Posted by SmashyCrashy on July 13, 2008 at 5:55 a.m. (Suggest removal)

What a shill piece.

This last May was the slowest May for sales on record for the history of Ventura County. And yet Jenni writes that the bottom of the market has been reached?

Median prices dropped 26% YoY and yet they can't possibly go any lower?

This is a complete propaganda piece, lines like:
""You are just giving that money away," Alvarez said. "You're paying another person's mortgage instead of your own.""
And
"Even with the economy struggling and companies downsizing, some people are willing to risk buying a home because the California coastal market — with its proximity to urban areas, ideal climate and beautiful beaches — is guaranteed to rebound eventually. And the question is will homes ever be available in the $300,000 range again."

I mean did Jenni just hand over the typewriter to the NAR?

Short sales and foreclosures are at record high. The Dataquick foreclosure report should be out by the 24th and will show the tremendous amount of foreclosures that have happened (trustee sales) and those to come (notices of default). If you look at the MLS and look at the number of short sales and vacant properties (usually, but not always REO) as a percentage of inventory it is staggering.

Prices will continue to drop until they align with income. They "affordable" house for the people in the article making 50k was $250,000, FIVE times their income. Sheer insanity. Realtors and mortgage brokers will of course tell you now is the time to buy, they desperately need the paycheck. But people need to sit and think what affordable is and it IS NOT five times your income.

You don't have to fear about the housing market magically rebounding and you missing out, housing markets move very slowly and they don't bounce. As Economist Chris Thornberg said, "You aren't dropping a rubber ball, you are dropping a watermelon" about the myth that housing can bounce back quickly.

This was the biggest housing bubble in HISTORY just because it has corrected somewhat doesn't mean we are anywhere close to bottom. Simple economics still apply. Todays "deal" is just another overpriced sale on the way to the bottom.

I'm disapointed in Jenni, I'm pretty sure she knows better but maybe I'm wrong.

Posted by blimp66 on July 13, 2008 at 7:56 a.m. (Suggest removal)

It's amazing how many different ways "Now's the time to buy" can be rephrased!

Posted by cassandra2 on July 13, 2008 at 8:02 a.m. (Suggest removal)

Yeah, but I'd rather the Star shill for their real estate advertisers than recruiting gullible young people for the war.

The corporate media have been so corrupted that

Posted by jill on July 13, 2008 at 8:21 a.m. (Suggest removal)

I bought an incredible short sale for an amazing price. It would be great for buyers if houses continue to go down, but another thing that's important to keep in mind is that interest rates may go up. The seller in my case paid my closing costs and a point, and I ended up with 5.5 interest rate. If I hadn't have locked in that rate, it would have gone up to 6.5 and I may have been out of luck.

Posted by christafrankmiller on July 13, 2008 at 8:27 a.m. (Suggest removal)

hey jill...we are in the process of trying to buy our first home and its a short sale...can you give me any tips or advice? it would be a va loan...so i know those are different but im sure its the same basics for short sale. i have heard theyre "bad", but we HAVE to have this house!! anything you can share would be great...

Posted by THX1138 on July 13, 2008 at 8:43 a.m. (Suggest removal)

It's interesting to see the contrast in the media. Other sources predict the housing market won't bottom out until sometime in 09 or even early 2010.
Whether to rent or buy depends on what price range you're shopping for. A 300k house probably won't go down that much, whereas a million dollar home may go down a considerable amount.
Housing was way over priced for many years, so were it settles is yet to be seen.

Posted by vcsexplorer11 on July 13, 2008 at 9:10 a.m. (Suggest removal)

What this article fails to show is that from 1979 thru 1999 (now shown on the chart) that median home prices went up $255,000.
That is a 20 year period.
From 2000 thru 2007 the median house price went up $335,000.
That is a 7 year period.
My math says that the median house should be around $340,000, maybe even less since salaries have a downward trend because of immigration and salary stagnation with high inflation.

Posted by heregoes on July 13, 2008 at 9:15 a.m. (Suggest removal)

The interest rate is more significant in detrmining your payment than the amount of the loan. Rates are going to go back up.

It is a buyers market and if you plan on staying in the house for a while, then I think now would be a good time to buy before rates do go back up.

$300,000 at 6.5% is about the same payment as $270,000 at 7.5%.

So if the market fell another 10%, but interest rates went up 1% you are making the same payment anyway.

