Monday, February 01, 2010

Sacramento Real Estate Market - February 2010 Water Cooler

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


Ben S. said...

In the price range of most first-time home buyers there's a ton of competition for very few properties on the market, so properties often sell over the listing price. Yet meanwhile I keep hearing about the banks holding back inventory. And there are also a lot of short sales which the banks seem to make as painful as possible to deal. So it has been very frustrating and my wife and I are considering taking a few weeks off. Maybe if the $8000 tax credit ends then it will be easier to buy! I'd gladly miss out on the tax credit if there were more inventory and straightforward prices!

wrong moves said...

The wife and I are so frustrated right now. After battling all cash investors, ridiculous bids from competitors (only to have them "under-perform") and just general crap in the home-buying processes, we had our 9th offer accepted - at asking price. Now, the sellers pimped us for 15K more. This was after the signed contract. They pulled the house off the market then relisted for 10K more than we offered. I'm ready to bury my head in the sand for about 6 months.

sacramentia said...

This is really crazy to hear given how *bad* the housing market is. The stories remind of when my wife and were trying to buy in Silicon Valley in 2000. We'd end up at Chevy's drinking a pitcher of Marg's after getting totally frustrated and being outbid for crap.

Can you share what price range that you are looking in?

smf said...

First time home buyers don't need to despair.

Rampant speculation caused this problem, and rampant speculation is at the same level as during the height of the bubble!

Too many of these buyers are under the wrong assumption that the house they bought will return too 2005 'soon' and will be burned when house prices stagnate for a long, long, looooong time.

When these people realize their mistake, and start selling en masse, then this whole ordeal can finally be considered over.

Deflationary Jane said...


Was the house you made an offer on a s/s, REO, and a tradional sale?

husmanen said...

Wrong. Six months is a good cooling off period. I have a few questions too.

The houses that you are bidding on, could you rent them out and cover the monthly nut (PITI - principle, interest, taxes and insurance)?

If the houses you lost out on can well cover the PITI there could be competition (especially since many think the bubble will return soon).

If the houses you bid on don't come close to covering PITI don't sweat it, the prices will come down - history and data tells us so.

patient renter said...

I'm ready to bury my head in the sand for about 6 months.

Sorry to hear you're having so much trouble. It is specifically because of the crap you're having to deal with that we know this thing is not over. I'm content to wait till it is, and enjoy life as a renter in the meantime no matter how many "get off the fence, consult a Realtor" commercials the NAR bombards me with :)

Jacob said...

If you have a signed contract and the seller is trying to back out could you sue them?

Of course they might be doing you a favor and making you wait since prices are likely to continue downward.

Deflationary Jane said...

I'm guessing this is a short sale.

The seller is who lists the short sale and they can pretty much list any price they want. You can have your offer accepted by the seller including the offer signed by both parties but you aren't in contract until the bank sends the offer letter with the buyout price and you agree on the price. Some times the asset managers will send back a letter asking for more.

husmanen said...

Price per sq ft keeps falling, the bigger they are the harder they fall.

4,109 sq ft
$111 sq/ft

Built 2004

But given the location, very close to the freeway, it may even go lower.

sacramentia said...

Does anyone have a link to or know off the top of their head what percentage of homes in the Sac MSA have a mortgage vs. how many are free and clear?

Found a study that said 44% of mortgages in Sac MSA are underwater, but it left me wondering how many homes have no mortgage at all.

Lucky said...


it seems that 4502 DUNNWOOD DR, EDH was sold on Dec. 10, 2009 for $390,105.

I guess the purchaser put in some new grass, paint and is trying to make a profit.

From some people in the industry they say they are buying cheap at auctions, putting in $10,000 of required fix-up and selling on the market in excess of $50,000 (depending on property, obviously).

I guess these people are making it difficult for people like Wrong Moves.

husmanen said...

Lucky, boy that is a very high risk investment. Say you invest 10k, you are in to it for $400k. Then it takes 6% to sell you have to get at least $425k to break even, excluding any value for your time and effort.

With an asking price starting at $456k they do not have a lot of wiggle room. A 6% drop in the price just about puts you out of the money.

Wonder how many are out there like this? How many flippers are pushing the envelope into the higher end?

Just like the banks with the subprime, one Alt-A loan on a house with a $800k loan could wipe out 10 subprimes, flippers in the high end might being blinded by the easier profits made last year in other areas.

husmanen said...

