I wake up Saturday morning and check my e-mail. A great home in one of our favorite neighborhoods had dropped it's price 75k! Boy was I excited. It was in our price range, even with current interest rates.
I was very hopeful (an actual owner occupied home), but wanted to move quickly since homes in the lower price range are selling much more briskly around here. We even took my MIL by the house, since she was in town for the night.
To make a long story short.....turns out, the agent put the price on the wrong house (even though the wrong price equated to the average price per square foot for EDH last month).
Needless to say, I was crushed.
Sunday, July 20, 2008
Friday, July 18, 2008
Bankruptcy anyone?
From foreclosure.com:
The last bankruptcy in El Dorado County was filed in August 2007 ... that is until June 2008. In June and the first two weeks in July 2008, there have already been 40 bankruptcy filings. (Filings actually take place in Federal court in Sacramento, but the debtor addresses are listed in EDC.) No area is immune, including 12 in EDH, several in the high rent portion of Cameron Park, and a couple in South Lake Tahoe.
The last bankruptcy in El Dorado County was filed in August 2007 ... that is until June 2008. In June and the first two weeks in July 2008, there have already been 40 bankruptcy filings. (Filings actually take place in Federal court in Sacramento, but the debtor addresses are listed in EDC.) No area is immune, including 12 in EDH, several in the high rent portion of Cameron Park, and a couple in South Lake Tahoe.
June/July 2008 Month's Inventory
Month's inventory for the zips I track has dipped even more this month, down to 4.2 from 4.5. It's amazing what happens when homes start to become affordable again!
I haven't seen as many rentals on the market lately either (at least where I live). So I am beginning to wonder if low supply will put upward pressure on rents, which will further facilitate market normalization (rents go up, and home prices go down...eventually finding an equilibrium point between the two adjustments).
Of course the elephant in the room is distressed inventory......which should continue to hit the market now that the Alt-A and Option ARM is starting to implode. I have started skimming Mr. Mortgage's blog. He has some disturbing predictions for what's to come.
Zips are sorted from high to low, month's inventory. Sales is from DataQuick courtesy of the SacBee, and inventory was collected for SFH resales from ZipRealty.
I haven't seen as many rentals on the market lately either (at least where I live). So I am beginning to wonder if low supply will put upward pressure on rents, which will further facilitate market normalization (rents go up, and home prices go down...eventually finding an equilibrium point between the two adjustments).
Of course the elephant in the room is distressed inventory......which should continue to hit the market now that the Alt-A and Option ARM is starting to implode. I have started skimming Mr. Mortgage's blog. He has some disturbing predictions for what's to come.
Zips are sorted from high to low, month's inventory. Sales is from DataQuick courtesy of the SacBee, and inventory was collected for SFH resales from ZipRealty.
Thursday, July 17, 2008
Too Shady to Sell
Some of you may remember an earlier post on a home near downtown Folsom, that was too good to be true. Well I guess they learned their lesson, and have now included the adjacent parcel and dropped their price even further. The new MLS listing number is 80062942.
Glad to see these shady sales tactics are not being rewarded by the market.
Glad to see these shady sales tactics are not being rewarded by the market.
Deer in the Headlights
I am off the grid for a mere 5 days (our annual Yosemite trip), and I come back to find our nation's financial system teetering on the precipice.
Coming back to all the news reports, which I still haven't quite sifted though, my general mood about the future has gone from nervous trepidation, to helpless and overwhelmed angst.
Let me start by saying, we are a very average American family. We don't have an army (of accountants, financial advisers, lawyers, tax preparers etc.) at our beck an call to offer advise and expertise. We also come from working class families, so we really don't have any trusted relatives we can turn to for this type of advise.
While my gut has been telling me we were headed for rocky economic times, I have been at a loss as to what actions to take in response. The vast majority of our savings is in 401k (except our down payment). Back in January I attempted to read up on my 401k investment options to look for a safer choice going forward. But with all the disclaimers they put in, its really hard to tell what the true risk is for each fund....even the money market and cash reserves seem to have large disclaimers about no guarantee on your principle. Needless to say, I didn't get very far, and gave up. In hindsight, I would have been much better served to have found some help on this.
At this point I am a bit like a deer in the headlights. To preserve the purchasing power of our down payment, I feel we should buy a home soon, as a hedge against inflation and higher interest rates. But at the same time I don't want to purchase a depreciating asset, which is also a quick way to lose our down payment.
I have developed this nagging feeling that I need to be doing something to prepare ourselves financially and physically for hard times ahead, yet I am at a loss as to what exactly those preparations should be.
I am also starting to wonder if I would be better off in ignorant bliss. I would love to know what others have done in response (to the future prospects of our changing economy), if anything.
Coming back to all the news reports, which I still haven't quite sifted though, my general mood about the future has gone from nervous trepidation, to helpless and overwhelmed angst.
Let me start by saying, we are a very average American family. We don't have an army (of accountants, financial advisers, lawyers, tax preparers etc.) at our beck an call to offer advise and expertise. We also come from working class families, so we really don't have any trusted relatives we can turn to for this type of advise.
While my gut has been telling me we were headed for rocky economic times, I have been at a loss as to what actions to take in response. The vast majority of our savings is in 401k (except our down payment). Back in January I attempted to read up on my 401k investment options to look for a safer choice going forward. But with all the disclaimers they put in, its really hard to tell what the true risk is for each fund....even the money market and cash reserves seem to have large disclaimers about no guarantee on your principle. Needless to say, I didn't get very far, and gave up. In hindsight, I would have been much better served to have found some help on this.
At this point I am a bit like a deer in the headlights. To preserve the purchasing power of our down payment, I feel we should buy a home soon, as a hedge against inflation and higher interest rates. But at the same time I don't want to purchase a depreciating asset, which is also a quick way to lose our down payment.
I have developed this nagging feeling that I need to be doing something to prepare ourselves financially and physically for hard times ahead, yet I am at a loss as to what exactly those preparations should be.
I am also starting to wonder if I would be better off in ignorant bliss. I would love to know what others have done in response (to the future prospects of our changing economy), if anything.
Wednesday, July 16, 2008
More signs of the times
We live in a geographically isolated part of Cameron Park, in an area with about 70 newer homes.
In early 2005, if a home listed, it went pending within 24 hours. By autumn 2005, there were 18 homes for sale, of which 14 were vacant.
Now, there are 9 homes for sale, 2 vacant. Four homes are in some stage of foreclosure.
One neighbor used to have magnetic signs on their cars advertising his/her mortgage company. The signs disappeared some time back, and yesterday, so did the neighbor, driving away behind two big moving company vans. The loan has been in default since May 2008 but the house hasn't been listed and like most REO's that I see, no one even attempted to sell it before they let it go back to the bank.
In early 2005, if a home listed, it went pending within 24 hours. By autumn 2005, there were 18 homes for sale, of which 14 were vacant.
Now, there are 9 homes for sale, 2 vacant. Four homes are in some stage of foreclosure.
One neighbor used to have magnetic signs on their cars advertising his/her mortgage company. The signs disappeared some time back, and yesterday, so did the neighbor, driving away behind two big moving company vans. The loan has been in default since May 2008 but the house hasn't been listed and like most REO's that I see, no one even attempted to sell it before they let it go back to the bank.
Tuesday, July 15, 2008
Today's WSJ ...
Sorry I'm a little short on time today, but some odds and ends from this morning's WSJ:
1. One of the new requirements that Bernanke is imposing on mortgage lenders, is the novel idea of requiring that the mortgage lender actually take steps to verify that a borrower can repay the loan. I wonder if certain members of Congress are going to be as outraged over this proposal as they have been over other recent events. Don't worry about a sudden dearth of homebuyers ... the new rules wouldn't take effect until October 1, 2009!
2. IndyMac has suspended home foreclosures, saying it (the FDIC) wants to help as many people as possible remain in their homes. As you will recall, IndyMac was at the forefront of the no-doc jumbo loan market. So now that you and I own IndyMac (or at least its liabilities via the FDIC), there are unlimited resources available to keep the folks in homes they perhaps couldn't afford in the first place.
3. Unrelated to the new Fed rules, lenders (including Fannie/Freddie) are now requiring borrowers to have an adequate downpayment, credit history and demonstrated ability to pay, or in the alternative, requiring borrowers to obtain mortgage insurance (from one of the likely insolvent mortgage insurers). At the same time, the mortgage insurers are scrutinizing the borrowers to make a similar inquiry into the borrowers ability to repay the loans. This will likely increase the cost of borrowing, reducing the amount folks can borrow, and reducing the pool of possible buyers for the mountain of inventory out there.
4. Another aspect of the Feds new requirements for mortgage lenders, is the return of the impound account for taxes and insurance.
Now if they would only enforce the thousands of rules and laws already on the books ... sigh.
Paul
1. One of the new requirements that Bernanke is imposing on mortgage lenders, is the novel idea of requiring that the mortgage lender actually take steps to verify that a borrower can repay the loan. I wonder if certain members of Congress are going to be as outraged over this proposal as they have been over other recent events. Don't worry about a sudden dearth of homebuyers ... the new rules wouldn't take effect until October 1, 2009!