Posted by vcsexplorer11 on July 13, 2008 at 9:15 a.m. (Suggest removal)

Just to give more info.
Ventura County Median Home prices.
1979 $100,000
1989 $245,000
1999 $255,000
2007 $590,000

Posted by vcsexplorer11 on July 13, 2008 at 9:20 a.m. (Suggest removal)

Woops - I made a typo it was 155,000 in 20 years

Posted by SmashyCrashy on July 13, 2008 at 9:48 a.m. (Suggest removal)

"but another thing that's important to keep in mind is that interest rates may go "

If you believe that prices will align with income because the funny money loans are gone from the market then any corresponding rise in interest rates will result in a drop in price. If you think interest rates are going to rise then it is all the more reason to wait.

We are near historic low rates that would suggest that rates are more likely to rise then go down. That means the market you will be selling in in the future is much more likely to be a higher rate enviroment.

Both short term and long term issues confront the housing market. The local economy is deteriorating, the county government very dependent on property tax income, and the state government is heavily in debt.

Look at unemployment (chart on the right):
http://www.labormarketinfo.edd.ca.gov/

Local major employers like Countrywide and Amgen are having issues. And it is an open question whether Countrywide will maintain its local presence. Looking on Loopnet (commercial real estate MLS) there are many Countrywide buildings up for lease and sale. Then there is the gas issue, the further out areas are becoming more expensive to commute and therefore much less valuable. If energy costs stay high it will hurt Ventura county housing.

If you are considering to buy now have a very long term view and realize that it will be many years before the local area starts to recover. So just make sure you realize you need to be able to pay off any debt you take on. It took 11 years for the local area to recover from the 1989 downturn and this bubble was infinitely bigger.

Posted by hemlock1262 on July 13, 2008 at 9:51 a.m. (Suggest removal)

Look, there's always an up-side in economics. Some people are going to be able to capitalize upon falling prices and values, and that's a good thing (though sorry indeed for the people who are losing out). Hopefully, a lot of people from West L.A. will be buying up property out here to keep our values high.

Posted by blimp66 on July 13, 2008 at 10:23 a.m. (Suggest removal)

So, Hemlock: Regarding your quote "Hopefully, a lot of people from West L.A. will be buying up property out here to keep our values high."

that is spoken like a true homeowner, but what about all of us who grew up here and are still waiting for prices to become more realistic/affordable?

Posted by riotgrrl83 on July 13, 2008 at 12:37 p.m. (Suggest removal)

Oh SmashyCrashy, your endless pessimism and skepticism never ceases to amaze me. You are a doomsayer. I hope everyone who reads these posts understands that some people, like SmashyCrashy, are bitter because they probably lost money on their homes and now want everyone to believe the real estate market is in a hopeless downward spiral. Real estate is a constant up and down. Yes, we are in a down market and there are some serious troubles in the financing markets, but the sky is not falling. If you truly want to buy a home in order to have a place to call your own, this is still a great time to do it. And as sawyerfamily pointed out, any potential further decreases in prices will be counterbalanced by the increase in interest rates. The reality is property values in Coastal Southern California always go back up. And you can only see the bottom in the rearview mirror.

Posted by live_for_purpose on July 13, 2008 at 12:51 p.m. (Suggest removal)

smashycrashy--I guess the VC Star won't have you writing real estate articles for it anytime soon. Good job as usual in your realistic posts! Do you remember about 3 years ago when the UCSB Economic Forecast said that our median value here in Ventura County would be about $1,000,000 by about 2010. Looks like they missed it by about $600,000 or so!!!

We bought for $370,000 (which I thought was way too high) in Camarillo in May 2002. It is assessed for tax purposes now at about $407,000. Do you know a good, reliable, quick way to check on the approximate market value so I can determine whether or not I should ask the county to reassess and possibly lower my real estate taxes? I hate to admit it is worth less, but if it is, I might as well pay lower taxes.

Hindsight being 20/20 we would have sold 2.5 to 3 years ago and rented and then tried to rebuy in about another 6-18 months or so. It would have been my greatest divestment ever!

Posted by pirie226 on July 13, 2008 at 1:44 p.m. (Suggest removal)

This article is even more absurd than that of June 26 (same reporter, I might add), "Home slump near bottom, CAR says." Why would anyone from CAR say anything else? SmashyCrashy said eloquently much of what I'd have said. WSJ Marketwatch and Business Week project market decline of 18.7 to 20.1 percent for Southern California before May 2009. A quick search of NOD filings on any of the foreclosure websites yields 15 pages of them between Thousand Oaks and Newbury Park alone (add in Oxnard, Simi, Moorpark, Ventura...you'll be there all day). The Fed expects 2.5 million foreclosures nationwide in the next two months. Fannie, Freddie, Indymac...need I say more?