A local strategic default article...

"Gain trumping pain of walking away from mortgage"

The comments can get a little long in the tooth but some are spot on.

wimpyVO2max said...

A Wells Fargo manager told me that his company is exceeding their internal targets for "asset acquisition" and because of it things are going well. Being a casual acquaintance I didn't pry farther.

Maybe this explains what's up with banks being slow to sell REO's and resisting mortgage modifications. They want homes to help with their "asset acquisition."

The big banks are up to something. Maybe they think if they have a big underwater portfolio they'll get another bailout out of Washington (and why shouldn't they think that, they've been able to get bailouts from both the Repubs and the Dems).

Louie said...

Another article in today's Bee about strategically walking away. Considering how far behind the traditional media has been on every aspect of the housing meltdown, this must already be a big trend, and sure to continue gaining momentum. There was a story on NPR last week too about companies that deal with troubled mortgages, and how they used to deal with people desperate to keep their homes, now everyone calls asking how to get the bank to foreclose. The public conscience is really ready to change on this issue. And just when I was getting ready to finally buy...

husmanen said...

I too have noticed a dramatic change in the openness of the strategic default subject with friends and family in the last six month. It takes time but I foresee this becoming a wave in the near future, i.e. less than a year.

Jacob said...

Well that is the problem with all these bailout programs. Instead of spending money to try to prop up housing we should just help people move from their house to a rental, help with moving costs and maybe a months rent, that's it.

But you have no incentive to pay your mortgage now. The bank won't lower your interest or principal if you are paying, so you have to stop paying, plus you can live rent free for almost a year if you do.

So you have about 10% of people in some form of foreclosure and 90% paying on time. Make the incentives too good and a good portion of that 90% will just default.

And for all the people like me waiting to buy, there is no real incentive to go out and buy. Not when the market is being artificially propped up. The tax credit will end at some point and unemployement is still too high and not likely to change anytime soon. If we start gaining 100k jobs a month it will take almost 10 years to get back the 10M we lost in the last 2 years.

Interest rates will be heading up at some point as well.

And I don't see any shortage of REO for a while.

husmanen said...

WOW! More flipping in EDH.


If I understand this right, it was bought at the courthouse steps for $334k in November and is now for pending with back-up offers accepted for ... $519k.

Now that is a good flip if they get it. I don't think the house needed much and the comps are selling for the high $300s to low $400s.

If someone buys this house anywhere within 20% of the asking price they are going to be underwater immediately. Even Zillow, which usually overestimates has this at $433k.

Deflationary Jane said...

It had to happen sooner or later. After 4 years and 19 offers, I'm in escrow.

I will have more details after the close but I will give you one tantalizing piece of info, the contract price was a mere 13,500 over it's 1993 sale price and 43% of the 2005 price.

husmanen said...

Sweet DJ!! With all the info/data you have I am sure you made a wise choice.

That even sounds like a future price at today's interest rates. Nice!!

Of course, I always have to ask if there are any rental-parity comparable homes.

Deflationary Jane said...

Thanks Hus,

The home is smaller and older but the previous sellers just added a new 50 yr roof, new HVAC, and new windows. No HOA, 1 MR bond for $26 annual and it's on a boulevard.

Rentals here run from 1050 for a 900 sqft 2/1 to a fantasy 1625 for a 3/1. I don't want to say too much because the HUD-1 could change between now and close but Piti is under 1k with 20% down.

It was a short sale, lender took less then 30 days to answer. Somebody is blinking.

patient renter said...

Wow. I was coming back from lunch earlier and thought I caught a glimpse of a bird flying by that looked an awful lot like a pig. After seeing DJ's post I'm convinced :)

wrong moves said...

For those with questions, sorry for taking so long to respond, computer, work, this house, blah...

OK, it WAS a short sale. The owners decided to refinance their other house in the "bay area" and dump about 70G's into this one to make it a clean sale. Our self imposed limit is 330,000 (to the frustration of our very patient agent "but you can afford so much more!!"). The original offer was for asking price of 310,000 expecting to redo the kitchen, put in hardwood and paint before moving in. The bathrooms need a makeover too but not as bad as the kitchen (quality 1981, but old just the same).
Fortunately the wife and I are in agreement and neither of us get emotional about the houses. We are tired of looking but not desparate. I haven't really pencilled it out, but I'm fairly sure I could rent it out to cover my mortgage if not the entire value of the house. I just don't know what houses go for in that neighborhood. Our consolation, I totally agree with everybody on here about more houses coming cheaper. I also absolutely adore my neighbors, just don't want to rent (or own this rental either) any more. I'm nothing if not patient.

wrong moves said...

