Once an owner has extracted every penny of equity and “put” the property to the bank, they don’t care anymore because they think, “I Got Mine.”
Asking Price: $450,000
Address: 51 Lakeshore #20, Irvine, CA 92604
{book6}
I Got Mine — Motorhead
Right now, this time,
You got yours and I Got Mine
It is human nature to be more concerned with your own problems than the problems of others. Many HELOC abusing homedebtors already extracted all their money out of the house, so the losses really aren’t their problem any more. Some stupid lender or crazy CDO investor somewhere is eating a huge loss, but the borrower is walking away with what is left of the cash. What reason would they have to care–other than perhaps for their credit score.
The whole situation reminds me of a brief scene from “King of Queens” I saw a few nights ago. Doug goes into an ice cream parlor and orders an ice cream cone. The attendant gives him the ice cream cone, and Doug hands him a $20 bill. The guy tells him he can’t break a $20, and Doug responds that it is all he has. After going back a forth a few times, it becomes apparent they are at an impasse. Doug looks at his ice cream cone and licks it a few times as if to tell the guy “I got mine, the money is your problem.” So it is with our housing market.
Asking Price: $450,000
Income Requirement: $112,500
Downpayment Needed: $90,000
Monthly Equity Burn: $3,750
Purchase Price: $551,000
Purchase Date: 4/12/2004
Address: 51 Lakeshore #20, Irvine, CA 92604
| Beds: | 2 |
| Baths: | 2 |
| Sq. Ft.: | 1,610 |
| $/Sq. Ft.: | $280 |
| Lot Size: | – |
| Property Type: | Condominium |
| Style: | Bungalow |
| Stories: | 1 |
| Floor: | 1 |
| View: | Greenbelt |
| Year Built: | 1979 |
| Community: | Woodbridge |
| County: | Orange |
| MLS#: | S575237 |
| Source: | SoCalMLS |
| Status: | Active |
| On Redfin: | 1 day |
location just steps to the North Lake and walking paths, this is a
single level spacious 2 bedroom condo with many nice features. Kitchen
has a nook as well as a bar and solarium windows looking out on the
garden. Step down living room with a fireplace and a large back yard
leading out to the walking path to the lake. Courtyard entrance for
privacy and a unusually long driveway.
The word nestled must come out of the realtor vocabulary.
Doesn’t the single picture of a glass door make you wonder what is inside? Perhaps this is a genius realtor ploy to pique our interest and schedule a showing… or not.
- This property was purchased on 4/12/2004 for $551,000. The owner used a $440,800 first mortgage, a $27,550 second mortgage, and a $82,650 downpayment.
- On 6/1/2004 he opened a HELOC for $55,100.
- On 1/6/2006 he refinanced with a $600,000 Option ARM with a 1.75% teaser rate.
- Total debt is $600,000 plus negative amortization.
- Total mortgage equity withdrawal is $49,000.
If this property sells for its current asking price, the lender will lose $177,000 plus negative amortization after a 6% commission.
{book2}
Here’s the story, there’s only me,
No other place for you to be,
I’ts only you babe, it’s only you,
I can’t believe the things you do,
Right now, right here,
Ain’t gonna let you disappear,
Right now, this time,
You got yours and I Got Mine
I Got Mine — Motorhead
Good LA Times article today
“Realtors are abandoning a listing ship”
http://www.latimes.com/business/la-fi-realtors25-2009may25,0,5351119,full.story
“”Our monopoly on information is gone,” said David Emerson, a Lakewood broker for 25 years. “The Internet changes everything. . . . The numbers[of Realtors]will diminish.”
For decades, agents generally had the only reliable access to complete, detailed listings of all properties for sale. They would select homes from the lists to show buyers, then drive them around to view properties….
The National Assn. of Realtors sought to restrict information that Internet real estate brokerages could publish, but the U.S. Department of Justice fired back with an antitrust lawsuit.”
A victory for buyers everywhere.
“In California, which has been hard hit by the housing downturn, just 2,030 people took examinations for broker and agent licenses in March, down from more than 18,000 in March 2005, according to the state Department of Real Estate.”
A 90% decline in new licenses.