I recently placed a bid on a T.O. $500K fixer-upper that's been on the market since March 2007. I do so enjoy reading agent listings; here's a translation of what "good bones" means the house needs in this particular case:

-complete interior and exterior paint
-wood patching and stucco work
-soffit and fascia repair/replacement
-flooring in every room (not cosmetic - it's disintegrating)
-Windows, or at least screens to replace the shredded ones currently provided
-a garage door (water rot at the edges)
-driveway repair
-roofing work
-new appliances and cabinets
-complete landscaping; there's not a shred of living grass between the patches of parched earth

In the case of this property, "good bones" mostly means the walls haven't caved in. Yet.

The agent seemed to regard the offer as an insult, and dismissed it out of hand, telling my agent she wouldn't even "waste the ink" to send in the request. If I factored in market projection and the cost of repairs, my bid was about $20K too low. I'd like to see what the price of the house will be in six months, when move-in ready homes are $100K lower than this one, and SB 1137 forces the bank to maintain the property. It doesn't matter anymore what the last selling price was, or what the bank invested. What matters, when four million homes may be sitting empty, is what a property is worth NOW, and if there's a solid buyer. It's the only way the market will ever recover. Rebound is a long way off; the avalanche is still at the top of the mountain.

Posted by SmashyCrashy on July 13, 2008 at 3:19 p.m. (Suggest removal)

riotgrrl83,

Maybe you can let me know how the bottom can possibly be in?

We face rising unemployment:
http://www.labormarketinfo.edd.ca.gov/

Cotinued record high foreclosure activity and Trustee Sales:
http://www.realtytrac.com/blog/photos...

And record price drops:
http://www.loanperformance.com/produc...

This last May sales were the weakest May sales on record with Dataquick. The only question about June sales is if it is the weakest June on record or second weakest on record. Throw in increasing lending standards for a little cherry on top.

I see falling prices as a POSITIVE thing not a negative item. The sooner the issue is recognized and dealth with the faster it can be put behind us. But to suggest we are at a bottom is just at best naive and worst irresponsible.

We just had the greatest lending boom in history which drove prices to stratospheric levels. You would need a bigger economic and lending boom than we just have to be optimistic about the housing market and both pointers are pointing downard not upward. People are trying to guess the bottom and stand in front of a speeding train instead of waiting for bottom and then getting in the market. For such a huge financial decision in which hundreds of thousands of dollars is on the line, it is simple prudence to make that decision conservatively.

Posted by freethought on July 13, 2008 at 4:27 p.m. (Suggest removal)

"Buying a home especially makes sense for renters who are paying $1,800 to $2,500 a month — about the same amount many people spend on their mortgages."

No, it doesn't. For $2,500, I can rent a beautiful four-bedroom home in a quiet Camarillo neighborhood. However, the average home I could get into with a mortgage that high (with 20% down on the purchase) would be a three-bedroom in an older neighborhood, or possibly a four bedroom near the infamous Barry Street. Basically, renting is still the more desirable route if you have a family, and peace of mind is important to you.

Posted by freethought on July 13, 2008 at 4:29 p.m. (Suggest removal)

SmashyCrashy - Don't be too hard on the reporter. I think she's still a little "wet behind the ears" right now, so she's just reporting what NAR is feeding her. Probably, she has marching orders from her supervisor on what the article should read.

Posted by freethought on July 13, 2008 at 4:37 p.m. (Suggest removal)

Realtor Alert! We have a realtor on the thread who goes by the name of "riotgrrl83". If you have any questions on how the housing market has truly bottomed THIS time, please refer them to riotgrrl83. He or she will be providing refreshments (Kool-Aid) at his or her next "get rich in real estate" seminar.

riotgrrl83 - There was another realtor about six months ago on these threads saying (generally) the same thing you just did - that the market is about to take off, and that we'd be sorry if we didn't buy now. How do you think that advice turned out?

As SmashyCrashy said in his reply to you - his posts does not contain a negative viewpoint, but a positive one. Prices are still way too high. They need to come down. And they will. Last week's news was simply "check mate" for the consumer vs. the housing market.

Posted by vcsexplorer11 on July 13, 2008 at 4:40 p.m. (Suggest removal)

I think SmashCrashy is right on the money. The people who disagree are probably real estate agents.

In Japan their housing crash lasted 15 years.

The numbers in my posts above speaks for itself. It took 20 years for housing to go up $155,000 (look at link below), and 7 years in the Bush administration, for housing to go up $355,000.(look at the slide in the article above)

That is crazy. Here is a PDF of a housing presentation to Amgen by Georgia State University.

http://robinson.gsu.edu/resources/fil...

Posted by freethought on July 13, 2008 at 4:58 p.m. (Suggest removal)

So, why will the price of homes continue to drop? SmashyCrashy offered some valid ideas, but I have e few more of my own.

