling season".

Diggin Deeper said...

Energy agency warns of impending oil supply crunch

http://news.yahoo.com/s/ap/20081112/ap_on_bi_ge/eu_world_energy_outlook;_ylt=AvAnMkDJTte2axBUaB0F.s5u24cA

What the article doesn't say is that the IEA studied 450 of the world's largest oil fields and found that production depletion in those fields is falling over 9%per year...That would mean we, as a world, would have to destroy enough demand to account for the oil supply depletion of 9% each year or find new reserves that make up the difference...

That's one tall task...We really do need to push forward on some alternate forms of energy before we're caught fighting over a resource that's in decline.

patient renter said...

BT: I would assume it's exactly what we'd expect given the new CA legislation.

Anyone who wants a blast from the past, check out this little montage of Peter Schiff being laughed at and mocked for his prediction that the economy would be severely damaged buy our debt:

http://www.youtube.com/watch?v=2I0QN-FYkpw

Favorite moment was when the pundits recommend buying Merrill Lynch, Goldman Sachs and Bear Stearns then laugh at Peter when he says they're going to collapse.

The future isn't always so hard to see, if you open your eyes.

Deflationary Jane said...

PR

Thank you for that! It's just what I needed this morning.

Diggin Deeper said...

PR...Schiff puts out a weekly commentary on his website...and well worth reading...

http://www.europac.net/

patient renter said...

Diggin: tnx.

So the TARP has degenerated into an unsupervised mess with companies of all sorts flocking in droves with their hands out. The premise, goals, and beneficiaries of the TARP have shifted more times then can be kept track of.

I suppose it's one of those things that will only get worse and worse and worse, because the alternative would be to admit that the whole thing was a mistake to begin with.

Cmyst said...

Here is a very lengthy article giving insider's views from insiders who didn't trust the Gods of Finance.
It's not a difficult read, and while I still don't understand CDOs, the depth of greed and manipulation is clear. It makes a gripping coffee-hour or after dinner story.
http://tinyurl.com/5s5w2b

patient renter said...

great article cmyst, tnx.

STOP ROSEVILLE CRIME said...

Saw on the sacbee RE blog an entry about green religion. I guess Tim Lewis' daughter gave him Al Gore's environmental book and Lewis is going all mental over it. He's going to make every newly built home green if it kills him. Guess instead of lowering costs and lowering prices his answer to this market is to add more costs and higher prices. These guys just don't get it. I'm really wondering how they were successful in the first place with their obvious lack of economic savvy and common sense.

Diggin Deeper said...

"The premise, goals, and beneficiaries of the TARP have shifted more times then can be kept track of."

When you don't have a handle on the problem, you use the "whack-a-mole approach...the trouble with that game is that it ends with whacker ending up the loser.

patient renter said...

Interesting little tidbit today: While the G20 folks were conceiving new ways to reinforce the tower of cards, Iran decided to shift their financial reserves to gold "so that we wouldn't be faced with many problems in the future"

http://www.reuters.com/article/GCA-Oil/idUSTRE4AE1F820081115

It's a pretty sad state of affairs when our supposed enemies are one step ahead of us.

patient renter said...

Sac county averaging over 50 foreclosures a day:

http://www.sacbee.com/142/story/1399693.html

waiting_for_the_fall said...

I'll be looking in Sacremento for some good investment deals next year.
Can someone tell me what the good areas are? I don't want to buy something and find out later it's a high crime area.

I was looking at a few homes on Flippers in Trouble and noticed some homes are coming on sale at a higher price than they sold for.
It's almost like the flippers are back!
Take a look at this one:
http://www.movoto.com/real-estate/homes-for-sale/CA/Sacramento/4844-Amber-Leaf-Way-102_80106707.htm

It sold in September and went on sale 1 month later for 30k more.
Is it a flipper, or the bank trying to make a profit?

anon1137 said...

What's the difference between "looking for some good investment deals" and flipping a house for a $30K profit?

I'd suggest you look in SOUTH Sacramento.

sacramentia said...

"Can someone tell me what the good areas are?"

I like areas that don't have a lot of people hanging around at 10am on a weekday. I also like mowed lawns. I try to stay away from chain link fences and too many cars.

Are looking for cash flow or future appreciation?