“Some traditional agents say that operations such as Redfin will eventually thin their ranks, but say many home buyers and sellers will prefer having a professional handle their transactions.”
Realtors will survive, but there will be fewer of them.
Isn’t this the same thing all the Fotomat shops said when digital cameras first came out? “Oh,people love the tradition of developing pictures” and my fav “they want a professional to handle their photos”. Good ridance.
The number of real estate agents will decline because real estate activity will decline, not becuase information is out there. Yes, they used it as monopoly before. However, purchasing a property is largest invest for many and I don’t see many people wanting to handle the process themselves.
For context, I work with an Orange County Property Management Company.
Cheers!
If there are no realtors, who is going to write all these colorfull home descriptions whe love to read? Surley not the sellers, they would never write so many all cap sentences, make excessive use of exclamation marks and mispell ever other word. Or maybe if we move to the web, all that markup will be in realtor html
Oh well, the price of progress.
Good article. Thanks for the link.
In May, 1975, the SEC mandated deregulation of brokerage commissions which henceforth were set by market competition. Charles Schwab, who had a B.A. and M.B.A from Stanford University (and who is dyslexic) started the discount brokerage business – and the rest is history.
I think discount brokerages such as Redfin will enable a similar transformation in residential sales critically aided by the internet. Like discount securities brokering, it will take a generation or more to become commonplace. Full service realtors will persist at lower commissions and in reduced numbers. Discount brokerages such as Redfin, already offering low commissions, will increase in number. And they may affect the process. For instance, a r.e agent told me that procedurally, they had to deal with several Redfin specialists during the course of a single transaction adding, in their opinion, unnecessary complexity.
Meantime, people who have the time and savvy will continue using the internet and blogs like this to educate themselves. Some will actually become do-it-yourselfers in buying or selling a home.
6% commissions will, in most cases, go the way of the dinosaur. If your home sold for $300K, is it worth paying someone $18,000 when you are presented with the critical sales document stating that the agent’s position is, essentially, advisory and that if you want legal advice, consult a professional? I certainly agree that their advice may be extremely helpful, perhaps critical, but is it worth 6% of the whole price? A fairer commission would be 6% of your equity, imho.
Even though the licensing applications are way down, as the really bad Realtors leave the field they are still being replaced by others… And guess who the others are? It’s the mortgage brokers who can no longer make a living making loans. Mortgage brokers already have their real estate licenses. So now that they’ve messed up the banking system, they’re going to have another crack at fouling the housing market.
A few years back the banks lobbied to become more involved in the real estate sales end of the transaction. I think they did enough damage in their role as bankers. It would/will be even worse if/when they get involved as agents too. It is a major conflict of interest. And the mortgage brokers who are becoming part-time Realtors have the same conflict.
From SDHB site:
“Our local real estate market has reached a bottom and prices have been heading back up.”
Question – if your clients follow your expert advice, and you are proven wrong, what remedy do they have to recoup their losses against you?
If you were marketing securities as opposed to, say, housing the SEC would slap you pretty hard. I suggest the ‘Tards are the ones who need further regulation. I’m not anti-‘Tards by any means, but I am against shills who make claims in order to manipulate clients into providing you a commission without any responsibility if you are wrong. Just like your doing now.
If you think I’m giving you grief now, wait till six months passes and I really stuff your nose in it.
If I were going to post on IHB, I wouldn’t identify myself as a realtor. Not trying to cast out an ad hominem, just saying that it’s a pretty ballsy move. Kinda like walking into a lung cancer support group and ID’ing yourself as a lobbyist for the tobacco industry.
-Darth
P.S. Although, using the name SDHB was somewhat clever, as it led readers to see you as someone like Larry Roberts. Until we saw the link that your name leads to, that is.
Looks like the “owner” is making at least a $50,000 profit plus subsidized rent for a three years ($81,000). The teaser rate and property tax were likely used on Sch D for a tax reduction while rent is not allowed on Sch D. Likely to get dinged on the credit score, but who cares with $131,000 in cash and savings.
Stupid me, I missed out on my subsidized rent and tax deductions for all those years.
Typo Sch A instead of Sch D.