2. IndyMac has suspended home foreclosures, saying it (the FDIC) wants to help as many people as possible remain in their homes. As you will recall, IndyMac was at the forefront of the no-doc jumbo loan market. So now that you and I own IndyMac (or at least its liabilities via the FDIC), there are unlimited resources available to keep the folks in homes they perhaps couldn't afford in the first place.
3. Unrelated to the new Fed rules, lenders (including Fannie/Freddie) are now requiring borrowers to have an adequate downpayment, credit history and demonstrated ability to pay, or in the alternative, requiring borrowers to obtain mortgage insurance (from one of the likely insolvent mortgage insurers). At the same time, the mortgage insurers are scrutinizing the borrowers to make a similar inquiry into the borrowers ability to repay the loans. This will likely increase the cost of borrowing, reducing the amount folks can borrow, and reducing the pool of possible buyers for the mountain of inventory out there.
4. Another aspect of the Feds new requirements for mortgage lenders, is the return of the impound account for taxes and insurance.
Now if they would only enforce the thousands of rules and laws already on the books ... sigh.
Paul
Sunday, July 13, 2008
Fannie and Freddie
As you know, Fannie and Freddie's status is currently in question (notwithstanding efforts to prop them up). Briefly, they hold or have insured about $5 trillion (yes, trillion) in mortgages. Combined, their capital is a little more than $50 billion. And about 1% of their loans are currently delinquent (about $50 billion). If their portfolio's don't get any worse (highly unlikely IMO), their capital is already at risk of being erased.
As you also know, our gubmint is working on homeowner "rescue" legislation that would, among other things, permanently increased the Fannie and Freddie loan limits from $417k to $729,750. So if Fannie and Freddie are soon to be (if not already) insolvent, what impact will doubling the loan limits have on them?
And if you haven't read the fine print in the legislation regarding the tax credit for new home buyers, according to the WSJ, the buyer must repay that tax credit over 15 years. In other words, an unsecured, no interest, mortgage on top of a mortgage. As if that isn't what is getting so many people in trouble now!
Paul
As you also know, our gubmint is working on homeowner "rescue" legislation that would, among other things, permanently increased the Fannie and Freddie loan limits from $417k to $729,750. So if Fannie and Freddie are soon to be (if not already) insolvent, what impact will doubling the loan limits have on them?
And if you haven't read the fine print in the legislation regarding the tax credit for new home buyers, according to the WSJ, the buyer must repay that tax credit over 15 years. In other words, an unsecured, no interest, mortgage on top of a mortgage. As if that isn't what is getting so many people in trouble now!
Paul
Friday, July 11, 2008
July 2008 Inventory by Zip
This is the first month that I have comparable year over year inventory data (from ZipRealty). Looks like we are almost 16% below last year at this point, but we are also 7.7% above last month. So this means sales have slowed or listings have picked up, or a bit of both.
I sorted the zips by % change over last year. As you can see, the relatively expensive zips where prices haven't fallen as much are lagging behind. Their inventory is still growing.
I sorted the zips by % change over last year. As you can see, the relatively expensive zips where prices haven't fallen as much are lagging behind. Their inventory is still growing.
At Any Rate?
The Bee had a story last week that hit close to home. All three of the homes we have tried to purchase, led to negotiations with the bank (2 REOs, 1 SS). In two of the three cases, negotiations played out over months, as opposed to days.
In both of those cases , I watched interest rates fluctuate over the course of our drawn out negotiations. This gave me considerable heartburn as I had predicated our offer on a particular rate (a tad conservative, but obviously not enough to capture the fairly large changes).
So of course, being the risk averse planner that I am, I wanted a rate lock. So here comes the Catch-22. To get a rate lock, I need a contract, but to agree on a contract price, I wanted a rate lock. Argh.
As of today, both of the REOs are Pending, and the SS is still sitting.
In both of those cases , I watched interest rates fluctuate over the course of our drawn out negotiations. This gave me considerable heartburn as I had predicated our offer on a particular rate (a tad conservative, but obviously not enough to capture the fairly large changes).
So of course, being the risk averse planner that I am, I wanted a rate lock. So here comes the Catch-22. To get a rate lock, I need a contract, but to agree on a contract price, I wanted a rate lock. Argh.
As of today, both of the REOs are Pending, and the SS is still sitting.
Thursday, July 10, 2008
Seed Money Update
Given all the gardening interest from the Government Seed Money post, I thought I would offer a quick update on our little container garden.
Keep in mind, my kids helped with the planting. My 4 year old was very meticulous about getting the seeds in the holes, but my 2 year old flung them about the minute they hit his hand. All this to say, the labels may not match the sprouts. We over seeded, and will have to thin some of the sprouts. I haven't done this in a while, and figured our odds were better if there were more seeds.
Thyme - very small with little growth since they broke ground
Rosemary - nothing
Basil - seems every seed has sprouted and they are over an inch tall now.
Sage - nothing
Pepper - a couple small sprouts
Marjoram - nothing
Cilantro - lots of good sizes sprouts
Parsley - can't tell if they are parsley sprouts (which I imagine look a lot like cilantro) or if they are just wayward cilantro sprouts.
I think the Pepper and Marjoram may have drowned, my kids "helped" water that bucket when I wasn't paying attention. My 4 year old is spellbound by the whole process, and gives us daily progress reports.
Keep in mind, my kids helped with the planting. My 4 year old was very meticulous about getting the seeds in the holes, but my 2 year old flung them about the minute they hit his hand. All this to say, the labels may not match the sprouts. We over seeded, and will have to thin some of the sprouts. I haven't done this in a while, and figured our odds were better if there were more seeds.
Thyme - very small with little growth since they broke ground
Rosemary - nothing
Basil - seems every seed has sprouted and they are over an inch tall now.
Sage - nothing
Pepper - a couple small sprouts
Marjoram - nothing
Cilantro - lots of good sizes sprouts
Parsley - can't tell if they are parsley sprouts (which I imagine look a lot like cilantro) or if they are just wayward cilantro sprouts.
I think the Pepper and Marjoram may have drowned, my kids "helped" water that bucket when I wasn't paying attention. My 4 year old is spellbound by the whole process, and gives us daily progress reports.
Indicator of Things to Come
Every time I look at the latest market stress stats, the first word that comes out of my mouth is, "wow." I am still pretty floored at how rapidly both these zips are deteriorating. I think my earlier predictions, of another 10% drop, may have been too tame. Gas at $4.50 a gallon surely isn't helping.
I should also note that EDH's inventory is a bit misleading (tall green bar), while it looks high relative to Folsom, a third of the inventory is homes over $800,000. They are selling at a very very slow pace. I think there were 8 pending out of 150 homes when I last checked. Can you imagine the carrying cost on those for two years...yikes!
I should also note that EDH's inventory is a bit misleading (tall green bar), while it looks high relative to Folsom, a third of the inventory is homes over $800,000. They are selling at a very very slow pace. I think there were 8 pending out of 150 homes when I last checked. Can you imagine the carrying cost on those for two years...yikes!
Wednesday, July 9, 2008
The Mommy Connection
Several months ago, I received an e-mail from a mom whom I had met at Bunco shortly after I moved here. She asked if I had anything to do with a local RE blog........doh! She obviously has an above average memory.
Well since that time, we have started meeting for play dates regularly. Aside from all the usual kiddy talk, we share a lot of dirt on housing related stories. She has been a great source, especially since she has lived here longer and knows her neighbors much better than we do.
So on to her latest dish......
Apparently someone in her neighborhood, struggling to avoid foreclosure, moved out at 3am.
I have heard reports of this in the news/blogs, but have never quite understood it. Why in the middle of the night? Did they take all the appliances and didn't want anyone to witness? If that is the point, wouldn't they do it in the middle of the work week when everyone is gone? I would think nighttime would be when all the neighbors would wake up and want to know what the heck was going on. Or perhaps, moving vans are in such high demand that 3am is the only time they have available? In any case, the situation strikes me as very odd.
A friend of hers who lives nearby, in the RE industry, had regularly refied their home. She was so underwater, that their monthly payment was almost twice our rent, even though their home was considerably smaller. Their home is now in foreclosure. Too much Kool-Aid. Now I am a big fan of personal responsibility and living within your means, but in some cases, like this one, it doesn't make sense for a person to try and stay. Walking away, renting for seven years, seems like a much better alternative to complete financial suicide.
The bank did not have to give them the money. The bank also set the terms for the contract that they signed, which lays out all remedies if they cannot pay. I don't understand why some feel it is such a bad thing to walk in this situation (I was raked over the coals by another blog for my thoughts on this...by a lawyer of all people....whom you would think would understand the idea of a contract).
Of course if there is any type of fraud or misrepresentation involved, that is another ball of wax entirely.
____________
Six months ago, I heard of these types of stories, but they occurred in places like Elk Grove and Natomas. Now they are in my neighborhood. Unfortunately, no zip code is immune.
Well since that time, we have started meeting for play dates regularly. Aside from all the usual kiddy talk, we share a lot of dirt on housing related stories. She has been a great source, especially since she has lived here longer and knows her neighbors much better than we do.
So on to her latest dish......
Apparently someone in her neighborhood, struggling to avoid foreclosure, moved out at 3am.