Most parts of Sacramento are fine. I would stay away from Oak Park, or at least google it and read the History before you decide. It has been the up and coming neighborhood for decades.

The link to place you sent is ok...but for 250 you can do better. Do a 2mi radius search <250 from 6500 Folsom Blvd - stay out of Oak Park and I think you'll find many good options.

JamesR said...

I think you might like this parody titled
"The Real Estate Downturn"

http://www.youtube.com/watch?v=bNmcf4Y3lGM

Hitler and his thugs discussing the current Real Estate market.
Laugh out loud funny.

Diggin Deeper said...

Not much of a Wall St Christmas...Citi announces it will layoff 50,0000 soon.

Diggin Deeper said...

I guess Citi upped it to 53,000. A polling of top economists targets 7.5% unemployment rates. Homeowners will be pushed over the edge as far as foreclosures are concerned. You don't renegotiate a note if you aren't in a position to honor it...

luca said...

Attention sacramentites

I invest in semi marginal areas myself- specifically the rosemont area.

Recently I have been looking into realtor.com to find some extreme steals in the really rough areas of sacramento.

I have been considering this townhome:

30 Creeks Edge Way
Sacramento, CA 95823

It is only $20,000 on realtor.com and will only cost $5,000 to make completly rent ready.

I am looking for a long term steam of income from this property and will give to a land lord so I do not have to do any landlord duties.

How bad is this area?

What is the fair market value in normal real estate conditions? Opinions?

Will I regret this purchase?

sacramentia said...

Luca - I'd go section 8 or some other subsidized rent in that area so you never have to go and try to collect. The numbers are great.

Jacob said...

How much rent do you think you could reasonably get from a place like that.

HOA is $250 so that will take a chunk.

Deflationary Jane said...

assuming a 0% vacancy you _might_ break even. Then come the legal bills from your tenants

You should totally buy it, really >; )

erin@erinattardi.com said...

Luca - that price is the "starting bid" for a reserve auction for that property.

sacramentia said...

dj - 50% vacancy and you break even unless you buy it with your credit card.

Deflationary Jane said...

Assumes that rental rates are stable.

Have you seen what has been dumped on the rental market lately by the bank relasing a "handfull" to a property manager? The first go was several hundred and they are undercutting rates to get them filled. They can discount all day to get them filled.

The one thing I did notice is that they weren't allowing co-signers, good scores were needed, and the income qualifications were set 3 times the lease rate. These compete straight up with potential residential buyers.

Now if the primo rentals are from this bank release, then what is left is the dregs of renters for individual investors. That'll leave a mark >: )

The only reason I know this is because I'm helping a friend relocate or I'd never have caught it.

anon1137 said...

(11-18) 18:32 PST SANTA CLARA -- Jing Hua Wu, the engineer who police say fatally shot three executives at a Santa Clara startup company last week just hours after being fired, spent the last few years amassing a large portfolio of investment properties. According to public records from eight counties in three states, Wu and his wife own at least 19 homes and vacant lots worth more than $2.4 million.

waiting_for_the_fall said...

I checked with my mortgage broker about maybe purchasing a few properties next year for a long-term investment. This was his reply:

guidelines for investor
loans in this market.

1. 20% down payment. The PMI companies are not provided PMI insurance for
investor loans.
2. The 4 financed property rule. You are only allowed 4 financed
properties including your personal residence.
3. Full documentation. Since you already own rental property, they will
require a copy of your last 2 federal tax returns. The underwriter will
look specifically at your Schedule E for the rental properties to determine
your positive or negative cash flow. The UW will add back into the income
your depreciation since the depreciation is a non-cash expense.

norcaljeff said...

Here's a great article on the middle class trap door. Good insight as to why RE was driven up and why we can't afford it.
http://tinyurl.com/5jotty

Jacob said...

A friend emailed me this list of companies that are closing stores, or closing completely. A long list:

Circuit City (filed Chapter 11)

Ann Taylor 117 stores nationwide closing

Lane Bryant, Fashion Bug, and Catherine's to close 150 stores
nationwide

Eddie Bauer to close stores 27 stores and more after January

Cache will close all stores

Talbots closing down specialty stores

J. Jill closing all stores (owned by Talbots)

Pacific Sunwear (also owned by Talbots)

GAP closing 85 stores

Footlocker closing 140 stores more to close after January

Wickes Furniture closing down

Levitz closing down remaining stores

Bombay closing remaining stores

Zales closing down 82 stores and 105 after January

Whitehall closing all stores

Piercing Pagoda closing all stores

Disney closing 98 stores and will close more after January.