Vaseline – You made that same point the other day, and I responded accordingly. The entry-level housing market in San Diego has found a bottom in recent months, and that is reflected in the month-to-month increases of the median sale price. So I am absolutely accurate in saying that prices are heading back up. There aren’t enough homes to satisfy demand at current price levels in San Diego. That causes prices to rise.
The more basic issue here is this… There are two ways that people look at the world. Either running away from something or running toward something. Those who run toward something are positive thinkers with optimism in their hearts. Those who run away are negative thinkers with fear in their hearts. You might think of it as the difference between Bush/Cheney and Obama.
I think there’s been enough fear and negativity in the past 8 or 9 years. Leaders and those like you with blogosphere soap boxes are the ones who shape the direction of the markets. Let’s face it, the majority of people in the world act like sheep with a herd mentality. Whatever you’re objective, the constant announcement of doom and gloom does not point the herd in the right direction.
Your attacks on people who have been greedy and unethical by ripping off the rest of us taxpayers are justified. But think of what might happen if you’d instead encourage people to do the right thing… hold on to their properties if they can, and wait for the turnaround. At the very least, with all the government spending there will be inflation. Before too long the $400,000 and $500,000 house will probably sound pretty inexpensive… especially if a gallon of milk costs $50 to $100. Not exactly an upbeat thought, but it’s something.
Try to think positive and hold on to whatever good news comes along. Things can get and will get better!
Peace+
I guess if we all just think positive then… all the bad people and bad realities will just melt away! Hahaha.
That’s not far from the truth. Give it a try Dave!
“The entry-level housing market in San Diego has found a bottom in recent months, and that is reflected in the month-to-month increases of the median sale price. So I am absolutely accurate in saying that prices are heading back up. There aren’t enough homes to satisfy demand at current price levels in San Diego. That causes prices to rise.”
Unless supply has been constrained by some other event, say, like a foreclosure moritorium!
http://huntingtonhomes.freedomblogging.com/2009/05/25/is-this-how-cities-should-manage-repod-homes/37231/
“The 90-day foreclosure moratorium that Governor Arnold Schwarzenegger signed into law in February is over at the end of this month.
The moratorium has allowed many lenders to offload mortgages through short sales, but it hasn’t decreased the number of borrowers going into default, notes Mortgage broker Dennis C. Smith of Stratis Financial in Huntington Beach.”
I used to foreclose of farms and ranches. There are two ways to look at the world – the way they are and the way you want them to be.
You are choosing the Fantasyland model, and your clients are paying the price. You should be ashamed.
I see that the mean-spiritedness won’t change easily… especially in a bubble blog. And no, I’m not ashamed. My clients aren’t paying any price because they are all putting in full-price offers and being outbid. That’s partly because I advise them not to overbid. I’m looking forward to the end of the foreclosure moratorium. Like I said before, trying to control local real estate markets on the state and federal level is asinine. A gradual release of the foreclosure inventory would be met with sufficient demand to support current prices in San Diego. But if they dump however many thousands of properties all at once the outcome is probably more the way you’d all like to see it.
“I am against shills who make claims in order to manipulate clients into providing you a commission without any responsibility if you are wrong.”
SDHB…in your verbose “defense” of your position, you failed to address this statement from vasoline. Care to indulge?
I wholeheartedly agree with vaso on this point. IMHO, the commision a realtor receives, or even more importantly a loan originator, should be paid over time and be dependent on the performance of the loan. If the amount of commision was based on the success of the loan I think there would be much more diligence being done by the parties brokering the deal.
There is a severe conflict of interest when the person advising a potential buyer is better off financially the more the client spends. If however, the broker got 20% of the commission at closing and was paid 1% of the commission each month (in which the mortgage payment was made) for the next 80 months, then the brokers would have a vested interest in the long-term feasibility of the loan. If the home is sold before the commission is fully paid then the balance of the commission would be paid at closing. If the home is foreclosed on, any unpaid commissions are forfited.
Another benefit to this idea is that a realtor or broker’s income would be less fluctuating over the course of natural (and extremely abnormal) real estate cycles.
The payment scale proposed is completely off the top of my head but the idea has merit. What would your arguements against this be SDHB?
Who’s being mean spirited?