I have heard reports of this in the news/blogs, but have never quite understood it. Why in the middle of the night? Did they take all the appliances and didn't want anyone to witness? If that is the point, wouldn't they do it in the middle of the work week when everyone is gone? I would think nighttime would be when all the neighbors would wake up and want to know what the heck was going on. Or perhaps, moving vans are in such high demand that 3am is the only time they have available? In any case, the situation strikes me as very odd.
A friend of hers who lives nearby, in the RE industry, had regularly refied their home. She was so underwater, that their monthly payment was almost twice our rent, even though their home was considerably smaller. Their home is now in foreclosure. Too much Kool-Aid. Now I am a big fan of personal responsibility and living within your means, but in some cases, like this one, it doesn't make sense for a person to try and stay. Walking away, renting for seven years, seems like a much better alternative to complete financial suicide.
The bank did not have to give them the money. The bank also set the terms for the contract that they signed, which lays out all remedies if they cannot pay. I don't understand why some feel it is such a bad thing to walk in this situation (I was raked over the coals by another blog for my thoughts on this...by a lawyer of all people....whom you would think would understand the idea of a contract).
Of course if there is any type of fraud or misrepresentation involved, that is another ball of wax entirely.
____________
Six months ago, I heard of these types of stories, but they occurred in places like Elk Grove and Natomas. Now they are in my neighborhood. Unfortunately, no zip code is immune.
Tuesday, July 8, 2008
A Few of My Favorite Things
Two years ago this week, I saw perhaps the most remarkable home in the entire United States, Falling Water. It is a stunning piece of architecture, and a magnificent engineering feat for its day, but not exactly a home I would want to live in.
This got me thinking about the architectural elements that make a home suitable for everyday life, as well as the flourishes and design elements I am drawn to.....here are a couple of my favorite things (although they don't all necessarily belong in the same house.....
Design Elements
In general I love the rustic farmhouse look, which includes, exposed wood beams, lots of covered porches and balconies, pine or other rustic wood cabinetry (the type they are always covering over or demolishing in HGTV specials....much to my chagrin). I don't really like tile, but will make an exception for slate. I also like darker metals and woods, no polished brass or oak. I prefer homes with a nice open flow, no need for a separate dining or living room etc. We are not formal people.
Livability
Entry closet near the front door for shoes, jackets and umbrellas.
Laundry near the bedrooms.
Back patio access near the kitchen or main living area.
The bedrooms should be grouped together and somewhat separate from the main living area.
No carpet in the eating areas.
Closets should not have sliding doors so large that you can't easily access what is inside.
(I'm sure there is much much more to this list, but I have to get back to my day job)
If anyone happens to run across my perfect home in their MLS searches, do let me know.
This got me thinking about the architectural elements that make a home suitable for everyday life, as well as the flourishes and design elements I am drawn to.....here are a couple of my favorite things (although they don't all necessarily belong in the same house.....
Design Elements
In general I love the rustic farmhouse look, which includes, exposed wood beams, lots of covered porches and balconies, pine or other rustic wood cabinetry (the type they are always covering over or demolishing in HGTV specials....much to my chagrin). I don't really like tile, but will make an exception for slate. I also like darker metals and woods, no polished brass or oak. I prefer homes with a nice open flow, no need for a separate dining or living room etc. We are not formal people.
Livability
Entry closet near the front door for shoes, jackets and umbrellas.
Laundry near the bedrooms.
Back patio access near the kitchen or main living area.
The bedrooms should be grouped together and somewhat separate from the main living area.
No carpet in the eating areas.
Closets should not have sliding doors so large that you can't easily access what is inside.
(I'm sure there is much much more to this list, but I have to get back to my day job)
If anyone happens to run across my perfect home in their MLS searches, do let me know.
Monday, July 7, 2008
One Subscription, Two Purposes
I was a little skeptical a couple weeks back when looking at the big spike in foreclosures and NODs in the surrounding neighborhoods. I was using the free search from www.foreclosure.com and thought some listings might be duplicates (but you have to pay the $$ to really know). So I signed up for the three day trial at www.foreclosureradar.com based on Mr.Mortgage's recommendation.
While the data was slightly different, the results were more or less the same. Best I could tell, neither service had complete and up to date info, without duplicates. All three foreclosure information services that I know of, charge about $50 a month for a subscription, which is pretty steep for an non-investor/home buyer (gratefully I found someone to help subsidize my subscription). www.realtytrac.com kinda pissed me off cause they won't tell you how much their service costs unless you put in all kinds of personal information first, so I didn't even bother considering them.
I plan to sign up this week, for two reasons. First and foremost, to make sure my landlord is paying the mortgage (I see it as a small insurance policy). And second, to get better information on the NODs and foreclosures prior to them hitting the MLS.
Anyone have a recommendation for a better foreclosure info site before I sign up with www.foreclosureradar.com?
While the data was slightly different, the results were more or less the same. Best I could tell, neither service had complete and up to date info, without duplicates. All three foreclosure information services that I know of, charge about $50 a month for a subscription, which is pretty steep for an non-investor/home buyer (gratefully I found someone to help subsidize my subscription). www.realtytrac.com kinda pissed me off cause they won't tell you how much their service costs unless you put in all kinds of personal information first, so I didn't even bother considering them.
I plan to sign up this week, for two reasons. First and foremost, to make sure my landlord is paying the mortgage (I see it as a small insurance policy). And second, to get better information on the NODs and foreclosures prior to them hitting the MLS.
Anyone have a recommendation for a better foreclosure info site before I sign up with www.foreclosureradar.com?
Sacramento Leads the Nation
For once we see the title above, and its not about our dismal housing market. There is a really interesting front page article in the WSJ about Sacramento's Blueprint for growth. I'm rather proud that our city would take such a proactive stance on smart growth.
Of course, I felt a substantial twinge of guilt as I realized that our home criteria are the antithesis of this concept.
Of course, I felt a substantial twinge of guilt as I realized that our home criteria are the antithesis of this concept.
Thursday, July 3, 2008
Redefining Patriotism
Time for another non-RE post.
This scene, which occurred a day before the 4th of July, brought tears to my eyes.
While I am dismayed at the religious extremism that fuels terrorists abroad, I have been equally dismayed at the extremism which has taken hold here in the U.S., much of it wrapped in patriotic fervor. The fact that a commercial with a well known cook (Rachael Ray) was pulled from the air because she was wearing a scarf (thought by some to be symbolic of terrorist support) is just absurd. Have we learned nothing since McCarthy’s day?
Tuesday, July 1, 2008
The Fever has Broke
Both the local market and my personal "spring fever" have both broken.
First the local market. Last year the ratio of PS to available home that meet my criteria reached 33% for about a week, and quickly faded back into the 20% range. At that time, there were very few homes on my list (but it was growing). This year, the PS to available home ratio has stayed in the low 30% range for over a month. But as of last week that has now fallen back into the 20% range. More inventory is coming on the market. Some of it is heavily discounted (like $135 sqft) which helps keep the PS ratio up.
As for us, I think we are going to take a breather. My intense desire to nest this spring has now abated. We plan to reorganize our lives to be more comfortable in our rental (find storage for our old fishing boat so we can actually use the garage). With oil over $140 a barrel, the dollar weakening, foreclosures rising with no end in sight, inflation on the rise......I am just too anxious about the future to feel comfortable making such a permanent decision about the next 10-15 years of my life and our entire nest egg.
First the local market. Last year the ratio of PS to available home that meet my criteria reached 33% for about a week, and quickly faded back into the 20% range. At that time, there were very few homes on my list (but it was growing). This year, the PS to available home ratio has stayed in the low 30% range for over a month. But as of last week that has now fallen back into the 20% range. More inventory is coming on the market. Some of it is heavily discounted (like $135 sqft) which helps keep the PS ratio up.
As for us, I think we are going to take a breather. My intense desire to nest this spring has now abated. We plan to reorganize our lives to be more comfortable in our rental (find storage for our old fishing boat so we can actually use the garage). With oil over $140 a barrel, the dollar weakening, foreclosures rising with no end in sight, inflation on the rise......I am just too anxious about the future to feel comfortable making such a permanent decision about the next 10-15 years of my life and our entire nest egg.
Monday, June 30, 2008
For the Record
Some of you may recall earlier posts by me regarding my opinion about agents I have spoken with and our very different interpretation of the facts. Recently I have been threatened with legal action for my opinion as to someone's conduct. Rather than lose sleep over something (or someone) this inconsequential, I have removed the post and set forth below is the full text of one agent's recent email to me.
Update: So I replied to the e-mail saying it wasn't me who was cyberstalking him (leaving links to my blog comments at all the online forums where he is active) and that I had removed the post as requested. I got a really wierd automated reply back. This does bring into question whether the e-mail was really from him, although the references to our personal encounter do lead me to believe it was. In any case, whoever is baiting him....please leave me out of it.
___________________________________________________________
I want to advise you of the following:
1) If you continue any further attempts to damage me or my business you will be met with swift legal action.
2) Your latest attempts are just the evidence my attorney’s need to prove it is malicious and meant to damage me and/or my business.
3) Your writings about me and/or the events do not support any of the facts.
4) As you hide faceless behind a blog do not think your bogus disclaimer will protect you.
5) I know who and where you are and I will personally expose you from your phony blog mask.
You are nothing more than a disgruntled Buyer that thinks every real estate professional is out to get you. That was evident from the first time I met you. It is even further evident by your goofy blog. I also have information about your past that would make a great blog… your past fits well with your current views.