Home Depot closing 15 stores 1 in NJ ( New Brunswick )

Macys to close 9 stores after January

Linens and Things closing all stores

Movie Galley Closing all stores

Pep Boys Closing 33 stores

Sprint/Nextel closing 133 stores

JC Penney closing a number of stores after January

Ethan Allen closing down 12 stores.

Wilson Leather closing down all stores

Sharper Image closing down all stores

K B Toys closing 356 stores

Lowes to close down some stores

Dillard's to close some stores

Mervyns is closing down all stores

luca said...

waiting for the fall-

I am running into a problem where you can only have 4 properties financed. I have heard of people being able to get more than 4 financed - especially if they all have very positive cash flow.

I would even put 30-40% down on some larger properties but the bank still wont let the money go.

Any idea of places to go to get more money?

I am a long term investor looking to hold these for a couple of decades and pay the properties off and enjoy some cash flow.

Jacob said...

Can you get a heloc from the properties you own and use that to buy another property?

Or you can do 0% balance transfers from credit cards. Some offer 0% for life but not sure how much money you could get access to that way.

Or pay off the cheapest property so you can purchase another one.

Deflationary Jane said...

sorry but woo-freaking-hoo!

Hearing that credit is being slammed down for investors is good news. Those homes need to be occupied by people that intend to live in them. You want people to have confidence in the market, that's what it's going to take.

evlunclbud said...

First subprime, now FHA:

http://www.businessweek.com/magazine/
content/08_48/b4110036448352.htm?chan=magazine+channel_top+stories

waiting_for_the_fall said...

luca,
I think we'll have to wait a few years for lending standards to loosen up a little.

Diggin Deeper said...

U.S. rescues Citi with $20 billion capital

http://news.yahoo.com/s/nm/20081124/bs_nm/us_citigroup_12

"The U.S. government has bailed out Citigroup Inc, agreeing to shoulder most of the potential losses on $306 billion of high risk assets and inject $20 billion of new capital, in its biggest rescue of a bank yet."

Don't let the initial $20B fool you. This will make the AIG bailout look like Mom handing out milk money for the week.

All this mononpoly money is adding up fast.

Obama readies with massive US rescue package

http://business.smh.com.au/business/obama-readies-with-massive-us-rescue-package-20081124-6ezv.html

"President-elect Barack Obama is considering a possible $1.1 trillion economic stimulus package in a bid to create or save 2.5 million jobs as soon as he takes office on January 20."

President Obama had better see it Bush left him any checks in the checkbook...

New New Deal on the way

patient renter said...

"President-elect Barack Obama is considering a possible $1.1 trillion economic stimulus package in a bid to create or save 2.5 million jobs as soon as he takes office on January 20."

Good god man! These are just stupid numbers being thrown around now. WTF is wrong with these people? You can't "save" jobs or the economy in any meaningful way by running up a bunch of debt.

It's like paying your own salary on a credit card - it works until it doesn't.

Diggin Deeper said...

"It's like paying your own salary on a credit card - it works until it doesn't."

And we haven't gotten to the automakers yet, or the insurance companies, or consumer credit card debt, etc, etc.

Anyone who thinks that by taking an equity position in a company, the people will profit at a later date...should think it through very carefully.

If you take on $2-3 Trillion in added obligations, over a short period of time, interest that debt will devour any hopes of profit, nevermind getting the money back, before the ink dries on the stock certificates issued.

patient renter said...

Anyone who thinks that by taking an equity position in a company, the people will profit at a later date...should think it through very carefully.

Yep. It's the basis for Keynesianism which is the basis for our government's economic policies - the idea that you can spend yourself into prosperity. Pretty stupid.

RV6Flyer said...

http://www.youtube.com/watch?v=bNmcf4Y3lGM

Pretty funny parody on housing speculators.

Deflationary Jane said...

OMG that was hysterical!

Diggin Deeper said...