Last week, two major blows were delivered to Wall Street. Both FreddieMac and FannieMae were found to be insolvent (assets are waaaaaaayyyy below their liabilities). Also, IndyMac Bank failed, which may turn out to be the largest bank failure in history (time will tell). Because of all of this, the Federal Reserve is finally following through with its long-standing threat of forcing a tightening of mortgage lending rules for all FDIC insured lenders. Two of the rules would:

Require lenders to verify income and assets.

Prohibit them from engaging in a "pattern or practice" of making loans borrowers can't afford.

Many economist are considering the rules to be too lenient and are calling for more stringiency. We can expect two things from this: loans that are harder to come by, and higher interest rates. Even if the feds don't inact tighter rules, the banks will themselves, because they have investors to answer to, and they need to be able to ensure those investors that all future loans will be more safely underwritten.

What does all of this mean? That part is easy. It means the average Joe (or Jane) will have to settle for a smaller loan based on their household income. Less money available to buy a home means that they will either settle for a smaller home or continue to rent. This will only help to increase property inventories, which will, in turn, lower prices further still. How far? Now, that's much harder to answer, but I am expecting a repeat of what we saw during the last twelve months for the next twelve months. Some, like SmashyCrashy, may be expecting worse, seeing as corrections tend to overshoot the mark before finally settling at a comfortable level.

Posted by freethought on July 13, 2008 at 5 p.m. (Suggest removal)

vcsexplorer11 - There are some economists who believe we will mirror (to a degree) the Japanese real estate crash and slow burn. I'm not sure I agree, but it is possible.

Posted by freethought on July 13, 2008 at 5:30 p.m. (Suggest removal)

christafrankmiller - I would say that you should not hold your breath on your short sale. This is not said to discourage you. Just know that short sales tend to take a long time to close, because the banks jsut can't swallow the fact that they are going to lose money on the deal. Just make sure all documentation is in order and delivered as soon as it's requested, and don't get in over your head. That means - don't buy if the monthly mortage (including insurance, tax, HOAs, PMI, and all other monthly costs) is more than you can comfortably afford. It also means to stay away from all ARMs and interest only loans. Only a basic 30-year (or 15-year) fixed rate loan will do (also stay away from 40-year or longer loans of any kind).

Even though I am expecting another year of huge price drops, I know that there are deals to be had today for sellers (including banks) who are willing to sell at the right price. I hope you found one of these deals.

Posted by christafrankmiller on July 13, 2008 at 5:42 p.m. (Suggest removal)

thank you freethought...this is what i have been warned of...well see how it goes..im hoping this bank will be different...im sure thats nieve to say...this is all new for me so i am going off others experiences and advice...

Posted by freethought on July 13, 2008 at 5:50 p.m. (Suggest removal)

I'm glad to help. Good luck!

Posted by freethought on July 13, 2008 at 5:52 p.m. (Suggest removal)

SmashyCrashy - For more humorous posts, see the article in today's paper titled, "The comeback of the American Dream". Here's the link: http://www.venturacountystar.com/news...

This one was written by a.....Drum roll please....................... Realtor!

Posted by SmashyCrashy on July 13, 2008 at 6:09 p.m. (Suggest removal)

The C.A.R. forecast in October 2007 that median price for California in 2008 would drop 4% to 553k. In their latest updated forecast in June of 2008, they think median price for California for 2008 will be 402k. Off over 151k in less than 8 months. They clearly have no idea what is going on in the market. What is also interesting is their October 2007 mortgage rates prediction for 2008 was 6.5%, in June 2008 they predict 2008 rates at 5.7%. So rates are lower than they predict and in the face of that prices are even lower.

christafrankmiller,

The highest chance of success for any short sale is if the short sale package has been done before the property was put on the market. The ensures all the people who own the different loans (and their insurers) are in agreement and the listing price is approved. Lazy agents will put properties on the market at lowball prices before the short sale package is even started in the hopes of getting a bid and a miracle acceptance by the bank.

A short sale with a short sale package done will go through very quickly, those without one have a low probability of success. The ones without a short sale package have a higher chance of success if there is only one loan on the property or if it does have multiple loans on the property they are owned by the same people. Asking the right questions (Has a short sale package been started? Approved?) and finding the right property (single loan, or multiple loan owned by the same lender) will help ensure your transaction goes smoothly. I have seen short sales sell and close in under two weeks with approved short sale packages before being listed.

Posted by christafrankmiller on July 13, 2008 at 6:28 p.m. (Suggest removal)

wow...thanks smashy crashy!! ill make sure to find that out!!! i had no idea about the package...but i had heard about the multiple loans before... thanks again!!