You’re encouraging people invest in a losing proposition so you can collect a commission. I’m just pointing it out.
And you’re being evasive. What is your plan to make up the difference for your clients since the bottom is here, lead pipe cinch certain? If you have no plan, you are no different than Madoff, and should be regulated straight out of the industry.
“What would your arguements against this be SDHB?”
Let me answer that for him – “Hey, I got mine.”
This is an interesting idea Partyboy. But the first problem that I see is this… It is the home seller who pays the real estate fees. Are you saying that part of the purchase price should be withheld from the seller at the close of the transaction? If the buyer then defaults, who gets that money? The buyer? The seller? The bank?
Speechless, is this gentleman SA? good luck to you
If proof is every needed that you are clinically delusional just cut-and-paste this post. The “running to or from something” meme is the dumbest thing I have heard or read in the last several months.
Tune in next week for:
“Hey! The next wave of forclosures is coming to get us!”
or:
“Oh, look! A bunny.”
LMAO!!
Is this secretly Larry Kudlow?
A true “bottom” for a housing market would not be marked by an increase in price, as much as a decrease in inventory. After a crash as large as the one we’ve experienced, prices are usually flat to slightly decreasing for a long period of time.
Median sales price is a slight of hand trick, as it is effected by so many different changes in the month to month dataset. Maybe more people bought 500k homes than they did last month, or maybe fewer 200k homes sold. Either of those could shift the median home price. Saying the median sale price has increased is statistically useless.
If you think the market has bottomed in your area, then you must believe that home prices will NOT FALL, or at least will not fall more than another 5%. If you really believe that, are you willing to stake your commission on that fact? Or insure your buyers against loss of home value >5%?
Interesting opinion in this week’s Barron’s about the housing market reaching a bottom:
http://online.barrons.com/article/SB124303112018248371.html
Biggest load of EST/lifespring/ or whatever bullshit seminar tactics I have read yet coming from a realtor.
When I read crap like that it makes me hope that slow sales don’t just cut into your lifestyles. It makes me hope that your kids feel as much, if not more pain, hunger and suffering so they can make a conscious decision not to grow up into a smooth talking slimeball like yourself.
And unemployment figure will creep up **slower** than before.
Geez, where have I heard that from?
There are a lot of strange ideas out there about real estate agents getting rich from trying to help people buy and sell their homes. For every commission we earn there are 10 other people who say they’re going to buy when they don’t, or sellers who are unrealistic with their prices and don’t budge. The envy/jealously is misplaced. Realtors would be much better off being paid by the hour.
And partyboy, I have no idea what you are saying.
SDHB,
Basically I am asking what the level of accountability is for realtors. In my opinion, when an “expert” makes gives advice as bad as realtors have over the past 2-4 years they are either liars or idiots. So which is it?
I actually copied the wrong quote from Vasoline earlier…what I wanted to know your the answer to his question, “Question – if your clients follow your expert advice, and you are proven wrong, what remedy do they have to recoup their losses against you?”
I think that it is a fair question. There is no consequence to realtors who give terrible advice or to loan originators who look the other way when someone really doesn’t qualify.
As far as your claim that realtors would be better off getting paid by the hour because of all the people they spend time with who don’t buy, you are probably right about that. But does this mean that the commissions, which are outrageous in my opinion, should be as high as they are to compensate for “deadbeat shoppers”? This seems very similar to the fact that all taxpayers are going to pay for the bank bailouts to cover the costs of the handful of people who bought irresponsibily and are walking away. Is this really why you feel the commissions are fair? Because of the wasted time realtors spend on people who don’t buy?
I feel for you, oh poor suffering salesperson, you can’t make money on every single person that you meet. As Homer Simpson would say “Why…is…life…so…hard”.
Please, do you really think in other jobs you get compensated for every second of work that you put into it? Grow up.
McDonalds is hiring. They pay by the hour.
Some the people I consider close friends are Realtors. They are professional and state to clients “I am her to serve you” and, curiously, are top producers.
‘Tards, on the other hand, claim market bottoms. Gee.
Homer Simpson also said “I am so smart. SMRT”.
“Realtors would be much better off being paid by the hour.”