Oh yeah, as of yesterday 2/08 we had put in another offer for the original price after the house didn't appear to be moving at 320,000. We were told there was an offer on the table for 325,000. I say good luck to both the buyer and seller, but why is the offer on the table and not signed in a NY minute? Realtor bluffing?

husmanen said...

Wrong Moves. I believe it is both a tactic to increase the price and provide a feeling of scarcity, as well as it legitimately happens.

I have bid on homes where this has occurred and they have sold for more. Then I have bid on other homes where I am initially told they have offers over the asking price, I then follow-up later, about two months typically, and some what another bid.

At one point I was ready to go on a house in American River Canyon, got the price down to rental parity, had everything that I thought we wanted and the big guns came in (my wife) and the process stopped - unknown schools, especially the high school.

Patience will pay off, plus all the experience you gain will make you a very informed buyer, thus lessening buyers remorse.

Good luck!

Deflationary Jane said...


I've had this happen several times. I put in a lowball offer and get told it has a full price offer. So I go on to the next one. I do go back and check to see if the transactions actually occured and what the price was.

Out of 12 S/S offers, only 1 actually closed over list, the difference just happened to cover the 3% close costs and the 8k fthb. That was last Oct when everyone was panicing and this place was in college glen right on the river.

Most often listings are pulled from the market and just held off the MLS after they fall out. I can't tell whether it's because the bankers are too busy or holding inventory down. Either way, the listing agent should be shepharding the listing so who knows.

5 of the 12 just went on to foreclosure. This seems to be the case if the servicer was BAC though I don't know why that is, just hunches.

Once I got used to how s/s work, I began asking my agent to look up the loan records before I even drove by. If it had a second or was owned by BAC, I didn't bother and moved on to the next.

Listings that are REOs or traditional sales like yours became seem to get marked up to ridiulous prices. Most of the flippers know they need to sell between now and april 1st so there is this weird game of chicken between them and buyers. These are lost causes until 4Q 2010.

Myself, I haven't bothered with non-S/S since July 08.

sacramentia said...


Do you think this is the bottom?

Deflationary Jane said...

My prediction is 4Q2011 without more gov invention.

sacramentia said...

what is your bet on deflation? do you think -10% cpi is a possibility?

husmanen said...

My 2 cents.

Not sure if we will get deflation or inflation in the CPI. Things are in a weird funk right now as one would expect inflation to be taking off, but consumer prices are stable and the Fed has pumped a lot of money into one sector of the economy. Then again credit lines have decreased too so this should lead to some deflation, but so far not so much.

Actually I cannot believe we have not had more inflation already, besides the stock market. Feels like something has to give in the future. Inflation is actually good for debtors as they pay back in dollars that are worth less, and they have more of them.

Can the government continue to meddle so directly in the market with the impacts on the credit and Treasury markets? Time is ticking and there is supposed to be an exit strategy. We will see…

Here is Rich Toscano’s (from Piggington’s blog) take on deflation:

a_builder said...

Anyone know what has happened at the Greenbriar Homes developement in Lincoln? It looks like they've just abandoned the whole project! Sales office is GONE, construction trailer GONE, workers GONE million dollar landscapes ALMOST GONE!! There appears to be some model homes left unsold and at their project in EDH there are like 10 slabs that they poured 2 years ago just rotting away (covered in weeds)

BTW these house are HUGE 2 acre lots and 6k square feet I think they sold in the 1.5 million during the fraud years...

husmanen said...

Very interesting video on IndyMac SS/foreclosures:

From a buyers standpoint maybe I should try to focus on SS/foreclosures that are owned by IndyMac!!

Its a win-win-lose situation, meaning I would win, Indy-Mac would win and taxpayers lose (this includes me but at least I get a little bit of a win with a purchase).

Lucky said...


I know that Greenbriar had their Lincoln models priced agressively for a while. The site was called Monte Azul. They even listed them on Craigslist. I think, and I may be wrong as I don't know, that since the listings are no longer appearing and I don't see it listed on any re-sale site, I think that the houses could be finally sold.