Posted by SmashyCrashy on July 13, 2008 at 6:48 p.m. (Suggest removal)

christafrankmiller,

A short sale package is basically the bank finding out the homeowner financial situation combined with a hardship letter to see if the short sale is the best course of action. The issue is that it takes awhile to get into the system even once it is completed but once approved it is possible (from some loan servicers) to get fast responses. But many times in a multiple loan situation where everyone can't come to agreement the first loan just forecloses and moves on as in many cases it is the most economical thing to do.

If this one doesn't work out for it is ok, there are plenty of houses to choose from and one will work out. Best of luck.

Posted by christafrankmiller on July 13, 2008 at 6:55 p.m. (Suggest removal)

how do i find out? have my realtor ask? is it even worth my time? we are not in a hurry to move, but my husband and i REALLY want THIS house and dont want to have my heart broken nor do i have money to blow for nothing...i dont mind being patient really...if something comes out of it, but dont want to WASTE time and money...ya know!? i know theres lots of houses...and if it comes down to it, thats what well have to do but im willing to fight for this one...

Posted by jill on July 13, 2008 at 6:57 p.m. (Suggest removal)

christafrankmiller,

I posted a link below about the nightmares of short sales called "11 Reasons not to buy a Short Sale," and most all of them happened to me. First off, the sellers' lenders can pull it out from under you all the way up to the end. An escrow closing date means nothing. The escrow agreement apparently only applies to the buyers. And you have to be patient. It took about three months for mine to actually happen, and no one involved could believe it actually went through. The sellers' lenders could care less about anyone involved. At the last minute, they want to change things. With me, they refused to do the termite work and then said they weren't going to pay closing costs as agreed. So I said, "okay, forget it." And they said, "Never mind. We'll pay the closing costs," but I have to foot the termite bill. Also, they might drop you along the way if a higher offer comes in. So it's not a done deal until it's actually recorded. Make sure you have an experienced, professional realtor and hang in there. If you're willing to go through the roller coaster ride and be patient, it might possibly pay off for you like it did for me. But the good news is it's a buyer's market, and they can't afford to keep jerking people around like this. I wish you the very best of luck with this house. Oh, one more thing. Do not put down any funds that you won't get back if escrow falls through. You will not get back money for an appraisal and an inspection, but you still might have to gamble with the appraisal to get your loan preapproved.

http://homebuying.about.com/od/4closu...

Posted by freethought on July 13, 2008 at 7:02 p.m. (Suggest removal)

christafrankmiller - SmashyCrashy know exactly what he is talking about. I learned much of this three years ago in an expensive class (sorry that I didn't relay it to you, as I have forgotten much of it). SmashyCrashy is outlining the same info for free. Hopefully, you have someone working for you who has experience in short sales.

Personally, I am waiting for a few I have my eye on in Camarillo to fall through and become REOs.

Posted by freethought on July 13, 2008 at 7:04 p.m. (Suggest removal)

Jill - Thanks for the link!

Posted by christafrankmiller on July 13, 2008 at 7:12 p.m. (Suggest removal)

wow..im so torn...this house is what i want and i dont know if i can walk away..but this is a lot of stuff that can go wrong!! this is scary..my hearts already invested and its going to get in even more...and just to be broken!? man... i dont know what to do!! wow...

Posted by SmashyCrashy on July 13, 2008 at 7:16 p.m. (Suggest removal)

christafrankmiller,

Yes, you're realtor should ask their realtor where exactly they are at in the short sale package process. First question is, "Is there an approved short sale package on this property?" (my guess is no) second question (if No) "How far along in the short sale package are they?"

One other thing, have your agent pull the public records report for the property (they can access a simplistic version from the MLS), that will give you a better feel for what loans are on the property and if you are dealing with a multiple or single loan situation.

As to whether it is worth it, that is only something you can decide. If this is the right house for you for whatever your personal motivations then going through the effort will be worth it to you. Different things have different worth to different people.

Posted by christafrankmiller on July 13, 2008 at 7:23 p.m. (Suggest removal)

thank you guys for all this info!! i cant tell you how much it means to me!! please keep it coming...the more the better!!
i read that article..thank you very much!!

Posted by ed.fitzhenry on July 13, 2008 at 7:47 p.m. (Suggest removal)

hahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahahaahahaaaaaaaaaaa!
hey Ventura County Star Editor:
if you want to have people read chronically optimistic drivel from the mouths of realtors, direct them to the National Association of Realtors website. there they can read how home prices in CA will increase in the next few months.

Posted by alloyz25 on July 13, 2008 at 7:56 p.m. (Suggest removal)

What a joke. We havn't even gotten close to hitting bottom, and NO ONE can speculate correctly when that will happen. All that is for certain is the market is going down down down, and has shown zero signs of anything else.

