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Original post made
on Mar 7, 2008
Don't get sucked in by any of this poppycock!
Of course realtors don't want you to try and time the market - they want you to buy now!!! The price trend is down and will continue to be down for an extended period. Use this to your advantage. Don't feel pressured to buy now.
Unfortunately, you may not be fine if you are going to stay in your house a few years, depending on your definition of a few years. Price drops may make that a 10 year proposition to be just fine.
"Historically, down cycles in California real estate are relatively brief and shallow." Things that have never happened can happen. Remember it was the realtors that repeatedly said and wrote, "house prices have never gone done nationally," while they pushed us along in this bubble. No one remembers saying that now...
And yes, unlike the advice in this article, you should be unrealistic and unreasonable. Interesting advice from same arrogant realtors and greedy sellers who, along with the mortgage brokers and financial system acomplices, created this housing bubble!
Kinda doom and gloom, aren't you, Homeowner? Did you pay too much in Ironwood and are now feeling it in the shorts?
While I don't disagree this current situation was greed motivated, it's not the first time nor will it likely be the last. I only hope the investigations underway now get to the bottom of this "Enron-like" situation and people are held accountable. But you can't airbrush everyone in the same category. There are good and bad realtors. Good and bad Mortgage Brokers and companies. Just as there are different make or break points for buyers and sellers.
Of course there are good and bad in all businesses, couldn't agree more. But as a whole, these groups played a big role in getting us where we are today.
Is it doom and gloom or just being realistic? In my opionion, this is not a good time to buy.
The original article by Larry Klapow is motivated by only one thing, to get folks off the sidelines, buy houses, and to put money in the pockets of realtors. He doesn't have your interest at heart. His job is to drive revenue and sales for his company.
I have no problem with that. I do think its fair though, to call out the inaccuracies in what is essentially an advertisement while he sugarcosts every aspect of the current situtation.
This article reminds me of an "advertorial" they called it, taken out by The San Francisco Cigar Company" not too long ago promoting his newly remodel store. It read like an interview, but was in fact a well crafted advertisment with the owner suggesting what a great guy he is, how "well connected" he is, how wealthy he is, and oh by the way, "I'm one of the most eligable bachelors in the Bay Area (no kidding)! All written in self promotion.
Reators don't care which way the market is going, just that inventory is moving! Even on the lowest single family home in Pleasanton (around $600K), the realtor makes $36,000 if the list and sell the property (unless of course you've negotiated a lower commission). I forget the exact numbers, but the number of real estate agents has exploded over the last 10 years. With houses selling on average for better than $1M in our area, $60,000 in commission per house means you don't have to sell that many to make a decent living! Someone else said in an earlier thread "value is what a buyer thinks something is worth"?
When I bought my first house in 1986 interest was 16 3/4% for a traditional loan! If you'd have told anyone at that time Interest could reach 5% sometime in the future they'd have thrown you in the looney bin ;-)
Follow the money..... Always.
right now the market is great for the right people.
here is what has changed in the past 3 years.
1) property values down- they go up they go down, the trend has been to go up for soo long, people never though it would go down. real estate is a long term investment. not a quick turn around.
2) People have to actually be able to afford the home they are in- with this people put themselves 100% financing, on properties the went down shortly after purchase. then their ARM mortgage went up. Why not go conventional fixed when purchasing? is it because you couldn't afford the payments? if not then you never could afford that property in the first place. If you adjust in 3 years and can barely afford the payment now, what make you think you can afford it when the low interest of a ARM or neg am loan goes up. People expected the value which arounsd here 200k that went up to 900k to continue faster than inflation goes up. sounds pretty crazy.
3) Finance companies now check you bank statements, credit reports, W 2's, and verify assetts. which most people got into these stated income stated assetts. ARM, and worst of all the pick a pay, neg am payment, which doesn't even cover interest. Which means what?, sign at the bottom and you get your loan. But doesn't anyone read what they sign? if it adjusts in 3 years, and and you aren't even paying your interest. you are reliant on property values going up. So it was a gamble for the start. BINGO!!!!
4) No more 100% financing in Alameda and contra costa counties. you have to have 5-10% down. which you should anyway. i underestand why people move in no money down. but likie when you are buying a car. the finance company willmake there money one way or another. giving them 100% with bad rates, that adjust every 6 months, isn't a smart move.
With rates as low as they are today, it is a great time to buy for some. not all. if you can't afford the 5% or a conventional fixed mortgage, you should probably look for a less expensive property. Ownership is a beautiful thing, but not everyone can buy. when 5 years ago everyone thought they could. you did not need assetts, you did not need good credit, you did not need anything. but a signiture.