I was in awe of those houses. Great layouts, the lots were beautiful, a tonne of upgrade. Someone I know said that he previously worked with the sales associate who was in charge of the site, and the sales person told him that they were open to offers. They wanted to sell them and would entertain whatever came their way. I remember him talking about how they reduced their price to $1mil but would probably take $800k. Like i mentioned, I don't know this as a fact, so don't hang me if it is incorrect.

I would have loved to buy one - if it was a few hundred thousand less expensive. As I am sure a lot of other people would. I have no idea what the value of that type of product would be today; if anyone can inform me, that would be great.

I am interested in what they are doing with their inventory of lots. I doubt you can build something cheaper than what they were selling these off for, but I think that it is such a great area. The trees and the hills make for quite a nice setting.

I will check it out this weekend and see if I can find any information.

I have never seen their EDH site, and am curious to see what came of that as well.

husmanen said...

Here is Greenbriar's website with EDH:

The MLS has 16 homes on Greenview for sale today, can't tell whick ones are Greebriar homes. One is a fixer/finisher for $450k and the top bill goes to the house at $2.7 million.

sacramentia said...

Just got a letter from an investor offering to purchase a home. Felt like 2005 again.

I guess I'll just add that to my list of things that don't make sense.

What were the shadow inventory numbers again...

smf said...

'Feeling like 2005 again'

Reason #1 why this thing is hardly over.

Lucky said...

I am coming in to town this weekend and am thinking of visiting different builders to gauge that segment of the market. Would people agree that South Placer County seems to have a wide range builders compared to other areas? We aren't in any rush to make a decision, but we do plan on moving down late this year and would like to know a lot about the areas.

Since I don't have a tonne of time, does anyone have some recommendations so I can get a good feeling for the market? We plan on driving a lot, and that always seems to be the best way of seeing stuff - but we don't want to over do it.

I find it hard to get the information from one source. I seem only to find info about the big national players or big local players. I don't know if there are any smaller local players left, but I'd imagine that there has to be. If someone wants to suggest small builders in Placer County, I'd appreciate it.

I will also be looking to see some open houses. I don't want to contact any agents yet, as I want to eventually find one that meets our strict criteria. But, this should be an eye opener.

This is more of a ramble than anything else, but if anyone wants to add something, please feel free.

patient renter said...

What were the shadow inventory numbers again...

The last Deutsche Bank numbers were massive. @sacrealstats has a post with them.

KTM 300 said...

I am pre-approved for a $255,000 loan. I know that is not much money, but I was hoping to buy my first home this year. Interest rates are low and the prices have come down. My concern is that, I am a state worker, and the possibility of minimum wage and pay cuts are very real beginning this summer. I am also concerned about interest rate creep presently, but if we get a lay-off for more than a month, I know that things will get quite nasty in Sacramento. Any suggestions as to where and when prices and interest rates will end up? Should I jump and take a chance? I've noticed that there is allot of junk in my price range, as well as, flips and cash buyers. Investors seem to be buying up all of the houses for $200,000 and under.

Sold in '05- Bought in '09 said...


The only "local" builders that I know of still working in the south Placer area are JMC and Tim Lewis.

They have both scaled WAY back on what they are doing but both are still selling developments that were started before the crash.

Additionally, all of the big nationals have some active communities in West Roseville. Many of the previous subdivisions have been retooled for smaller/cheaper homes.

- CD

Lucky said...

thanks, cd.

I was wondering about the feelings similar to 2005. is this happening because money is still cheap? Are people still buying houses and mortgaging themselves to the highest amount or have people learned to not buy the most expensive house they can "afford"?

sacramentia said...

I think you have 2 kinds of people coming out of the last 3 years, no debt and all debt. Both make logical sense if things continue to get worse.

I had a grandparent and a great aunt that survived the depression. One never had debt again, the other maxed every credit card and made the payments because she claimed gov't would take it all away anyways.

I'm a no debt kind of guy, but many of my friends have lived with maximum debt over the last decade, and honestly lived much better lives.

I'm starting to reconsider....

Louie said...

I don't know if anyone here has the inside knowledge to answer this question, but what kind of price leverage can be achieved by paying all cash? 3%, or 5%? What about on a 30-50% downpayment? My significant other just received news of a sizeable inheritance, and if it means whittling another 10K off the price, may be worth it.

