Housing crisis or window of opportunity? Comments on Stories, posted by Editor, Pleasanton Weekly Online, on Nov 16, 2007 at 9:25 am
It seems like each morning when I open my paper I find more alarmist headlines that paint a bleak picture of the country's real estate market. The trouble is, the news media often paints the picture with a mop that covers the entire U.S, missing the details afforded by fine brush strokes. As a result, consumers are often left with a somewhat inaccurate portrayal of the Bay Area real estate market, and that could ultimately cause them to miss an exceptional opportunity.
Read the full story here Web Link posted Friday, November 16, 2007, 12:00 AM
Posted by Homeowner, a resident of the Ironwood neighborhood, on Nov 16, 2007 at 9:25 am
This is just a one-sided cheerleading exercise intended to entice you into the real estate market at potentially the wrong time. Reader and buyer beware.
There is no doubt that over the long-term, real estate has appreciated into the single largest asset for most families. In fact, this appreciation has been remarkably consistent. Anytime the housing market values deviate from this long-term consistent growth, they revert back to the average over time. Herein lies the problem today.
We have shot well past historical averages for real estate values, outpacing incomes, affordability, and rational behaviour. We will revert back to the mean, with prices dropping or staying flat until incomes catch up to values, or a combination of both. Outlandish lending practices and a get rich quick mentality drove an incredible run-up in prices above historical averages that we will find again. Your long-term better be at least 8-10 years in this case to avoid downside risk.
This advertorial does a good job of pointing out the double-digit price increases and appreciation we have seen, but ignores the reality of the current situation after the increases.
There are several comments that would be funny except that the author actually wants you to believe them. The credit crunch is easing? Economy continues to move ahead? Inflation under control? Without diving into each one, let's see - are you paying more for gas lately? The Fed hasn't recently made essentially emergency cuts in the discount rate because we have clear sailing ahead. The government isn't setting up a bailout fund for investment banks who own our mortgage loans because they are all getting paid on time. We are at the precipice of a potentially deep cliff. Recession is a real possibility. Now is not the time to be a Pollyanna.
If you have the funds, credit, and patience, now may be the right time for you to buy. If you and your family enjoy your home and stay long enough to ride out any changes in the market, a 15% drop in prices won't hurt too bad, if it happens. However, this is not a "window of opportunity" not to be missed. In my opinion, patience will be rewarded if it fits your situation.
Best advice is to contact a realtor? Sure. Just be advised that the realtors are complicit in the overheating of real-estate to their benefit, along with the mortgage brokers, appraisers, and banks. Don't forget - they get paid for closed transactions, not good advice.
It is getting tiresome to hear all the partial cheerleading. Has a realtor ever said there wasn't a good time to buy?
Posted by Janna, a resident of the Mission Park neighborhood, on Nov 16, 2007 at 9:41 am
I agree. Of course they've never said there wasn't a good time to buy. It's an advertisement. The country is tanking and yet they still want to convince you to buy a home here. I would love to, but I'm not stupid. Now is not the time. They seem to think that Pleasanton isn't part of the U.S. economy, but of course it is and we are still affected by the ups and downs, although not as much. They will never give up trying to get people to buy what they can't afford. The bottom line is that they want to make money. They don't care if you have to foreclose down the road.
Posted by aaron, a resident of the Highland Oaks neighborhood, on Nov 16, 2007 at 3:12 pm
some people's misfortune is always anothers gain. as the market is down investment properties, are selling so low that it's almost a garuanteed 100k + gain over the next few years. i work in finance . it is definately a good time for inverstors with good credit to get into the game. there is lenders out there that can go 125% to cover the closing costs, but as you can imagine the fico has to be excellent. but generally speaking, if you have good credit and approximately 5-10% downpayment. you're good to go. in a buyers market, it is easy to invest wisely.
Posted by John, a resident of the Vineyard Avenue neighborhood, on Nov 16, 2007 at 7:12 pm
We just had a terrible time selling our house, and finally had to take a loss after holding it for 3 years. Don't believe the realtors or loan officers. They don't have your best interest at heart. We used an interest only loan. Big mistake. If we hadn't put 10% down, we would have been in real trouble.