You are now formally put on notice to cease your writings about me or claimed events. You are further notified to remove the blog you wrote on or around 11-07 within 24 hours or expect swift legal action.
Any questions you know how to find me… I do not have a reason to hide or remain faceless behind bogus writings about events or others.
Jaret L. Ghent
Update: So I replied to the e-mail saying it wasn't me who was cyberstalking him (leaving links to my blog comments at all the online forums where he is active) and that I had removed the post as requested. I got a really wierd automated reply back. This does bring into question whether the e-mail was really from him, although the references to our personal encounter do lead me to believe it was. In any case, whoever is baiting him....please leave me out of it.
___________________________________________________________
I want to advise you of the following:
1) If you continue any further attempts to damage me or my business you will be met with swift legal action.
2) Your latest attempts are just the evidence my attorney’s need to prove it is malicious and meant to damage me and/or my business.
3) Your writings about me and/or the events do not support any of the facts.
4) As you hide faceless behind a blog do not think your bogus disclaimer will protect you.
5) I know who and where you are and I will personally expose you from your phony blog mask.
You are nothing more than a disgruntled Buyer that thinks every real estate professional is out to get you. That was evident from the first time I met you. It is even further evident by your goofy blog. I also have information about your past that would make a great blog… your past fits well with your current views.
You are now formally put on notice to cease your writings about me or claimed events. You are further notified to remove the blog you wrote on or around 11-07 within 24 hours or expect swift legal action.
Any questions you know how to find me… I do not have a reason to hide or remain faceless behind bogus writings about events or others.
Jaret L. Ghent
Calling all Lawyers
Wondering if there are any lawyers who would be willing to take a quick look at something. I have received a threatening e-mail from a realtor.
I was merely recounting my personal experience, so I don't believe I can be sued for defamation. I also know that California has anti-SLAPP. But a professional opinion would be very helpful.
I was merely recounting my personal experience, so I don't believe I can be sued for defamation. I also know that California has anti-SLAPP. But a professional opinion would be very helpful.
Friday, June 27, 2008
Thou Shall not Covet
Okay, so I am not normally one to "covet," but if I had a mil or so to drop on a house....this would likely be a great candidate...
80050055
603 FIGUEROA ST, Folsom, CA 95630
I always joke around with Mr. BT that I would never really want to own a home this large, but I would really love to have friends who do. That way I can enjoy it when I come over to visit =)
80050055
603 FIGUEROA ST, Folsom, CA 95630
I always joke around with Mr. BT that I would never really want to own a home this large, but I would really love to have friends who do. That way I can enjoy it when I come over to visit =)
Thursday, June 26, 2008
SubPrime was Sublime Compared to This
As many industry insiders have said for a while, its not just subprime. Evidence of this can now be found in our local market. Subprime just happened to be first, and was concentrated in lower income and newly built burbs. However, no area in Sacramento is immune to the second wave, the Alt-A and Option ARM loans.
With each week I watch with shock and awe, as the number of foreclosures and NODs increase at an increasing rate in both 95762 and 95630 (Folsom and El Dorado Hills). Given that these two zips are more pricey than some other parts of Sacramento, it makes sense that they largely escaped the subprime meltdown. While I knew this second wave would be an issues, I am still taken aback at how pervasive the problem is.
I keep thinking, the pace will start to moderate.....but it hasn't.
In El Dorado Hills, NODS are up 25% and foreclosures are up 194% since March 3rd.
Folsom NODs are up 104%, and foreclosures are up 115% over that same couple months. 25 new NODs were reported in Folsom this week alone (all stats are according to www.foreclosure.com). Ironically I only started looking at this data to make sure our rental was not in jeapordy.
The real shocker came when I compared the stats above to my previous zip in Northern Virginia outside of D.C. The numbers there are a fraction of what I am seeing in Folsom and EDH. The neighborhoods are largely comparable, albeit with a little less new development and more crime in my previous zip.
All this is making me rather grateful that none of our earlier offers were acceptable to the banks. Seems they were doing us a favor. Ironically, all three homes we have put offers on over the last 6 months, are still on the market.
With each week I watch with shock and awe, as the number of foreclosures and NODs increase at an increasing rate in both 95762 and 95630 (Folsom and El Dorado Hills). Given that these two zips are more pricey than some other parts of Sacramento, it makes sense that they largely escaped the subprime meltdown. While I knew this second wave would be an issues, I am still taken aback at how pervasive the problem is.
I keep thinking, the pace will start to moderate.....but it hasn't.
In El Dorado Hills, NODS are up 25% and foreclosures are up 194% since March 3rd.
Folsom NODs are up 104%, and foreclosures are up 115% over that same couple months. 25 new NODs were reported in Folsom this week alone (all stats are according to www.foreclosure.com). Ironically I only started looking at this data to make sure our rental was not in jeapordy.
The real shocker came when I compared the stats above to my previous zip in Northern Virginia outside of D.C. The numbers there are a fraction of what I am seeing in Folsom and EDH. The neighborhoods are largely comparable, albeit with a little less new development and more crime in my previous zip.
All this is making me rather grateful that none of our earlier offers were acceptable to the banks. Seems they were doing us a favor. Ironically, all three homes we have put offers on over the last 6 months, are still on the market.
Wednesday, June 25, 2008
It's Getting Personal
When we first moved here in the Fall of 2006, we didn’t really know anyone in the immediate area. Over the last year and a half that has changed. I have been continually surprised at what a “small town” this is. Everyone seems to be connected somehow (so-and-so’s doctor is so-and-so’s brother in law etc.).
The more roots we put down, and the more we get to know the people who live here, the less I like to blog about local real estate conditions. Without any ties to the community, it was easy to feel righteous about my quest for affordable housing.
But all that has changed. Now when a home gets listed on the MLS, I know people who live nearby. I know what these comps are going to do to their home values. For instance, in yesterday’s screen scrape, I saw a home for $157 a square foot. Last year I would have been elated …but instead my heart sank. It is the exact same model as my friend’s.
The more roots we put down, and the more we get to know the people who live here, the less I like to blog about local real estate conditions. Without any ties to the community, it was easy to feel righteous about my quest for affordable housing.
But all that has changed. Now when a home gets listed on the MLS, I know people who live nearby. I know what these comps are going to do to their home values. For instance, in yesterday’s screen scrape, I saw a home for $157 a square foot. Last year I would have been elated …but instead my heart sank. It is the exact same model as my friend’s.
Tuesday, June 24, 2008
Whose Skin is It?
I thought I would discuss the pros and cons of down payment assistance since its been in the news so much lately.
First, I should note, that Mr.BT and I bought our first home in early 2002 with very little down. At the time, home prices were comparable to monthly rents and prices were increasing faster than we could save for a down payment. We had fully documented income (but not a long history) and good credit (but I can't remember how good).
For our situation, a low/no down payment made a lot of sense given the market conditions and our steady income.
Fast forward several years. Home prices are so high that even avid savers can't muster up the down payment. In this situation two things can happen, 1) builders and industry groups can subsidize down payments to get people into homes at current prices, or 2) prices can come down to a point where normal people can afford them with what they have saved up.
I obviously like the second choice, since it is a much more sustainable solution over the long term. It also means, as many opposition groups have noted, that people will have "skin in the game." I am not sure we are doing low income or minority groups any favors by getting them into homes using down payment assistance. At current prices, its cheaper to rent a home than to buy in most locations. And buying is risky in a declining market, since even the slightest decline in value (I believe 3% is the FHA threshold) puts them underwater on their loan, and chances are, prices are likely to decline if no one else can afford a down payment.
As I have mentioned many times on this blog, I would rather see home prices drop to affordable levels for fixed interest, 20% down loans. Of course there are always exceptions. I have no problem with the government offering more lenient terms to first time buyers who have documented income (1-2 years) and good credit.
I know there are several first-time buyers out there.....are you more inclined to 1) look for low down payment options and purchase a more expensive home, 2) purchase a less expensive home with the money you currently have saved up, 3) wait till prices drop and you can afford a nicer home with less down payment.
First, I should note, that Mr.BT and I bought our first home in early 2002 with very little down. At the time, home prices were comparable to monthly rents and prices were increasing faster than we could save for a down payment. We had fully documented income (but not a long history) and good credit (but I can't remember how good).
For our situation, a low/no down payment made a lot of sense given the market conditions and our steady income.
Fast forward several years. Home prices are so high that even avid savers can't muster up the down payment. In this situation two things can happen, 1) builders and industry groups can subsidize down payments to get people into homes at current prices, or 2) prices can come down to a point where normal people can afford them with what they have saved up.
I obviously like the second choice, since it is a much more sustainable solution over the long term. It also means, as many opposition groups have noted, that people will have "skin in the game." I am not sure we are doing low income or minority groups any favors by getting them into homes using down payment assistance. At current prices, its cheaper to rent a home than to buy in most locations. And buying is risky in a declining market, since even the slightest decline in value (I believe 3% is the FHA threshold) puts them underwater on their loan, and chances are, prices are likely to decline if no one else can afford a down payment.