Now you need at least a 620 FICO score, and 5- 10 % down or no dice.
For those who do have that. great!!! you should buy any of the foreclosed houses in the bay. ex. 15 BEO 3 bed 2 bath 1300-2000 square ft houses in concord between 300-400k. the 10 BEO 3 bed 2 bath 1300+ square ft houses in livermore between 300-400k. that is cheap.
for those saying brokers are the reasons for the housing crisis, they are simply pointing the finger, not wanting to blame themselves. if i made a bad purchase that is my fault. i signed the papers. the docs lay out the structure of the financing. what rate for how long. what goes into the premium, what goes to interest. closing costs, broker fees. ect. ect. It is also wise to not only review everything before signing it, or even after, you have 72hrs don't change your mind after signing. so this is 30-45 day process where every oportunity is there to review, learn and understqand your contract that you will be in for the next 30 years. sounds pretty important. also to simply work with someone you trust. trust, and a broker wanting to build/keep his client base is going to give you a great rate based on competition. you can go to any broker and get the same rates the other has,. there is no special broker that gets special rates.
my advise to anyone is work with someone you trust. review and make sure you understand everything in you 30yr contract. stay with a fixed rate, don't neg am it. make sure you can afford the full payment before purchase. don't sell now, no matter what you realtor says about how pleasanton has not gone down in value. cause every other city has, and you can get twice the house somewhere 15 minutes aways for the same price. and research any purchase you do. make sure it is worth while, based on recent, and decade long trends. you have to analyze things yourself, if you want to end up on top.
The BEO'S are great investments. if a reasonable offer is made which is typically 10% below listed price, it will get accepted at a fair price. just because the bank has hundreds of these doesn't meant they will just take anything. it has to be reasonable.
RATES ARE LOW, PRICES ARE LOW, GOOD LUCK!!!
Prices are dropping, don't buy!
(see recent article below)
Home prices plunge across California
By ALEX VEIGA, AP Business Writer
Thu Mar 13, 3:11 PM ET
Median home prices plunged in many of California's most populous counties in February, with Southern California leading the slide with an overall drop of 17.9 percent compared to a year earlier, according to new housing data released Thursday.
The drops reflect a deepening housing crisis in the state, which saw home values soar during the housing boom then decline sharply in most areas.
Median home prices fell this year in 15 major counties, DataQuick Information Systems said.
The median price in a six-county area of Southern California fell to $408,000 the lowest level since October 2004, when it was $402,500. That median is 19.2 percent below the region's peak price of $505,000 last summer, and it's 1.7 percent below January's median, the firm said.
In the nine counties of the San Francisco Bay Area, the median price fell 11.6 percent to $548,000 compared to a year earlier and 17.6 percent from the region's peak median price of $665,000 last summer. Bay Area prices were essentially flat from January.
Home sales volume also kept sliding last month.
Sales fell 39 percent from a year earlier in Los Angeles, Orange, San Diego, Riverside, San Bernardino and Ventura counties. In all, 10,777 homes were sold in February in those six counties, up 8 percent from January, DataQuick said.
Southern California's home sales volume has hit new lows every month since September.
The nine San Francisco area counties saw a similar slowdown, as sales dropped 36.7 percent last month from February 2007.
Some 3,989 homes were sold in San Francisco, Marin, San Mateo, Napa, Alameda, Sonoma, Contra Costa, Santa Clara and Solano counties. That was up 11.2 percent from January.
Even as prices fall, buyers remain slow to dive into the market, with many waiting for prices to fall further.
Others have been unable to find affordable financing because lenders stung by soaring mortgage defaults and foreclosures have cut back on the easy lending that helped propel the housing boom.
The dynamic has worsened the prospects for many homeowners desperate to sell as falling home values drain their equity.
Statewide figures were expected later Thursday.
In Pleasanton, I just signed and sold a 2bd/ 2bth condo built in 89' for 280k. it was a bank owned. 2 comparables in the complex are listed right now for 399k in the same complex. another is pending for 375k. the appraiser gave it 375k. moving in with 95k equity in awsome. Finding a property at that rate is great. i'd wouldn't listen to too many people that are saying it's going to continue to fall. it will take a few years to recover though. you have another few years of lower prices but guess what those that don't act fast, are going to be the same ones who bought 2 years ago and are belly up right now. with real estate it is as always timing. and now is definately a good time.
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