Tuesday, December 8, 2009

Housing News From Around the Web

I've been slow getting up some posts I have in the works. In the meantime here are some interesting links from around the web:

Underwater with Little Hope (Press Democrat): The Ochoas Real Estate agent no doubt told them in 2005 that they were making the the most important investment decision of their lives and to act now before they were priced out of the market. Now Sal Ochoa admits the home was "the worst investment I've ever made in my life." They put $120,000 down on their home yet are still almost $100,000 underwater on their loan. Trying to modify their mortgage is proving near impossible. If the terms they are offered are anything like those I've seen being offered to some of our readers (artificially low rates that creep up yearly, massive balloon payments in 25 years) they would be better off walking away.

HAMP = Another Exotic Mortgage (WSJ): Related to the above, the Obama program to help homeowners looks like they are curing the disease with more poison. As such, the Home Affordable Mortgage Program looks like at best will just kick the day of reckoning down the road.

Will BofA aggressively unload 500,000 foreclosures on the market? (Naked Capitalism): Various readers write in to shed some light on the rumor that Bank of America is about to flood the market with foreclosures.

New Healdsburg/Windsor Real Estate Website (GreenVine): I just stumbled upon GreenVineBlog.com run by Andrew Meyer that covers the local market. Looks like it has some good pictures and updates on projects going on around town.

Sales in Healdsburg Skyrocket (Redfin): Sales in Healdsburg surged in September and remain at an elevated level. My opinion is that this is a result mainly of the government throwing everything and the kitchen sink at the housing market trying to prop it up. A local agent also relayed that there are several first time buyers(many with the help of family members) who have been sitting on the sidelines for a while and now think they are timing the bottom. Readers of this site know I think we've got a long way to go before we see real estate prices bottom out. Still, the sales numbers can't be ignored:

8 comments:

  1. I bought a house earlier this year in Healdsburg and just recieved an unsolicted offer 15% above where I purchased it.

    ReplyDelete
  2. I'm not surprised (although I would have been at the beginning of the year).

    The key is though that since the start of the year the government has committed to throw $20 billion at home buying tax credits and the Federal Reserve has committed over $1.5 trillion to driving down mortgage rates. That is trillion with a "T". Over 10% of our national output. That should scare you.

    If you bought a home you know you will be in for the next 20-30 years it was probably a smart move as your payments are locked in. But the point I try to make on this site is that all this government support simply can't go on forever. When it stops interest rates will head higher and home prices will continue their decline. $400,000 homes become completely unaffordable if mortgage rates head back to 8.5% (where they were just a few years back).

    Add in the huge pipeline of foreclosures that will be hitting the market in Sonoma County and you only compound the downside.

    Buying a depreciating asset with leverage is one of the worst financial decisions you can make(as every Realtor should tell you, but most don't). If you need to sell the asset before the term of the loan is up, it can lead to financial ruin.

    With those points in mind, you can see why I think it is a bad time to buy a home.

    Out of curiosity, roughly how much was your home and how did you receive the offer?

    ReplyDelete
  3. I listened to Mike Kelly's Real Estate Program last weekend Nd HE thinks that people had better buy now while they have a chance to snatch up a bargain! Inventories are half of last year's,rates are low,the government is giving out free money and foreclosures,well he did say something about foreclosures in a positive tone of voice,but it was not intelligible to me even though I listened very closely.Prolly he has access to super secret information available only to those with radio talk shows,instead of the economic studies,MLS Data,Posts from places like Calculated Risk,what our eyes see daily etc that we mere mortals have to depend on.Or maybe all his income is commission based and he will go belly up if he doesn't make enough sales...

    ReplyDelete
  4. I'm the anonymous poster who had the unsolicted offer. I can't divulge the actual numbers for privacy reasons, but I was surprised to receive one. I don't think its a great time for everyone to buy a home, but it was a good time to buy a home for me- and it was the right home. I'm in it for the long haul and hope to pass this home on to my children.

    I think Sonoma and Napa county are still going to be in a world of hurt for awhile too- worse than some other parts of California. That's why this high volume uptick in Healdsburg is surprising to me. I wouldn't recommend anyone buying right now unless it is a foreclosure, where there are significant discounts.

    Healdsburg is a great town with a lot of potential. I think its a hidden gem and am very happy here.

    ReplyDelete
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