As I have mentioned many times on this blog, I would rather see home prices drop to affordable levels for fixed interest, 20% down loans. Of course there are always exceptions. I have no problem with the government offering more lenient terms to first time buyers who have documented income (1-2 years) and good credit.
I know there are several first-time buyers out there.....are you more inclined to 1) look for low down payment options and purchase a more expensive home, 2) purchase a less expensive home with the money you currently have saved up, 3) wait till prices drop and you can afford a nicer home with less down payment.
Monday, June 23, 2008
Other Sacramento Renters
I updated the link section of other Sacramento area renters. If you would like to be included in the list, please send a link to your blogger profile or website. Content doesn't necessarily have to be housing related. My e-mail address is average_buyer at yahoo.com.
In particular, PeoninChief has a nice write up on some of the legal rights and remedies you have as a tenant if your landlord is being foreclosed upon.
In particular, PeoninChief has a nice write up on some of the legal rights and remedies you have as a tenant if your landlord is being foreclosed upon.
Saturday, June 21, 2008
Why Can't we Be the Great Deal Story?
So I am rather bitter, and a bit tipsy now. We put in an offer last week on an REO that was very close to full price. Bank wouldn't budge an inch. The home has been on the market for around 6 months, and has dropped in price almost 150k. You would think 5-10k would be peanuts. And so far, its not like they have any other offers. What the hell is going on? If they wait another month or two for a full price offer, they will have pissed away the difference (between our final offer and their terms) in carrying costs. And don't get me started on how their agent killed the deal over commission.
I am highly frustrated, and about ready to give up. We live in a lovely rental home, and at this point, I am not sure it is worth the frustration and headache of trying to purchase. I know many readers have counseled me to wait (on top of the year and a half we have already waited). At this point, waiting might be better than facing continual rejection (its almost worse than interviewing for a job).
I am always hearing these anecdotal stories of the great deals people are getting.....600k homes for 350k. Why can't this happen to us?
I am highly frustrated, and about ready to give up. We live in a lovely rental home, and at this point, I am not sure it is worth the frustration and headache of trying to purchase. I know many readers have counseled me to wait (on top of the year and a half we have already waited). At this point, waiting might be better than facing continual rejection (its almost worse than interviewing for a job).
I am always hearing these anecdotal stories of the great deals people are getting.....600k homes for 350k. Why can't this happen to us?
Friday, June 20, 2008
Figuring out Folsom
Folsom has been relegated to our list of "we would love to live there, but its still too expensive" (Davis, Downtown, Mid Town, East Sac, Arden are also in that bucket).
The strong market there seems at odds with what I am seeing in the data. From the graph below, you can see that there are almost as many NODs as there are MLS listings in Folsom. Part of the story may be that inventory has shrunk compared to last year when it was in the 300s. Sooner or later, something has gotta give.
The strong market there seems at odds with what I am seeing in the data. From the graph below, you can see that there are almost as many NODs as there are MLS listings in Folsom. Part of the story may be that inventory has shrunk compared to last year when it was in the 300s. Sooner or later, something has gotta give.
May June Month's Inventory
While we may not agree on what is happening and why. At the very least, we should be able to agree that something is happening. The market is vastly different that it was a year ago. Inventory is down, prices are down, and sales are up.
The result, month's inventory is almost half of what it was last year at this time (obviously 30% off last year's prices makes a big difference!). The Sacramento Metro area is now down to 4.5 month's inventory. This is below the traditional 6 month mark that is thought to be a balanced market between buyer and seller. The zips below are sorted by month's inventory.
Almost everyone I know that had been waiting to buy a home, has now done so this spring (including several housing bubble bloggers). So what I am wondering...... will the current demand level be sustainable? Or is this just a really big big bounce?
SFH inventory comes from ZipRealty, and sales comes from the SacBee via DataQuick.
The result, month's inventory is almost half of what it was last year at this time (obviously 30% off last year's prices makes a big difference!). The Sacramento Metro area is now down to 4.5 month's inventory. This is below the traditional 6 month mark that is thought to be a balanced market between buyer and seller. The zips below are sorted by month's inventory.
Almost everyone I know that had been waiting to buy a home, has now done so this spring (including several housing bubble bloggers). So what I am wondering...... will the current demand level be sustainable? Or is this just a really big big bounce?
SFH inventory comes from ZipRealty, and sales comes from the SacBee via DataQuick.
Thursday, June 19, 2008
How Much is A Lot?
The Sac Bee posted their DataQuick county stats today. There is a little tidbit in the write up that I focused on.
Wasserman notes that "Absentee owners, typically investors seeking rental properties, accounted for an estimated 19 percent of all sales. At one point near the peak of the boom, investor share reached almost 27 percent."
Wow, that's still one out of every five purchases! It's only down 8% from the hey day. Most stable neighborhoods that I know of don't have nearly that level of renters. Once again I wonder, what the heck are they doing with all these homes?
I have no idea what a healthy level of investment activity is. Even lacking historical context for this number, 19% still seems really high. I would think around 10% is "normal".
This leads me to believe that while it may appear that life has returned to the Sacramento housing market, it is largely artificial. Thus the market is likely to remain on life support for quite some time to come until true home buyer demand strengthens.
Wasserman notes that "Absentee owners, typically investors seeking rental properties, accounted for an estimated 19 percent of all sales. At one point near the peak of the boom, investor share reached almost 27 percent."
Wow, that's still one out of every five purchases! It's only down 8% from the hey day. Most stable neighborhoods that I know of don't have nearly that level of renters. Once again I wonder, what the heck are they doing with all these homes?
I have no idea what a healthy level of investment activity is. Even lacking historical context for this number, 19% still seems really high. I would think around 10% is "normal".
This leads me to believe that while it may appear that life has returned to the Sacramento housing market, it is largely artificial. Thus the market is likely to remain on life support for quite some time to come until true home buyer demand strengthens.
Wednesday, June 18, 2008
How Low Can They Go?
I'm not sure I agree with all the recent comments on Lander's blog about how interest rates will bring prices down. My gut tells me that a home listed at $300,000 now, is not going to fall another 50% due to interest rates. I haven't spent much time mulling this over...so please point out what I may have overlooked.
Right now we are in a situation of oversupply. Currently, prices are moving lower as it gets worked off. At the rate we are going, it seems the extra supply will be worked off by the end of the year (assuming its not just investors buying right now......foreclosures notwithstanding).
If we take much more off today's prices, it will mean we are below the cost to build new homes. Thus, no new homes would be built. Eventually, existing homes will fill due to population growth (the fact that the area is now more affordable may even bring some people back). At some point, this will squeeze supply, bringing home prices up to a point where builders can profitably build more supply.
If interest rates go up, building will pretty much grind to a halt (more than it is now!). Resale home prices are very sticky going down. I doubt we would see prices drop, in line with increases in interest rates, since there is always a lag. In other words, this will take some time to work out, and similar to 2006/2007, purchase activity would dry up as buyers and sellers face off in another stalemate.
I see this scenario taking several years to play out, depending on how long interest rates are up. In my mind, there is just way too much uncertainty related to macroeconomic factors right now, and we are talking a period of many years for this all to resolve.
Personally, I am a bird in the hand kinda gal. I would rather purchase sooner, and get a reasonable price (there are some on par with rent), with a reasonable interest rate, prior to seeing my purchasing power eaten up by rising inflation.
Many argue that home prices will continue to go down (beyond the levels that fundamentals would suggest) as interest rates increase. This would lower my property tax base, my principle, and increase my interest write off. However, I am not sure waiting for several more years is really worth it, if our monthly payment ends up being roughly the same, and I have the ability to appeal my property tax base.
I am looking for a place to live and raise my family. If we can purchase now for the same or less than we can rent, why would we wait? Especially since rents will go up with inflation and decreased housing supply.
Right now we are in a situation of oversupply. Currently, prices are moving lower as it gets worked off. At the rate we are going, it seems the extra supply will be worked off by the end of the year (assuming its not just investors buying right now......foreclosures notwithstanding).
If we take much more off today's prices, it will mean we are below the cost to build new homes. Thus, no new homes would be built. Eventually, existing homes will fill due to population growth (the fact that the area is now more affordable may even bring some people back). At some point, this will squeeze supply, bringing home prices up to a point where builders can profitably build more supply.
If interest rates go up, building will pretty much grind to a halt (more than it is now!). Resale home prices are very sticky going down. I doubt we would see prices drop, in line with increases in interest rates, since there is always a lag. In other words, this will take some time to work out, and similar to 2006/2007, purchase activity would dry up as buyers and sellers face off in another stalemate.
I see this scenario taking several years to play out, depending on how long interest rates are up. In my mind, there is just way too much uncertainty related to macroeconomic factors right now, and we are talking a period of many years for this all to resolve.
Personally, I am a bird in the hand kinda gal. I would rather purchase sooner, and get a reasonable price (there are some on par with rent), with a reasonable interest rate, prior to seeing my purchasing power eaten up by rising inflation.
Many argue that home prices will continue to go down (beyond the levels that fundamentals would suggest) as interest rates increase. This would lower my property tax base, my principle, and increase my interest write off. However, I am not sure waiting for several more years is really worth it, if our monthly payment ends up being roughly the same, and I have the ability to appeal my property tax base.
I am looking for a place to live and raise my family. If we can purchase now for the same or less than we can rent, why would we wait? Especially since rents will go up with inflation and decreased housing supply.