Fed says it will buy mortgage-related assets

http://news.yahoo.com/s/ap/20081125/ap_on_bi_ge/mortgage_debt_2

"The Fed says it will purchase up to $100 billion in direct obligations from mortgage giants Fannie Mae and Freddie Mac as well as the Federal Home Loan Banks. It also will purchase another $500 billion in mortgage-backed securities, pools of mortgages that are bundled together and sold to investors."

Gee, no one else will buy these assets for good reason...As Buffet coined, "assets of mass destruction"

Leave it to the lender of last resort...

RV6Flyer said...

Sounds like quantitative easing to me.

Diggin Deeper said...

No doubt about it, another good phrase for dollar flooding...as one person I read puts it...it's a "balance sheet" recession, asset deflation while relieving bad debt. Let's hope the presses hold up long enough to cover all the "dead money" out there.

paranoid renter said...

Why is housingtracker2 not being updated?

Rich said...

Slightly off-topic: Automaker bailout funny

http://www.markfiore.com/owners_manual_0

Cmyst said...

Ok, so I put in a written offer on a short sale at the end of August. Other than reassurances that the bank had the offer, and that BPO would be done "within a couple weeks" (that was 3 weeks ago, btw) I haven't gotten any response.
Sort of like being engaged, I took myself out of the market and put househunting out of my head, until this weekend. And wouldn't you know, what appears to be a much nicer and better-maintained property with much easier access and energy-efficiency is for sale asking 30K less literally directly behind the property I submitted an offer on.
Can I rescind my offer, or am I stuck until the bank decides to make the next move?
BTW, even if this new property turns out to be not as good as it looks, it won't break my heart to give up on the current one. It's a lot of work, and since I made that offer a lot has changed in my extended family obligations as well as the general economy.

patient renter said...

"Satellite Asset Management LP, founded by former employees of billionaire George Soros, stopped client withdrawals from its three largest hedge funds and eliminated more than 30 jobs after losses reduced the firm’s assets to about $4 billion this year."

Oh how the mighty have fallen.

Cmyst - I would think your offer is just that, an offer, and isn't binding. That's just purely a guess.

sacramentia said...

Can I rescind my offer, or am I stuck until the bank decides to make the next move?

Did your offer have a time frame on it? If so, the offer may be expired.

If the Bank counters you can not accept the counter

And, If you used the standard California form and the Bank accepts your offer, you can stop the deal based on the inspections/ contingencies in the contract. (I think it's section 14)

Short answer is as a buyer I wouldn't worry about getting out of the deal.

norcaljeff said...

Cmyst, why aren't you following the comments on this blog? You would have saved yourself both a headache and some money :) There's no reason to be in the market yet, prices are still accelerating lower.

erin@erinattardi.com said...

Cmyst;

You and your agent should have submitted form SSA, the Short Sale Addendum, with your offer. In the SSA, you indicate the date by which you will wait for the lender(s) written acceptance. Has that date passed?

eastbay said...

like i tell everyone i talk to and post, houses are dropping around 10K a MONTH (at least in Walnut Creek, Concord, Danville, eastbay)...the longer you wait, the cheaper the house will be for you to buy...Of course you can get out of the offer, just take it back or cancel it, especially since it has taken 3 weeks for a response, which is RIDICULOUS!!!! there are so many houses out there and at CHEAPER PRICES, why mess around and waste your time with these short sales (unless you are getting something real cheap, like 25%-50% BELOW current market prices)...spend some time on the real estate websites like trulia (very good), redfin (very good), zillow, etc., etc...check the past sales prices and see what they paid for it and low ball away...I am doing that right now. if they don't want my offer, they can sit on their houses and see the prices drop every month...and more and more houses come on the market every month...they take them off and then put them back on after months of sitting and no offers...i am sitting on cash, baby and renting!!!!!!!!! every month that goes by, i save at least $10K!!!!....(ps. check the price per sq foot and you should using that to make your offer...Walnut creek should be in teh $250/sq ft range next year...)

norcaljeff said...

Check this out, it will make your head spin. I'm still nautious.

"The 17th Street house is one of a constellation of 90 homes stretching across Tampa, all bought and sold in the past four years by a 34-year-old tattoo parlor owner."

http://tinyurl.com/5r4rrd