Also, we were the backup offer on a short sale in Elk Grove that fell through, my agent called and said that our original offer of 230K 2 months ago would get us the house. I asked if we could offer closer to 205K, and he said the bank would have to reevaluate the property and possibly put it back on the market if we made an offer that low. Is this true? Thanks

sacramentia said...

Cash will go furthest on the homes that don't qualify for FHA financing. Missing appliances, non-functioning plumbing, etc.. Ask you lender what it takes for a home to be 'habitable' and then go look for one that isn't.

I think cash works better on REOs, but I don't know short sales at all - maybe DJ can chime in.

Louie said...

Thank you Sacramentia, that helps!

By way of anecdotal evidence, I was cruising by a few homes that were just listed, and at one foreclosure, the guy who hammers in the For Sale sign was doing his thing. I asked if he was busy these days, and he said things were really picking up. He said a normal day was up to 20 signs going up, and today he was putting in 27.

Deflationary Jane said...

Inventory seems to be going up but there doesn't seem to much that's priced right. Check Redfin and you'll find it's not unusual to see homes listed at 150+ DOM.

On short sales, what matters is whether the sellers and the lender believe you will still be around in 2 to 6 months when the sale is approved. This may be one time where cash doesn't get preferential treatment as cash can walk away at any time where a traditional buyer is more tied to the sale being completed.

All cash can bring a 33% discount but so can 10% to 20% down. List price on my house (boy does that sound strange to me) was 198k, I bid 165k, seller took 165k and sent it to the lender.

Lender replied with 3 different offer letters, each one slightly less. Weirdest RE transaction I've ever seen. By the time I close, my mortgage will be for around 125k or 100 sqft. If I hadn't had 3 HUD1s sent to me to review I wouldn't have believed it.

There are no straight REOs here but you do see the REO flips. They are asking for 175+ sqft. Obviously, not a reasonable price by any standard. It's freaking madness. Once my sale records, these guys are going to hate me.

Louie said...

Thanks for sharing your story, can I ask how you arrived at $165K for your offer?

And how will your final price of 125K be so much lower than the $165K? I assume that includes $8K credit, how else was that lowered? And which bank did you deal with, sounds like someone to do business with! :)

Deflationary Jane said...
This comment has been removed by the author.
Deflationary Jane said...


The folks on this blog will tell you to live in an area before buying and they mean it. I've been watching this neighborhood and the general area since 1998. I knew every sale, default, REO, and tax lien within a mile radius. That made coming up with the offer price easy.

My target was $120 sqft but due to the location, lot size, and condition of the structure (brand new 50yr roof, new HVAC, etc) I went on the high side. If there were problems once we did the home inspection, I could either negotiate down or walk.

I wouldn't assume your experience will be anything like mine. There was only 1 lien holder and it was a foreign bank. That's all I'm going to say on that. The owners were suing the loan servicer and I think that made them anxious to dump the property fast.

The price drops had to do with how the offer letters was written. This one wiped out all junior lien holders, covered all closing costs and left room on the downside in case issues arose because banks do not like to go back and forth. The asset managers don't have the time. We had to go back to them twice for clarification and each time they undercut themselves a little and gave me more time to close if I needed it.

My agent said he'd never seen anything like it.

husmanen said...

DJ, and of course you knew about rental-parity :-) I like how you described you knowledge of the area, that is how I feel. Someday, I will get that area of my brain back!

On anther note, just came back from a short family vacation to Southern California. We had a great time and, of course, I couldn't help but check into the housing market.

Redondo Beach/Palos Verdes. We spent a day at the beach and I saw a lot of for rent/lease signs up right by the beach. A 2bd/2ba Condo on Sepulveda with ocean view, $1995/mo. A 2bd/2ba house two blocks from the beach $1900/mo.

Riverside. In an exclusive area of the hills above Riverside, I have know of a house that had $1.2M in loans that went back to the bank and was just sold for $599k. Rents in the area are about $2500/mo. Still off with rental-parity. BUT the houses in the valley are below rental-parity, sadly there just are no jobs and rental prices are being pushed further down.

Lucky said...

I was able to visit the Greenbriar site - Monte Azul this weekend. I stand corrected, they have at least one model still for sale.

husmanen said...

There are a number of metrics to identify the state/health of the housing market. Trulia came up with a new one in April 2009 - number of houses that have price reductions.

The number of homes for sale that have price reductions is decreasing in Sacto. Does that mean we have or will have a healthy market soon?