Tuesday, June 17, 2008
Government Seed Money
Wondering what we did with our stimulus $$? Probably not...but I'll tell you anyways.
As I have mentioned previously, one reason I am anxious to get our own place, is so I can start a small garden and plant some fruit trees. I was lamenting this to a good friend from high school, who lives in Novato. She convinced me there is no reason to wait. They had already started a nice container garden in their small backyard (including a dwarf lemon tree). Their 4 year old is really enjoying the experience.
So last weekend we went down to Home Depot, and bought some containers, soil and seeds (figured we would try from seed first). Will let you know if we get any return on our investment =)
Thus, we followed the intent (spending money at a big box store) but not necessarily the spirit of the Congressional legislation.
As I have mentioned previously, one reason I am anxious to get our own place, is so I can start a small garden and plant some fruit trees. I was lamenting this to a good friend from high school, who lives in Novato. She convinced me there is no reason to wait. They had already started a nice container garden in their small backyard (including a dwarf lemon tree). Their 4 year old is really enjoying the experience.
So last weekend we went down to Home Depot, and bought some containers, soil and seeds (figured we would try from seed first). Will let you know if we get any return on our investment =)
Thus, we followed the intent (spending money at a big box store) but not necessarily the spirit of the Congressional legislation.
Sunday, June 15, 2008
Another Mental Note to Self -
Prospective home should have good sturdy construction and solid doors. Our 4 year old drama queen seems to be developing quite the temper (of course the heat and lack of nap don't help the situation). Also preferable to have a home where sound doesn't carry (hence we lean more towards a one stories). Also nice to have - a good spot for time-outs.
Inferiority Complex
I have heard that Hollywood and the entertainment industry are recession proof. The idea is that people turn to TV and the movies as a getaway in hard times. It's seen as an inferior good to vacations and expensive nights out on the town.
Speaking of inferior goods, an interesting recession indicator is lipstick sales. They typically go up, while spending on spa treatments and other beauty related items plummet. Lipstick is seen by working class women as a little luxury that makes them still feel beautiful, at a fraction of the price.
So this was my overly academic way of prefacing the latest bad news in the family. My pseudo step-brother, who works on the technical side of the TV and film industry in the L.A. area was laid off last week.
While the National Bureau of Economic Research's (NBER) Business Cycle Dating Committee may not have declared an official recession yet....it sure feels like one to me.
Speaking of inferior goods, an interesting recession indicator is lipstick sales. They typically go up, while spending on spa treatments and other beauty related items plummet. Lipstick is seen by working class women as a little luxury that makes them still feel beautiful, at a fraction of the price.
So this was my overly academic way of prefacing the latest bad news in the family. My pseudo step-brother, who works on the technical side of the TV and film industry in the L.A. area was laid off last week.
While the National Bureau of Economic Research's (NBER) Business Cycle Dating Committee may not have declared an official recession yet....it sure feels like one to me.
Saturday, June 14, 2008
Losing Interest
Yikes! Interest rates rose almost 1/2 percentage point last week.
There were a couple homes we were considering, and they suddenly got more expensive!
Not sure if this is giving me more incentive to jump before they go higher, or less, as I wait for the home price to come down further to compensate.
At any rate, although expected, this is not a welcome development.
(I have to admit, this is happening a bit sooner than anticipated, I figured they would start rising substantially around Aug/Sept....so I thought we had a bit more time to shop while rates were low).
There were a couple homes we were considering, and they suddenly got more expensive!
Not sure if this is giving me more incentive to jump before they go higher, or less, as I wait for the home price to come down further to compensate.
At any rate, although expected, this is not a welcome development.
(I have to admit, this is happening a bit sooner than anticipated, I figured they would start rising substantially around Aug/Sept....so I thought we had a bit more time to shop while rates were low).
Friday, June 13, 2008
Whoo Hoo....Phew
Mr. BT found out today his contract has been renewed! So we have at least a 1-1.5 years of job security for him (although we had thought that the first time they got the contract).
A relatively secure job certainly makes house shopping easier.
A relatively secure job certainly makes house shopping easier.
Recent Good Buys & Offers to Builders
Please post homes you think are a good buy or any offers you know of that were accepted, especially to builders. It will help give others negotiating leverage when they are ready to buy. Even just letting people know what type of builder incentives they can expect would be helpful since its hard to tell if they give everyone the same incentives.
Pieces of data to include: Zip Code, MLS or Development Name, List Price, Incentives, Offer (if any), house details (sq ft, garage size, lots size etc).Feel free to post info for homes anywhere in the Sacramento Metro area.
(I am no longer going to update this section each month since it doesn't get as many comments as it used to....rather ironic since prices have fallen so much!).
Pieces of data to include: Zip Code, MLS or Development Name, List Price, Incentives, Offer (if any), house details (sq ft, garage size, lots size etc).Feel free to post info for homes anywhere in the Sacramento Metro area.
(I am no longer going to update this section each month since it doesn't get as many comments as it used to....rather ironic since prices have fallen so much!).
Thursday, June 12, 2008
Housing Options
When we first moved back to the Sacramento area in the Fall of 2006, we figured we wouldn't be in our rental for long. We signed a 6 month lease, and didn't put anything on the walls (since the holes would need to be covered when we moved). We also kept our down payment money in a high yield savings so that it was immediately accessible.
In some ways, I saw this as an option on the housing market. We could have saved money if we signed a longer lease (or moved to a cheaper rental), or locked our money up in a CD or some other financial product. The money we are not making by doing these things, is essentially the cost of our option.
Fast forward a year an a half, and I am starting to become frustrated. I am still hopeful that we will find a great place soon. But am wondering if it would be prudent to give up some of our options. Heck, I haven't even ordered checks that have the rental address on them (we are still using checks with our old D.C. address, and are down to the last book!). This hopeful mindset, has me living in denial, which makes the waiting both better and worse.
In some ways, I saw this as an option on the housing market. We could have saved money if we signed a longer lease (or moved to a cheaper rental), or locked our money up in a CD or some other financial product. The money we are not making by doing these things, is essentially the cost of our option.
Fast forward a year an a half, and I am starting to become frustrated. I am still hopeful that we will find a great place soon. But am wondering if it would be prudent to give up some of our options. Heck, I haven't even ordered checks that have the rental address on them (we are still using checks with our old D.C. address, and are down to the last book!). This hopeful mindset, has me living in denial, which makes the waiting both better and worse.
Wednesday, June 11, 2008
Making Sense of It All - 95672 & 95630
Below is my attempt to make sense of the conflicting data I have been gathering for 95762 & 95630.
According to both Housing Tracker and SacRealStats inventory is still dropping in the Sacramento Metro Area.
Specifically, inventory for the El Dorado Hills housing market (95762) is down 4.3% compared to last month, and 21% compared to last year. For the Folsom housing market (95630) its down 2.3% compared to last month, and a whopping 40% compared to last year. Although, I should note that both of the month-to-month changes are below the region’s average month-over-month drop of 5.8%.
Part of the explanation for the drop in inventory is increased contract activity. The number of pending homes in my screen scrape is still at an all time high. Approximately 1 in 3 homes is pending. I specifically use the term “pending”, since actual sales don’t seem to be up compared to April 07 or 06 (don’t have May data yet). In fact, sales in Folsom are still considerably below those levels.
This is where things get interesting. I have been tracking NODs and Foreclosures for the past three months for those zip codes (see graph below). Rates for both have been going up steadily. NODs seem to be a bigger issue in Folsom, and actual foreclosures in EDH.
This leads me to two separate theories….one for each zip code:
In Folsom, where home prices haven’t fallen much (less than 20% from peak), it seem like people have stopped trying to sell their homes and are purposely missing payments in hopes they can get a bank work out. Hence the big increase in NODs, but the smaller conversion to foreclosures.
In El Dorado Hills, I believe many stretched too far, and are getting foreclosed on. With prices down approximately 30% form peak, there is little reason to fight for your home. I should also note that, inventory has not dipped as much here, since million dollar homes make up a quarter of the listings. So looking at total inventory numbers is deceptive (these homes seem to sit forever).
What does all this mean for my home search? I have yet to figure that out =)
According to both Housing Tracker and SacRealStats inventory is still dropping in the Sacramento Metro Area.
Specifically, inventory for the El Dorado Hills housing market (95762) is down 4.3% compared to last month, and 21% compared to last year. For the Folsom housing market (95630) its down 2.3% compared to last month, and a whopping 40% compared to last year. Although, I should note that both of the month-to-month changes are below the region’s average month-over-month drop of 5.8%.
Part of the explanation for the drop in inventory is increased contract activity. The number of pending homes in my screen scrape is still at an all time high. Approximately 1 in 3 homes is pending. I specifically use the term “pending”, since actual sales don’t seem to be up compared to April 07 or 06 (don’t have May data yet). In fact, sales in Folsom are still considerably below those levels.
This is where things get interesting. I have been tracking NODs and Foreclosures for the past three months for those zip codes (see graph below). Rates for both have been going up steadily. NODs seem to be a bigger issue in Folsom, and actual foreclosures in EDH.
This leads me to two separate theories….one for each zip code:
In Folsom, where home prices haven’t fallen much (less than 20% from peak), it seem like people have stopped trying to sell their homes and are purposely missing payments in hopes they can get a bank work out. Hence the big increase in NODs, but the smaller conversion to foreclosures.