And that’s the reason why you’re still a ‘realtor’ 🙂
I can’t thnk of any sales job that sells to the majority of initial contacts. I suspect that’s why the worst part of any sales position is rejection. Why would real estate brokering be any different?
San Diego Homes Blog,
The natives are restless today. Don’t be driven away. I like having people who see the market daily come here and post. Although it is very unlikely your market is at the bottom, it is closer to the bottom than OC. The San Diego market was a year ahead on the way up, and on the way down.
There is still much anger toward realtors among the readers, particularly those who spout bullshit and try to manipulate buyers into action. I haven’t detected that in any of your posts here, and it is fairly muted on your website (yes, I did look).
Everyone is reacting to your suggestion that San Diego’s market might be at a bottom because playing on people’s fear of being “priced out” is one of the tools realtor’s used to cajole people into buying who are now in foreclosure. The sales tactics of realtors lead many buyers into the mess they are in today, and there is some responsibility for this that realtors have. Rightly or wrongly, you are being lumped in with them.
As long as you speak the truth and back up statements with data, people will respect what you say despite the early antipathy. You should have seen the reaction a couple of months ago when I announced I was forming a brokerage here in Irvine. Yikes!
Wake me up when there’s an **increase** in employment on a monthly basis.
And a decrease in defaults, not just in notices but a decrease in the number of people actually defaulting.
This guy isn’t trying to manipulate buyers into action? Take a closer look at the following comment: “There are two ways that people look at the world. Either running away from something or running toward something. Those who run toward something are positive thinkers with optimism in their hearts. Those who run away are negative thinkers with fear in their hearts.” So because I ran away from toxic loans just to get into a house during the boom makes me a negative thinker? No, that is called WISDOM, SDHB. Those who bought beyond their means and listened to realtors like SDHB, were they positive thinkers with optimisim in their hearts? No, just fools who took the bait. SDHB, stop trying to manipulate people’s emotions to get them to buy a home. How many times did you use that line in the past few years, I wonder??
Orcian… you seem to be confusing the Realtor’s role with the lender’s role. I have always advised my clients to get 30-year fixed loans, and almost all of them have taken my advice. The ones who didn’t went to shady lenders who I did not recommend. Usually this was the “friend” or sister, or uncle who was a mortgage lender who would get them the “great loan” at the “great rate.” I saw it as my job to point out the risks of the adjustable and interest-only loans. But sometimes people would view me as the stupid Realtor who didn’t know anything about finance… despite the law degree and MBA. I even had a neighbor who was a Certified Public Accountant lecture me on the “wasted time value of money” that was needlessly tied up in his home equity. His mother was the Realtor who “helped” him buy several high-end properties with interest-only ARM loans. But we can agree on this, there are and always have been a lot of unqualified and unethical Realtors and mortgage brokers out there. And no… today’s comment on the two types of people was a first for me.
Thanks Irvine Renter. I truly appreciate your comments… refreshing anti-venom. I’m not trying to mislead. I’m trying to lead. I honestly think that there is a way out of this mess if people keep the fear and greed at bay. It will take some good policy decisions and leadership from the banking sector, which is a very tall order judging from recent experience, but not impossible. And I do understand why people are angry, but don’t see how the negativity is going to help fix anything. Many of these bubble blog posts seem bent on encouraging people to walk away from their mortgages, since anyone who stays in their home and pays their mortgage is seen as “stupid.” That’s just not what I believe, and I think it is an honest disagreement. All the best to you.
So, what recourse do your clients have if you are wrong?
Or will you just continue to be evasive?
Vaseline… I’d like to think that you’re a nice guy even if you try your best to be very annoying. I’ve been anything but evasive. I’m pretty sure I’ve explained my position pretty thoroughly here. But since you need a specific answer about recourse… no, there is no recourse… As a matter of fact the C.A.R. has a standard form called the “Market Conditions Advisory” which we use in every transaction. The MCA clearly states that prices fluctuate, and the buyer signs/attests that their Realtor didn’t tell them what price to offer for the property. They sign it because we truly don’t tell them what price to offer. We try to educate people about recent comparable sales prices, and people decide what the place is worth to them in light of current market conditions. People only make offers if they want to make offers. If they want the property they offer a price that is likely to buy the property. Often they offer prices that are lower than a seller is willing to accept. But whatever it is, as buyer’s agents we present the offer to the seller and the seller’s agent in the best light possible, and state as strong a case as possible on our clients’ behalf. No rational person comes back to the Realtor later and demands recourse if the value drops. Yes, it has been tried in court, and it is a losing argument in the worst of circumstances. And Realtors don’t come after their client for a piece of the gain when the client makes money on the real estate investments either.