Wouldn't it be easier just to look at historical affordability, rental parity and the strength/diversity of the local economy?

patient renter said...

Wouldn't it be easier just to look at historical affordability, rental parity and the strength/diversity of the local economy?

Yes, or more specifically, just to look at affordability and price/income is enough. If the metric you mention had existed in 2006 it probably wouldn't have shown many price reductions, yet the market was anything but healthy.

husmanen said...

Did you guys see this?

Sacramento-area home sales were terrible in January

"DataQuick said 31.8 percent of buyers in Sacramento paid cash..."

At the same time "But median prices for existing homes in Sacramento County, the largest sector of the real estate market, fell from $178,000 in December to $166,000 as lower-end homes gained more market share."

There is a 'normal' level of risk and reward buying at auction. This type of flipping has been around for a long time and part of the 'normal' market.

It appears the sheer numbers and the percentages are above 'normal'. But we may be at a new 'normal' now, however I suspect, with only anecdotal data from Folsom and EDH, that the level has not been met yet.

There is a pain point where buying a house at auction is not worth the risk or reward. With what appears to be above 'normal' amounts of purchases at auction, we haven't hit that spread yet.

This pain point will be hit, especially as prices continue to decline. Just as long as the banks don't drop their prices even more.

kanishk said...

The stories remind of when my wife and were trying to buy in Silicon Valley in 2000. We'd end up at Chevy's drinking a pitcher of Marg's after getting totally frustrated and being outbid for crap.
Antalya Homes Construction

ash said...

I'm bought a duplex in carmichael last month for $135,000 - it brings in $850 on each side

I'm still trying to rent out the other side and will be making $1700 a month total with both sides- though I do have to pay for water, garbage taxes and repairs

I bought it with 100% cash.

Am I retarded? It just seemed like such a good deal- I'm 28 and want to keep it for a long time.

I just don't know where else to put my money.

Thanks for any advice sac landing

husmanen said...

Ash. Welcome to the blog.

Your situation almost seems too good to be true and a little confusing to read as you said you bought a property then you ask for advice.

- Did you actually purchase the property?
- Are you baiting?
- Have buyers remorse?
- Looking for a discussion?
- Lost?

Why don't you share some info on how you actually got to this point, like:

- Why cash?
- Why did you choose the rental area?
- What area?
- ROI, or approach to Value
- Vacancy Rates
- Est. Annual Maintenance Costs, will you be doing it yourself or having someone else do the work?
- How did you determine that price was valid?
- What do other duplexes rent for?
- How long do you intend to keep the property?
- What amount will you insure the property for?

There are plenty of other questions and there are persons on this blog that own rental that could chime.

paranoid renter said...

Congratulations Deflationary Jane on your purchase!

Guess it must be time to shut this blog down. :-)

I _still_ cannot bring myself to buy. It's not so much as I think that prices will fall, but more that I'm enjoying a certain sense of freedom being a renter. As long as prices were going up, I felt some pressure. Now I don't feel that pressure. Instead my requirements have shifted to wanting to buy something new and "green". The problem is that there is very little new construction, and what ever is there is definitely not green...I'm basically looking for things like low-VOC paint, formaldehyde-free furnishings, etc. I think things are moving in that direction, but it will probably take a while to get there.

ash said...

I bought the home in cash because I have a ton of cash. I have 2 rental properties financed currently so I am probably not the best candidate for another loan right now.

The comparable rentals rent for $850 each

It is going to bring in $1700 a month minus utilities - taxes and - property management fees. Should net $1250 per month after all costs are incorporated.

I think the property is a golden nugget that will be a gift that will keep giving to my pocketbook over the years especially since my goals are long term.

I do not have buyers remorse or anything in fact over the next few years I am looking to accumulate more property.

My goal is to own a ton of property and live of the rent eventually.

I'm 28 - I think this downturn will be one of the best times to buy in a long time. In 15 yrs I think we will look back and say,,..,why didn't we buy more?

Jacob said...

People in Japan are still waiting 20 years later.

There are some deals out there for sure, but who knows what will happen.

Especially with the jobs issues, there should be plenty of time to get a deal.

husmanen said...

Anybody know the average time to foreclosure for homes that have the first mortgage with Wells Fargo?

I know the minimum time is three (3) months without payment, then an NOD is filed and three (3) months after that an auction date is set which has to be 21 days after the end of the three (3) NOD months.