In El Dorado Hills, I believe many stretched too far, and are getting foreclosed on. With prices down approximately 30% form peak, there is little reason to fight for your home. I should also note that, inventory has not dipped as much here, since million dollar homes make up a quarter of the listings. So looking at total inventory numbers is deceptive (these homes seem to sit forever).
What does all this mean for my home search? I have yet to figure that out =)
Tuesday, June 10, 2008
Follow the $$
While working out on the treadmill at the gym, I couldn't help but notice the RE infomercial on the big screen. Apparently they are having a seminar in Sacramento, hence they were running their pitch locally. They showed a guy, who bought a home that appraised for $315, 000 in Henderson NV. He was bragging about how he paid, $315,000 (well actually the bank, since it was a 100% LTV loan), plus he got money back from the seller who also paid closing costs.
Why are banks willing to give folks like this $$? I'm sure that home has lost at least 20% of its value by now.
I came home from the gym, to an e-mail about someone's recent experience trying to purchase an REO in a community nearby. They had put in a full price offer 6 hours after it hit the MLS, only to be out bid, 3 hours earlier with an all cash offer. This was very disturbing news for me. It is similar to the experience my brother-in-law is having over in Santa Rosa.
What the hell are these investors doing with these homes? Where is the cash coming from? Something seems wrong to me when investors constantly beat out well qualified offers from real buyer (people who actually intend to occupy and live in the house full time). Neighborhoods need stability and community to survive and thrive. Too much investor activity kills even the nicest of places (for instance, where I live in Serrano, its almost all rented homes and there is little to no neighborliness).
I would love to see them change the (tax?) laws to give buyers a fighting chance.
Why are banks willing to give folks like this $$? I'm sure that home has lost at least 20% of its value by now.
I came home from the gym, to an e-mail about someone's recent experience trying to purchase an REO in a community nearby. They had put in a full price offer 6 hours after it hit the MLS, only to be out bid, 3 hours earlier with an all cash offer. This was very disturbing news for me. It is similar to the experience my brother-in-law is having over in Santa Rosa.
What the hell are these investors doing with these homes? Where is the cash coming from? Something seems wrong to me when investors constantly beat out well qualified offers from real buyer (people who actually intend to occupy and live in the house full time). Neighborhoods need stability and community to survive and thrive. Too much investor activity kills even the nicest of places (for instance, where I live in Serrano, its almost all rented homes and there is little to no neighborliness).
I would love to see them change the (tax?) laws to give buyers a fighting chance.
Monday, June 9, 2008
It's Official.....
According to the popular saying, Sacramento is now in a Recession. They saying goes something like.....its a recession when someone you know loses their job, its a depression when you lose your job.
Rather bummed out tonight. Just got word that Mr. BTs cousin, who was a manager at a local auto dealership, was laid off. He wasn't exactly expecting it. Although he admitted it wasn't a complete surprise either, as he had to lay off quite a bit of staff already.
Save those pennies.....we are in for some rainy days. I find it rather ironic that California is experiencing drought conditions.
Rather bummed out tonight. Just got word that Mr. BTs cousin, who was a manager at a local auto dealership, was laid off. He wasn't exactly expecting it. Although he admitted it wasn't a complete surprise either, as he had to lay off quite a bit of staff already.
Save those pennies.....we are in for some rainy days. I find it rather ironic that California is experiencing drought conditions.
May June 2008 SFH Inventory
Inventory continues to decline for all but a handful of zips (zips are sorted by decline in inventory, least to most), with a 5.8% decline from last month. This is especially significant, because, inventory is typically growing at this time of year.
Due to shrinking inventory, I think the biggest of the price declines are now behind us. However, as the economy continues to sputter, additional supplies of distressed inventory, should keep a lid on prices.
Due to shrinking inventory, I think the biggest of the price declines are now behind us. However, as the economy continues to sputter, additional supplies of distressed inventory, should keep a lid on prices.
Saturday, June 7, 2008
I know its bad when......
......even my younger brother, (who thinks the WSJ is worthless because it has no sports or comics) knows about the stock market tumble, increased unemployment and the jump in oil that occurred on Friday.
To boot, his company laid off over 10% of its sales force last week....they were calling it Black Friday.
To boot, his company laid off over 10% of its sales force last week....they were calling it Black Friday.
Friday, June 6, 2008
Rethinking the REO
Thanks to the many who commented and sent e-mails regarding our situation. Normally I would respond in the comments, but my thoughts were running a bit long....
We were prepared to deal with many of the issues going into the deal such as -
1) The "as-is" condition: Mr. BT has considerable experience in construction, as does the rest of his family, so we had a good idea what it would take to fix up the place the way we like it. In addition, we planned to stay in our rental an additional month, so we wouldn't have to live with invasive renovations.
2) Market/Financials: The monthly payment on the home would have been cheaper than our current rent, even when you include taxes and insurance, and some $$ for home maintenance and repairs. So the falling market wouldn't really affect us till we were ready to sell.
We had even worked through the addendum and created a list of modifications that we felt would make us comfortable going forward. (Next time, assuming there is one, we will know to ask for that upfront.)
The item that finally broke the camel's back, came last night after learning about how unscrupulous the bank has been working with customers. The WSJ lawsuit article tipped us off that they may not be a model citizen (in fact our mortgage broker thought they were already out of business), so we did a little research when Mr. BT came home last night. There was page after page of consumer complaints where Option One Mortgage mislead its customers on purpose. At that point, we felt it was no longer worth it to proceed (at least not without a lawyer). The deal had gotten too risky.
This situation has exhausted me emotionally. I spent way too much time daydreaming about it, researching needed renovations, working the financials etc. It will take me a while to recover, and I am now fully cured of my spring nesting urge (the unemployment numbers out today, also helped reinforce that we were making the right decision).
We were prepared to deal with many of the issues going into the deal such as -
1) The "as-is" condition: Mr. BT has considerable experience in construction, as does the rest of his family, so we had a good idea what it would take to fix up the place the way we like it. In addition, we planned to stay in our rental an additional month, so we wouldn't have to live with invasive renovations.
2) Market/Financials: The monthly payment on the home would have been cheaper than our current rent, even when you include taxes and insurance, and some $$ for home maintenance and repairs. So the falling market wouldn't really affect us till we were ready to sell.
We had even worked through the addendum and created a list of modifications that we felt would make us comfortable going forward. (Next time, assuming there is one, we will know to ask for that upfront.)
The item that finally broke the camel's back, came last night after learning about how unscrupulous the bank has been working with customers. The WSJ lawsuit article tipped us off that they may not be a model citizen (in fact our mortgage broker thought they were already out of business), so we did a little research when Mr. BT came home last night. There was page after page of consumer complaints where Option One Mortgage mislead its customers on purpose. At that point, we felt it was no longer worth it to proceed (at least not without a lawyer). The deal had gotten too risky.
This situation has exhausted me emotionally. I spent way too much time daydreaming about it, researching needed renovations, working the financials etc. It will take me a while to recover, and I am now fully cured of my spring nesting urge (the unemployment numbers out today, also helped reinforce that we were making the right decision).
Thursday, June 5, 2008
Our REO Rollercoaster
As I have alluded to in several of my recent posts, we have been trying to purchase an REO. I should emphasize the word trying, as it has been just that, a trying experience, and I feel the need to rant a bit. Unfortunately I was under the mistaken impression that an REO deal would be much easier than a short sale. Boy was I wrong (although my agent, who has done 7 or so, says this one has been particularly difficult).
To date, we have negotiated approximately 33% off the 2005 price of the home (it’s listed for approximately 27% off). The negotiations took quite some time as the bank/listing agent dragged their feet on just about every little point. Since we put in our initial offer, the other agent dropped the price 10k, perhaps looking for offers better than ours (annoying).
During negotiations, we also took a long hard look at the home, because we will be purchasing it as-is. At first glance, the home is in need of some major TLC, as well as some remodeling (which we are willing to do). However there is also some major HVAC problems under the home (the ducts were busted up). But without the utilities, we can’t tell the extent of the problem. This revelation also dragged out the negotiations (since it took two weeks to get an answer back).
In the mean time, an enormous hole was dug in the front yard by one of the utilities (it’s now been there over a month and no one seems to know who dug it, I have called at least 4 places looking for answers).
We like the home an awful lot, which is why we have stuck with the process to date. We also found out a friend of ours is under contract to purchase a home 8 doors down (and they have 2 kids the same age as ours). The home fits most all of our criteria and is very modestly priced for the area. We haven’t been able to find anything nearly as suitable for the price.
However the bank is now requiring us to sign an addendum which is not very buyer friendly. We have now submitted our own, addendum to the addendum, but have our doubts that they will get the utilities turned on in time for inspections to occur.
At this point I am not sure this particular home is worth the $$. I know the market will continue to drop. Mr. BT’s job is requiring a lot of travel lately, and his contract is not longer as secure as it once was.
In my 5 minutes of down time last night, I picked up my WSJ (the pile of unread copies is growing larger and larger), only to find that the bank we have been attempting to negotiate with is among the shadiest of them all. This helps explain our difficulties, and makes me even more prone to walking as they don’t seem to be a very ethical organization.