Posted by jill on July 13, 2008 at 9:04 p.m. (Suggest removal)

I have noticed that houses are starting to move, albeit very slowly. And it's true, nobody can predict the market or else we wouldn't have been in the state we're in in the first place. So many of the houses on the market are short sales, so something has got to give. It will be interesting to see what happens in the next few months.

Posted by jill on July 13, 2008 at 9:20 p.m. (Suggest removal)

Christafrankmiller,

My heart goes out to you. I felt the same way about my house. I actually had to emotionally disconnect from it until it was actually recorded. I had the keys in my hand before it was recorded, and I still wouldn't believe it. It's not a total impossibility, because after all, they do sell eventually to someone. Twice I was told that it was a go and it really wasn't. I even gave notice to my landlord and then had to say, "Whoops. No, I'm not moving in 30 days!" Just provide all information and documents ASAP whenever they are asked for.

Posted by christafrankmiller on July 13, 2008 at 9:56 p.m. (Suggest removal)

thanks jill...i definitely feel better prepared..as much as can be now...i really hope this works out...i guess its worth a shot

Posted by jill on July 14, 2008 at 9:09 a.m. (Suggest removal)

I'd say it's definitely worth a shot. I almost gave up but had nothing to lose. The sellers' realtor was the one who really made it happen, though. Plus, a little luck.

Posted by christafrankmiller on July 14, 2008 at 9:58 a.m. (Suggest removal)

thats sort of how i feel...we are renting a house right now that we dont HAVE to move out of...the only thing i am afraid of is the dissapointment if it falls through...i dont understand why they jerk people around like that...dont they want to sell the house!?

Posted by redsparrow1334 on July 14, 2008 at 10:23 a.m. (Suggest removal)

The prices are still too high for normal working people in Ventura county. I thought I might finally have a chance to buy a home however, my husband and I only qualified for $200,000. There still isn't anything livable in ventura county for that price. So, i'm not sure where they got their numbers in this article. We make $70,000 a year w/ no debt and that's all we qualified for!

Posted by Fay_Buddha on July 14, 2008 at 10:43 a.m. (Suggest removal)

the one thing they forgot to mention is what goes into that 43% affordability .. notice the kicker of "based on an adjustable interest rate of 5.65 percent"

http://www.car.org/index.php?id=Mzg0ODk=

The minimum household income needed to purchase an entry-level home at $356,350 in California in the first quarter of 2008 was $67,830, based on an adjustable interest rate of 5.65 percent and assuming a 10 percent down payment. First-time buyers typically purchase a home equal to 85 percent of the prevailing median price. The monthly payment including taxes and insurance was $2,260 for the first quarter of 2008.

Posted by marketrealist on July 14, 2008 at 12:32 p.m. (Suggest removal)

The housing market is a symptom of a larger ecnomic instability. So too is the stock market - down from 14,000 in Oct 2007 to 11,100 now.

The USA is bleeding $700 billion a year in energy imports in a $14.7 trillion economy. (We have the worst fuel economy standards of any country in the developed world and China). This is really bad! We are also bleeding in expensive wars in Iraq and Afghanistan. The accumulated war cost is over $1 trillion since these wars began. The only thing that keeps us going now is that unemployment has not spiked. If that happens, the pain will really begin. Hopefully, skim through and start addresssing some serious issues we need to face.

Posted by CAPEDad on July 14, 2008 at 3:39 p.m. (Suggest removal)

This is the tip of the iceberg. Please don't rush in to hold the bag for someone else. Many alt-A loans will be resetting in the coming year. This will dramatically increase the payments on owners barely keeping their heads above water. They'll walk away in mass and leave MANY more shorts and REOs.

A few stories ago riotgrrl83 called my forecast of another 30% drop misguided. I think it is very possible.

Just a fact. It will take a long time for this mess to unwind. Smashy is absolutely right - just wait. You're not going to miss any sort of jump in prices and the inevitable rise in interest rates will only cause a decline in prices as the earlier posters have pointed out. It's simple math. The higher the interest rates, the smaller the demand, the lower the prices.

Posted by jill on July 14, 2008 at 8:24 p.m. (Suggest removal)

Christafrankmiller,

The banks are flooded with short sales, and the decision-makers just don't care. There's no rhyme nor reason why one offer is approved and one isn't. What I did was I kept looking around so I wouldn't feel so bad if mine didn't go through, because I didn't want to be disappointed, either. One realtor's advice to me long ago was, "Never fall in love with a house." You may think this is crazy, but I followed the advice in that movie "The Secret," and visualized that I already had the house, etc. You visualize it and it will be. Hey, whatever it takes! lol

Posted by SmashyCrashy on July 14, 2008 at 8:54 p.m. (Suggest removal)

The reason short sale approval seem without rhyme or reason to us on the outside looking in is there are competing interests behind the scenes. So while it may look like just another house to you there may be multiple loans negotiating each with competing interests. Then those loans could have mortgage insurance which must approve the sale. Or the loans could be part of a loan pool and the AAA tranche might be pushing to liquidate quickly and the lower rate tranches might be holding out for a slightly higher price.