So there you go… that should be more fodder for you to vent more of your pent up anger and frustration.
I’m not a believer in the power of positive thinking vs. calm and rational assessment of the actual facts, but this answer on recourse against the realtor in case of a bad deal makes perfect sense. Everyone seems to be looking to shift the blame and consequences for their decisions to someone else. The “misled” excuse is wonderful: I would have made what later proves to be the correct call, if only this person had accurately predicted the future. At some point, people have to live with the advice and information that they choose to accept and that which they choose to ignore, and decisions that they make.
If you’re going to hide behind the MCA, then don’t give bad advice on the market conditions.
When you make statements about the market bottoming, it is enticing people to buy at a time that could very well be a BAD time to buy. Then you just have the buyers read the little MCA, once they’re all jacked up about the “market bottom” and are ready to buy buy buy! “Oh, by the way, I know I told you that the market is at a bottom, and I’m totally right about that fact, but just in case I’m wrong would you sign this?”
When you call a market bottom as a realtor (especially in this market) you are either intentionally misleading people, or you’re an idiot who actually believes the market has bottomed. Either way, it makes you a bad advisor for your client.
And if you really are a lawyer SDHB, you’d understand the importance of tempering your advice.
I thought you were evasive because it took a lot of prodding & verbiage before you came right out and put it in black and white… you expect to get paid handsomely for participating in the trade of a home, but you are not acting as a fiduciary. Unlike a broker you are not punished if you do not act as a fiduciary. Please correct me if this is wrongly concluded.
Most buyers/sellers labor under the misapprehension that you are acting in the best interests of the buyer or at least the seller – the party who is actually paying the realtor. The buyer feels that they are paying the commission seeing as the money comes from what they bring to the table. They expect the realtor to be doing their best for them. This is not the case – is it? It seems that the realtor expects to be paid some vast amount of money, disproportionate, independent even, of the amount of work done without the buyer or seller getting what they perceive to be value.
You claim you’d be better paid if you were paid hourly. Interesting, and how much would you be paid hourly in order for that to be true? How much of your time and funds does it typically cost you to sell a home? To me the problem is that for ma as a buyer you are not acting in my interests. You get paid more if I pay more. I may never even get my offer considered unless I let you have both ends of the transaction. It is in your interests that I do not go to a thorough Home Inspector – that way I’m less likely to see things that will dissuade me from buying and you’ll still be selling this home rather than the next one. It is in your interests that I go to some sub-prime lender – you may get kick backs from them if I take some crappy loan and funding is less likely to fall through. Much is stacked against me as a buyer. There are honorable and decent realtors out there – you claim to be an educated one. I have no idea about the rest. I hope you are honorable.
What I do know is that if mostly crappy accom is selling in San Diego, median prices will seem low. Most of the areas of San Diego that are considered desirable are seeing very low volumes of homes trade hands, and the prices are not that discounted in those areas. The job situation down there is not good. It isn’t getting any better. Without jobs, people with normal homes and normal mortgages will be challenged to keep up with the payments. This will likely cause homes to fall in price with foreclosure and short sales.
House prices, despite what the median of crappy homes changing hands says, are still extremely high, and are high compared with income levels when viewed as a ratio of income to price.
I personally believe that you should be paid by the hour, at a reasonable rate, but with respect, I would prefer not to have to use a realtor at all. I just don’t trust most realtors, a few of my friends aside. I feel like if I want to buy a house it is almost inevitable that I’m going to have to deal with a realtor, and it is almost inevitable that this will push up costs, I will likely get lied to, misled, and the whole process will eat time and even if I’m willing to pay asking, I still may not get the home I want. I have never bought a property here so lets hope I am wrong. Perhaps you should wonder why I’ve come to such conclusions though. It feels like you guys had the monopoly on access and that this is now slipping away from you. Some realtors raked in huge amounts of money – how many of them deserved it? Did they work any harder than the stock brokers or the guys doing the gardens? Perhaps you are a misunderstood breed. What is it that you do that is worth the money that you want to be paid?