To date, we have negotiated approximately 33% off the 2005 price of the home (it’s listed for approximately 27% off). The negotiations took quite some time as the bank/listing agent dragged their feet on just about every little point. Since we put in our initial offer, the other agent dropped the price 10k, perhaps looking for offers better than ours (annoying).
During negotiations, we also took a long hard look at the home, because we will be purchasing it as-is. At first glance, the home is in need of some major TLC, as well as some remodeling (which we are willing to do). However there is also some major HVAC problems under the home (the ducts were busted up). But without the utilities, we can’t tell the extent of the problem. This revelation also dragged out the negotiations (since it took two weeks to get an answer back).
In the mean time, an enormous hole was dug in the front yard by one of the utilities (it’s now been there over a month and no one seems to know who dug it, I have called at least 4 places looking for answers).
We like the home an awful lot, which is why we have stuck with the process to date. We also found out a friend of ours is under contract to purchase a home 8 doors down (and they have 2 kids the same age as ours). The home fits most all of our criteria and is very modestly priced for the area. We haven’t been able to find anything nearly as suitable for the price.
However the bank is now requiring us to sign an addendum which is not very buyer friendly. We have now submitted our own, addendum to the addendum, but have our doubts that they will get the utilities turned on in time for inspections to occur.
At this point I am not sure this particular home is worth the $$. I know the market will continue to drop. Mr. BT’s job is requiring a lot of travel lately, and his contract is not longer as secure as it once was.
In my 5 minutes of down time last night, I picked up my WSJ (the pile of unread copies is growing larger and larger), only to find that the bank we have been attempting to negotiate with is among the shadiest of them all. This helps explain our difficulties, and makes me even more prone to walking as they don’t seem to be a very ethical organization.
Hometown Blues
Looks like my home town has made housing headlines on CR today. While I don't normally read the zillions of comments on that site, I did feel compelled to add in my two cents....especially since my mom just closed escrow last week (she paid cash).
Wednesday, June 4, 2008
Sacramento is Now Undervalued!
According to my favorite housing valuation study by National City Global Insight, we in the Sacramento Metro area are now considered undervalued by -2.5%!
This study was for Q1 2008, so we have dropped even more since then. Given the bouyancy that is occuring in the lower price ranges, their data seems feasible, at least on a general level. Although the higher end hasn't budged much, and still seems way overvalued.
This study was for Q1 2008, so we have dropped even more since then. Given the bouyancy that is occuring in the lower price ranges, their data seems feasible, at least on a general level. Although the higher end hasn't budged much, and still seems way overvalued.
Tuesday, June 3, 2008
Disastrous Policy Ahead
Went looking into homeowners insurance recently. Wow, what a shock when I learned of the rates they charge here in California. The policy would be almost 3 times what we spent in Virginia, and that doesn't include any supplements like earthquake. For those interested, the insurance commissioner has a nice estimator on their website.
Thus I became a bit upset when I read an article this weekend in the WSJ. Apparently there is a bill in Congress that may subsidize others at taxpayers expense. The big insurance firms want taxpayers to back them up, if they run out of money after a big hurricane in places like Florida.
Somehow this doesn't seem fair to me. We don't ask them to pay for our earthquake insurance do we? (I know nothing about earthquake insurance....anyone know if we even need it in Sacramento?) The situation is especially slimy because there are political motivations behind it, since FL tends to be a swing state.
If Congress were really to go down that road, it would seem fair to make all communities eligible based on their risk for major natural disasters......to name a few of the biggies: hail, fire, earthquake, flood, mudslide, hurricane, tornado, cyclone, and wind. So zips that are at a very low risk for any of these, would pay almost nothing to the fund, while zips at a very high risk would pay the most. This would help to discourage people from settling in high risk areas.
In most situations, subsidizing costs associated with risk, sends the wrong signal to the market. You end up with more risky behavior than we should have otherwise.
Personally I would love to implement a "one time, one event" rule per family. This rule would allow federal assistance for a natural disaster one time per type of event (so one for earthquake, one for hurricane etc.). For example, folks who's homes have been damaged by flood every 10 years when the Mississippi overruns its banks would be much cautious about rebuilding in the same place if they use up their one flood meal ticket. In other words, fool me twice, shame on me.
Thus I became a bit upset when I read an article this weekend in the WSJ. Apparently there is a bill in Congress that may subsidize others at taxpayers expense. The big insurance firms want taxpayers to back them up, if they run out of money after a big hurricane in places like Florida.
Somehow this doesn't seem fair to me. We don't ask them to pay for our earthquake insurance do we? (I know nothing about earthquake insurance....anyone know if we even need it in Sacramento?) The situation is especially slimy because there are political motivations behind it, since FL tends to be a swing state.
If Congress were really to go down that road, it would seem fair to make all communities eligible based on their risk for major natural disasters......to name a few of the biggies: hail, fire, earthquake, flood, mudslide, hurricane, tornado, cyclone, and wind. So zips that are at a very low risk for any of these, would pay almost nothing to the fund, while zips at a very high risk would pay the most. This would help to discourage people from settling in high risk areas.
In most situations, subsidizing costs associated with risk, sends the wrong signal to the market. You end up with more risky behavior than we should have otherwise.
Personally I would love to implement a "one time, one event" rule per family. This rule would allow federal assistance for a natural disaster one time per type of event (so one for earthquake, one for hurricane etc.). For example, folks who's homes have been damaged by flood every 10 years when the Mississippi overruns its banks would be much cautious about rebuilding in the same place if they use up their one flood meal ticket. In other words, fool me twice, shame on me.
Monday, June 2, 2008
Primary Responsibility
Just a friendly reminder that tomorrow is the California Primary. Up here in the hills the race for the Republican seat in Congress has been particularly nasty. It even made the NYT today. If nothing else, the leading Democrat has name recognition (Charlie Brown......what were his parents thinking?).
There are two Real Estate related initiatives on the ballot. Both related to eminent domain. I am strongly in favor of eminent domain for use in projects that will benefit the public (like airports =).
However I am very conflicted over government taking (with compensation) property from one private citizen to give to another. I know this has been in the news recently with some property the city wants to redevelop downtown on K Street. Much of it comes down to how much we trust our government. I like the idea of government being able to revitalize ailing downtown districts, but I don't like the idea of them taking from low income and elderly, and handing over to big land developers to "gentrify" neighborhoods. Unfortunately, I haven't seen much in the way of a litmus test to outline what type of projects would be okay, and which ones wouldn't.
There are two Real Estate related initiatives on the ballot. Both related to eminent domain. I am strongly in favor of eminent domain for use in projects that will benefit the public (like airports =).
However I am very conflicted over government taking (with compensation) property from one private citizen to give to another. I know this has been in the news recently with some property the city wants to redevelop downtown on K Street. Much of it comes down to how much we trust our government. I like the idea of government being able to revitalize ailing downtown districts, but I don't like the idea of them taking from low income and elderly, and handing over to big land developers to "gentrify" neighborhoods. Unfortunately, I haven't seen much in the way of a litmus test to outline what type of projects would be okay, and which ones wouldn't.
Foreclosure Update
Sacramento made today's WSJ again. This time, in a slightly positive way related to the brisk sales of bank owned homes we have been experiencing.
Out here along the 50 corridor (thank goodness Mr. BT doesn't have to take I-5 to work) in Folsom and El Dorado Hills, we seem to be several steps behind the rest of the market. Prices haven't dropped nearly as much, so these markets haven't seen the same increase in sales activity compared to the rest of the metro area. Its a mixed bag right now.
Inventory is actually down considerably from last year at this time, and pendings are at an all time high according to my screen scrape criteria.
However, market stress indicators are still climbing. Since I started tracking NODs and Foreclosure numbers on www.foreclosure.com 3 months ago, foreclosures in Folsom have doubled (up 100%), and they are up 144% in El Dorado Hills. NODs are up 71% and 11% respectively as well.
As far as the bank's willingness to wheel and deal, I believe its more case by case right now. While on vacation down South, a nice looking bank owned home came on the market in EDH. By the time we were ready to go do a drive-by, it was already pending (773 Lakecrest, MLS 80052575). This is in stark contrast the the agonizing negotiations we have been going through on the REO we are attempting to purchase.
Out here along the 50 corridor (thank goodness Mr. BT doesn't have to take I-5 to work) in Folsom and El Dorado Hills, we seem to be several steps behind the rest of the market. Prices haven't dropped nearly as much, so these markets haven't seen the same increase in sales activity compared to the rest of the metro area. Its a mixed bag right now.
Inventory is actually down considerably from last year at this time, and pendings are at an all time high according to my screen scrape criteria.
However, market stress indicators are still climbing. Since I started tracking NODs and Foreclosure numbers on www.foreclosure.com 3 months ago, foreclosures in Folsom have doubled (up 100%), and they are up 144% in El Dorado Hills. NODs are up 71% and 11% respectively as well.
As far as the bank's willingness to wheel and deal, I believe its more case by case right now. While on vacation down South, a nice looking bank owned home came on the market in EDH. By the time we were ready to go do a drive-by, it was already pending (773 Lakecrest, MLS 80052575). This is in stark contrast the the agonizing negotiations we have been going through on the REO we are attempting to purchase.
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