It is a very complex process behind the scenes and on top of it all the servicers are overwhelmed (and the servicers themselves can have competing financial interests). Each loan isn't getting nearly the proper attention needed to make a good decision and many loans simply fall through to foreclosure.

Once a property is foreclosed on the process is much simpler. The number of people with a say in the property is reduced greatly and usually everything falls under one asset manager who has tremendous authority to dispose of the property (though they are still overwhelmed).

Posted by freethought on July 14, 2008 at 10:01 p.m. (Suggest removal)

SmashyCrashy - You just outlined why I am stalking a few homes currently at the short sale stage. If the short sale falls through, I will be waiting and ready to lowball whatever price the bank initially requests. There's one short sale in particular that I am hoping to get for about 30% less than it's current offering.

Posted by christafrankmiller on July 14, 2008 at 10:58 p.m. (Suggest removal)

jill...i certainly didnt mean to fall in love with this house or any house..i was just looking through books and online and there it was and it was seriously love at first sight...everything i do is based on this house...i cant even think about looking at other houses...ive tried...they just arent what i want...maybe when i get told flat out no!? i dont know...ive never felt this way about a house...its just very natural and im just following my heart...hopefully that doesnt get me in trouble...lol

Posted by jill on July 14, 2008 at 11:45 p.m. (Suggest removal)

christafrankmiller,

I bet you will get it. It sounds like it's supposed to be your house. Think positive. Send those vibes out!

Posted by christafrankmiller on July 15, 2008 at 7:33 a.m. (Suggest removal)

thanks jill!! my agent called this morning to tell me someone made an offer on the place...so it may get bloody now!! lol im going to battle for my house!! and i have to do this all alone..my husbands deployed to afghanistan...ugh well, i have 5 kids to add to it!! lol

Posted by freethought on July 15, 2008 at 9:43 a.m. (Suggest removal)

christafrankmiller - Best wishes for your husband's safe return.

Posted by christafrankmiller on July 15, 2008 at 10:29 a.m. (Suggest removal)

thank you so much freethought!!

Posted by venturapagan on July 15, 2008 at 11:21 a.m. (Suggest removal)

I had to laugh when my fiance and I got pre-qual for $290,000; the first thing I said was "what the heck am I going to buy with that around here?!" Sure you could maybe get a condo, but we need privacy, space for the animals & veggies, and no HOA! Most won't entertain a mobile home for a 1st timer. Even at 290k, the monthly is more than we can take (2,200/mo). Now what? That's why we keep waiting, paying down our few bills, hoping... We make decent money, too.

Posted by jill on July 15, 2008 at 2:32 p.m. (Suggest removal)

venturapagan,

Too bad you can't qualify for a little more. There are some nice moderate-income homes as low as $350k. You have to make under $60k for one person and under, like, $72k for two people.

christafrankmiller,

Tell your realtor to work it!
My best to your husband for a safe return home.

Posted by freethought on July 15, 2008 at 3:37 p.m. (Suggest removal)

Jill - I used to live in an "affordable home" (qualified as a "low income" family at the time). I will never advise anyone to do what I did. First, there are way too many restrictions on the disposition and resale of these homes. Second, the price that they ask for on the "affordable homes" has gone up so much in the last eight years that they are not much lower than the cost for a similar home without the restrictions. Third, there is no negotiating the price. The price you see is the price you pay (just like with Saturn dealers). Fourth, the majority of the people who will qualify for these homes usually come from much worse situations and bring with them some unsavory characteristics.

During my first year in my home, I watched my neighborhood deteriorate to one with constant noise (even after midnight on a school night), cars parked absolutely everywhere, destruction and defacing of property, and a lack of mutual respect from my neighbors. I had no idea the experience I was in for, and I'll make sure to tell anyone who will listen why buying one of these homes is a bad idea.

venturapagan - Don't worry. Pay down your bills and save as much as you can. Within a year, you'll finally see properties listed at prices you can afford, and you'll be in a better position to buy. When buying a home, there are three rules I will now and forever live by: (1) Be able to put at least 10% down (20% if possible) on a 30-year (or 15-year) fixed rate loan (no interest only loans); (2) Be able to comfortably make the monthly payments on your mortgage, to include taxes, insurance, PMI (if applicable), HOA (if applicable), and any other monthly requirement - comfortable means you are not living paycheck to paycheck eating mac and cheese; and most importantly (3) You must be looking forward to the home you plan to buy. I do not subscribe to the "starter home" route. Buy something you really want, or don't buy at all. If any of these rules are broken, I don't even give the home a second thought. Right now, every home my realtor has sent me for review has broken at least one of those rules. I hope this helps some.