Finally, I’d say the market has recently picked up for crappy bottom end houses, because the stock market has picked up – and this has meant that hot money has become available for people to buy dumps. I think we’re a long long way from the bottom in San Diego and prolonging the agony is not good for anyone.
Here, here!
San Diego is not Irvine, and is indeed leading the way towards a real sustainable bottom for the lowest rung in the housing “ladder”. I think a lot of the antipathy here is the pain of waiting, and not wanting anyone else to be able to buy where they want to buy sooner than one can in Irvine.
If you have a good job in SanDiego, are buying easily within your means with a good 6 month emergency fund and 10-20k on hand for a repair fund, I see no reason not to buy now if you feel that the prices are “fair” based on the fundamental measures listed in this blog. Yes, there may be an overshoot ahead, but prices should recover from any overshoot within 3 years, so as long as you can reasonably look at your downpayemnt as money available to spend (not as part of your long-term equity, but as money down the drain). Then I think you’re well within your rights to buy now.
But, SDHB, this is also not one of those bubble blogs that tells people to walk away from their responsibilities. Or that has a vested interest in generating short sales. This is mostly just people who wish that prices had never gotten disconnected from the realities of earned income and rent and who are anxiously awaiting the return of that parity.
Not to engage in a pile-on, here’s an article from todays’ San Francisco Chronicle about the problems with declaring a bottom has been reached:
A May 24 NY Times article indicates that around 1.5 million prime and subprime loans and about half that many alt-a loans are 90 or more days past due.
Each of these 3 categories now totals about $250 billion owed – a grand total of 3/4 of a trillion dollars.
And the majority of alt-a still have reset/recasts ahead.
As noted in a Barron’s opinion over the weekend, we are in the eye of the housing hurricane; the other half of the storm is yet to hit.
I find it interesting how we talk about these foreclosures, etc. as if the homedebtor is just walking away Scott free. Is that the entire truth? Is this debt being forgiven or is the bank failing to “produce the note”?
Moon-walking away from legal obligations sure makes great copy these days, but it seems to me that these some of these people haven’t watched enough episodes of COPS and still think they can outrun and hide from, oh I don’t know, a freaking helicopter!
I’m just wondering whether some may have an awful lot of ‘splainin’ to do to Uncle Sam come mid-April the following year.
After further consideration, I’ve made a good-faith effort to modify the blog post that has been the subject of so much controversy.
Where I had said “Our local real estate market has reached a bottom and prices have been heading back up.” I’ve changed it to read
“Demand for homes in San Diego exceeds current supply, and the result has been upward pressure on prices…. And while this is no guarantee of future market performance, it is certainly positive news.”
I appreciate the input from everyone who cared to make comments.
Sounds much better to me 🙂
I agree with IrvineRenter and his opinion about you. I would like to see data to backup your observations, so keep posting. I personally think Realtors are good at assessing “the immediate present”. That is, Realtors know better than most people what a particular house should sell for “right now”. But when it comes to “the future” Realtors are usually not very good.
Interest rates are extremely low, and 10k CA credit + 8k federal credit, plus FHA guaranteed loans, foreclosure moratoriums, government rescue programs (like loan mods), etc, means home prices are still inflated. But who knows, maybe the low-priced areas are near a bottom? I don’t know, but one thing is certain in my mind, all these government intervention and incentives is making people pay a lot more than they should.
Thanks QP… The data cited in my SDHBlog post is “After reaching a low of $280,000 in January 2009, the median price increased to $285,000 in February, remained at $285,000 in March, and increased to $290,000 in April.” And in a subequent post “In April 2009 the number of home mortgage defaults in San Diego County dropped 12 percent from the March 2009 figure.”
Before anyone starts throwing knives… These obviously aren’t stupendous achievements, but like I said before, at least it’s positive news.
The abandonement of properties will continue until owners will be held responsible and made repay banks losses.