Then the minimum would be 90 days + 90 days + 21 days or 201 days.

BUT that is the minimum. Anyone know if Wells Fargo has a tendency to go as fast as they can or drag out the process?

Deflationary Jane said...

Most often WFC is just the servicer. From my experience, WFC will usually try a mod first but it depends on who is holding the note.

I also avoided any SS if WFC or BAC serviced the loan. Generally, WFC would try to mod and string the buyer out and BAC would just let them go to the courthouse.

Another trick on SS, if the house is less then 20% underwater, they'll try to hamp it first. You need to find SS where the borrower is more then 45% underwater. I used a foreclosure site to look up the default amount vs the market price before seeing if the house was even worth looking at.

I still have enough cash to buy a vintage fourplex in midtown if I wanted but I wouldn't touch one with someone else's 10 ft pole. Neighborhoods with a large number of rental properties are changing fast. This is one area of the housing bubble that still a ways from hitting it's bottom.

Deflationary Jane said...


Feels weird to think I'll be owning, like I'm a traitor to my people >; )

I looked for green buildings as well but nothing was priced right or in an area I wanted. So I looked at older central neighborhoods where I could remodel using green tech and the costs made sense.

The nice thing is that the mortgage with impounds is affordable even if I have to go on unemployment. If I hadn't gotten this house at this price, I would have stayed renting too.

Deflationary Jane said...

For all you cash flow spectators:
CR: Shadow Rental Market Pushing down Rents

"This increase in units has more than offset the recent strong migration from ownership to renting, so the rental vacancy rate is now at 10.7% and the apartment vacancy rate is at a record high."

There are vacant rentals everywhere. Why rent a apt or duplex when you can rent a 4 or 5 bdr mcmansion for $1600 and get the space, big kitchens and nice upgrades for less then $450 mo? I rented a 3800 palace for 1875 mo with a balcony overlooking the Sac River and open wild fields on 1 side. How do you compete with that?

People forget to factor in vacancy losses into their rental income projections. Failure to do so now is probably not wise and if you are considering it, you might want to up the %.

patient renter said...

I think this downturn will be one of the best times to buy in a long time

I guess it depends on what you mean by a long time. Compared to 10 years ag, current prices/affordability still don't match up. Looking at the future, prices will continue to go down and affordability will continue to go up, particularly if you're paying in cash. Of course I wish you and anyone else best of luck with their pursuits.

Re: Wells, ditto to exactly what DJ said. I have some friends whose loan is being serviced by Wells. They were offered a trial mod, that fell through, then a forbearance agreement that was pretty atrocious. As DJ said, the goal of Wells is to string things out as long as possible.

I'm a traitor to my people >; )

Hahaha - Consider yourself pardoned :)

patient renter said...

The new article by Matt Taibbi is a good read, for anyone who hasn't caught it yet:

husmanen said...

Thanks for the Wells info. It will help me evaluate any potential homes that have only one loan for potential short sales.

The info will also help friends decide on how to deal with Wells when attempting a loan mod and how long it would take before they have to move if it doesn't work.

Ash. DJs link might provide you an insight into why the other half of the duplex is not renting out. Could be in for some rental reductions in the future.

b1whois said...

husmanen- in california when a home is sold at the courthouse steps the homeowner has 3 days to vacate. if there is a tenant a new law requires 90 day notice to vacate. glad i rent a room out:) just be sure to have a utility in the name of the renter as they want to see that.

husmanen said...

b1whois. That is true. I have am a renter and my rental went into foreclosure last year. So far so good as the owner has received a loan mod. But I am fully aware of the success rates of loan mods.

The friends I have discussed the foreclosure process with 'own' their home. They would get three days but would probably be gone long before that.

On the personal side when looking at a potential foreclosure, a real estate agent can check the records and see if the owners and the address are the same. If not, it is a good sign of a potential rental.

On a side note, one friend of mine got $5000 for cash for keys to move out of his rental that went into foreclosure.

husmanen said...

If Dr. Housing Bubble had a Northern California version I would nominate this home for one of his segments regarding 'bubbles still exist'

$3000 / 5br - Beautiful 5bed house for rent (El Dorado Hills)

This house sold for $1.150 MILLION in April 2005. My guestimate is that Taxes, HOAs and Insurance come to almost $1300 per month. That leaves $1700/month for principle and interest, equating to a loan in the low $300ks.