Posted by Andy, a resident of Dublin, on Nov 17, 2007 at 8:15 pm
I live in concord and waiting on the sidelines for the last couple of years renting 'coz I missed the boom boat of 2002-2005 :-( Anyway - I think this market is quiet volatile now. The builders are cutting prices by 30K,40K,50K and so on in Dublin but the medians are not reflecting this price cuts. Sellers are reducing prices for homes in walnutcreek, concord etc., by 30-50K and still the medians are not lower. What is really happening here? I checked the dataquick numbers and I check it religiously every month on www.dqnews.com and it is not reflecting these price drops. May be the price needs to go down by 100K and I definitely think it will happen (I wish too)in the next few months.
Posted by John, a resident of the Vineyard Avenue neighborhood, on Nov 18, 2007 at 6:40 am
Just to amplify what I was saying earlier, look what a well known Pleasanton Realtor (Mike Hyles) was saying two years ago in the October 14, 2005 Pleasanton Weekly:
"He also said that with creative financing still available, many can afford higher priced homes than they thought possible. A Pleasanton beauty shop owner just bought a $1,175,000 home in San Ramon using negative amortization that gives them a monthly payment of just $2,600."
""Although they go in the hole about $26,000 a year on their mortgage, the house is expected to appreciate even conservatively at 7 percent annually, increasing the value of the house and putting them well ahead," Hyles explained."
Posted by aaron, a resident of the Highland Oaks neighborhood, on Nov 20, 2007 at 11:31 am
people have to use people they trust, and make sure they fully understand their contracts. don't go stated, when you know you don't make that much money. why would anyone go into a interest only loan....your principle goes up every month. if you only make the minimum payment, you aren't even paying the full interest payment. not a good loan unless you know what you're dong. understand what you are getting into. people that educate themselves as they get a loan are in the best positions. they knew what they were doing. did not let their fico score go down and got out of the int. only, when their prepay penalty ended. it is a good temporary program. don't think you will have this for 30 yrs and own your house. i tell my clients it is temporary untill they can fix their finances, and get into something better. there are lots of bad loan officers out there. but most of those companies are out of business, due to defaults, and them only pushing bad products, ex....arm's, balloon loans, interest only, hybrids. all temporary solutions to your problems. sometimes people want their equity soo badly they don't attempt to fully know their product. their are guidelines and timetables, which should work as a manual to what they need to do and when. self education is the key to everything. if you don't know ask. by law they are supposed to fully explain the loan to you. in my opinion it is still a good time to buy, and even refi, as the fixed rates are getting lower and lower. 5.875 today, not too bad. my advise is make sure whoever you are working with is explaining everything to you, so no future problem with the loan or property are had
Posted by Ty-Town, a resident of Dublin, on Nov 20, 2007 at 6:24 pm
Buy Now or Wait?? Wait for everyone else to buy? Or Buy low and sell high. If a home in Walnut Creek was going for 1.5 5 years ago and is now going for 1.1. It is probable it will reach that 1.5 Million price at some point. Should you buy now when nobody is snatching up the premium properties or be in a multiple bid situation and over pay. In Pleasanton Valley you could buy a home for $20,000 brand new, today, even in this market they are $900,000+ (for the good ones). Remember it's not about timing the market, it's time in the market that will make you money. And dont buy a home that is the same as every other one on the street. Did you see the last two pending homes in Pleasanton? Equestrian Dr. and Martin Ave. Both with multiple offers. Those are opportunities and long term money makers! I kick myself for not making a bid on one of those homes. Realtors make their money off closed transactions, so do some research on the home and loan you are about to get. Just like buying a car, life insurance, or any other large investment. If there is the possibility to make or loose hundreds of thousands of dollars I think it would be wise to spend a little more than 3 weeks looking at open houses and asking friends for advice! This happened in the 80's and now in 2005... So we can expect the next generation to do the same in about the year 2030. So buy a house soon and sell in 2029!
Posted by aaron, a resident of the Highland Oaks neighborhood, on Jan 10, 2008 at 12:21 pm
i work in real estate, right now i have 60 bank owned properties in the bay going for 100k under current value. which is still about 100k below what it was worth 1 1/2 yrs ago. i'd definately say time to buy. for those who still have good credit. act now. when you know in a few years you'll have a great return on these or any other bank owned on short sale property. but it is definately a bad time to sell if you can hold off, wait 2 years to sell, but if you can buy today, go for it, the market is rgeat for buyers, especially with rates as low as 5.25 %
Posted by Drexl, a resident of the Ironwood neighborhood, on Aug 18, 2009 at 2:32 pm
I was once told...when everyone is talking about buying and how great things are...SELL...when everyone is talking about how horrible it is and going to get... BUY... that simple, you will never time the market, and by the time you think it is the bottom, you might be paying more than what it is worth today...