BTW, lets say they can rent it out for $3000/month that equates to a PITI of an equivalent house value of $550k. Funny, a house down the street is PS for an asking price of $600k.

So what do you guys think? Is there risk for foreclosure? If so is it HIGH, VERY HIGH, or OFF THE CHARTS HIGH?

There is going to be a lot more pain before this trip is over.

norcaljeff said...

Lucky, if you buy from a builder be prepared to pay 10-30% more than if you were to buy a forclosed home, or even a short sale. Local builders have no incentive to deal, they bought land at pennies on the dollar.

husmanen said...

Did anyone see this from Bloomberg?

Prohibit Home-Loan Foreclosures Without HAMP Review

It may slow the tide of foreclosures even more, kicking the can down the road even farther.

Man this is getting frustrating.

Fatigue is starting to take over my addiction :-0

sacramentia said...

That sounds like it would push more homes to short sale. Or is that also considered a foreclosure?

husmanen said...

I don't consider a SS a foreclosure.

Yes, probably more would be considered for SS and a few more would get the SS approval but there is a potential for a much greater impact by slowing the process down and delaying foreclosure.

Also, CA is moving in a different direction that the Feds regarding taxing forgiven loans in a SS.

FTB seems to be looking for those that bought the SUVs, boats etc

Could be a very bad surprise for many.

patient renter said...

FTB seems to be looking for those that bought the SUVs, boats etc

I don't think too many people (myself included) would have a problem with this.

Louie said...

I'm looking at buying a short sale fixer, but unsure of how to price it, or how the bank will discount the value of the house based on the work that needs to be done.

The home is valued at about 200K on the county assessor's page, and its priced accordingly. It sold in 2001 for 185K. Its been on the market about 50 days with no offers, and the price has been reduced about 20% over that time. (I toured the place with the owner, turns out he bought it with his brother, his brother wanted out in 2005, so this guy refinanced at close to 400K and paid out his brother. Ouch)

It has water damage in a bathroom, as well as in one of the bedroom ceilings. There appears to be mildew on the bathroom walls, and my guess is one or both bathrooms will need to be gutted. It will need a new roof soon, and has some other minor damage to the exterior. And the kitchen is all original, so that needs a remodel as well. It also doesn't have a garage, which was was converted to a couple bedrooms, so the sq. footage is nice.

So what would you advise a novice such as myself regarding making an offer? The place will need $30,000 or more in remods right off the bat. But I have some cash for a nice downpayment and the work. Thanks in advance, I really value all the knowledge and advice on this board!

waiting_for_the_fall said...

30K seems on the low end for all that work. I think double that is the right amount. If you really want to buy that dump, bid $100k.

I don't know why you would want to buy now when in a few months, a ton of inventory will hit the market.

There won't be many buyers, since we just entered another recession last month.

Jacob said...

If you haven't fixed houses and especially if you are not doing the work yourself then take whatever budget you think it will cost and double it, that is the low end, tripple it for the high end and it will probably cost you somewhere inbetween.

Also you may see a lot of problems but when you start tearing it apart to fix you will no doubt find a lot more.

sacramentia said...

"There won't be many buyers, since we just entered another recession last month."

Haven't seen this yet - can you share the source?

Louie - How many square feet is the place you are looking at? Really rough numbers but $10/ft will get you paint, floors and some simple stuff. Mildew is no big deal, dryrot can get a little expensive. Be careful to get mulitple bids - they can vary 2-3x is some cases.

Louie said...

Sacramentia and others,

Thanks for the advice. The house is 2100 square feet and has some nice features, like a good floorplan, many large dual pane windows, and big backyard. Cyberhome estimates the neighboring houses to be valued at about 230k (and I think they're the best of the websites for that).

I was there yesterday with my agent, and we also noticed a large crack in the ceiling, where we think there isn't enough structural support in that part of the ceiling. A few beams may be needed, but I'm worried what an inspector will require. I think the posters here are correct, 30k in too low, its looking more like 60k worth of work if I keep a good budget, and I feel comfortable doing some of the work.

I'm thinking now that a $130k bid would be about right, but maybe I should offer even less? Apparently there's a first mortgage with GMAC for about 220k, and second with BofA for about 70k. My agent said both do short sales, but from what I've read on this site, the 2nd mortgage might muck things up. OK, thanks again for any input!