Posted by ifly617 on July 15, 2008 at 5:34 p.m. (Suggest removal)

To all you realitards and naysayers.... I have been reading these articles since the days of "buy now or get priced out" back in 2004. Smashy has been commenting for about that long and he has called it exactly true even before any signs of a crash. He has all the facts and data to back him up and YOU have none. As for the people who are worried about the interest rates going up- affordability is affordability its just like cars. If you can't afford the gas you get a car that gets better milage. If you can afford 300k you can afford 300k it doesn't matter what the purchase price or interest is it will all add up to 300k. And for those of you who would like to do advanced math you can write off your home interest on your taxes and not your principle. Therefore the more interest you pay then more tax deduction you get and during the course of 15 to 30 years you will most likely have the opportunity to refinance at a lower rate with a lower payment. Now if you really want to do some deep thinking-- If you pay less for the house your property tax will be less! but nobody ever thinks about that. Anyone who disagrees with these principles is merely a speculator and my friends speculation is over.

Posted by jill on July 15, 2008 at 6:50 p.m. (Suggest removal)

Freethought,

The home I purchased is a moderate-income home. It had been on the market for so long that I didn't have to meet the income cap. There were many offers on it, but the people either didn't qualify for a loan or didn't want to deal with the short sale. I have three sheriffs living down the street. I am fine with the restrictions, and I got an amazing house at an unbelievable price in a super-quiet neighborhood. I have met most of my neighbors and they are really good people and made me feel so welcome to the neighborhood. I had no less than four neighbors come over to help when they saw me struggling to turn on the water meter. I lived over in the "nice" neighborhood by Buena High and had a couple very inconsiderate neighbors. There are a few umkempt houses there, too. I have not seen one messy house in my new neighborhood. I actually think it's better that people cannot rent out these houses. You don't get renters who could care less about the properties. People seem to really appreciate their homes. So I don't know. Maybe I just got extremely lucky, but I am thrilled with my home and plan to stay there a long time. I think it also depends upon what people plan do do with their homes. You cannot "flip" these, for instance. But for the right person, like me, it's a sweet deal.

Posted by freethought on July 15, 2008 at 8:31 p.m. (Suggest removal)

Jill - I guess we experienced different circumstances. In my situation, the entire neighborhood was comprised of Afffordable Homes which were controlled by the City of Oxnard. I believe you are living in an Affordable Home that is surrounded by homes that are not in that category. That may have worked out for you. I suppose it all depends. If the home you suggested earlier is like your won, then it might be worthwhile. However, if it is part of a tract that is completely comprised of Affordable Homes, I would suggest staying away. I will never forget my experience. I feel that I should warn others whenever I can.

There's also one other point to consider. The home prices for Affordable Homes is controlled by the city in which it resides for a period of 10 to 30 years, NOT the prevailing market. Typically, the index used to determine home prices once you decide to sell is the CPI (inflation). Over the last ten years, reported inflation has not risen much, so those homes would not have been worth too much more than they were originally purchased for.

Just food for (free) thought.

Posted by freethought on July 15, 2008 at 8:34 p.m. (Suggest removal)

ifly617 - You are correct. Speculation is indeed dead (oil speculation soon to follow).

Posted by freethought on July 15, 2008 at 10:12 p.m. (Suggest removal)

Correction - "If the home you suggested earlier is like your won,..." should have read, "If the home you suggested earlier is like your home,..."

Not sure where the word "won" came from. Sorry.

Posted by freethought on July 15, 2008 at 10:17 p.m. (Suggest removal)

Jill - On my "point to consider" above, I guess that I should state that the basis of an Affordable Home's resale price on the CPI can be a good thing in markets like today's - especially if you bought within the last few years. This is because your home price will not deteriorate as much as the average home nowadays that are based on market value. I would consider that the one bright side for all Affordable Homes.

Posted by guy133 on July 15, 2008 at 10:38 p.m. (Suggest removal)

Freethought, I don't think the selling restrictions of an "affordable" home are a downside. You are still buying a house that is less expensive than comparable units. It's still better than renting. You are still building equity. You still have all the other benefits of home ownership, but you just lack the potential for great windfalls.

Your worry about lack of appreciation in a home is what got us into this mess to begin with. Houses should not be looked at as something to get rich off of. I don't think houses should appreciate any faster than inflation, anyway. In fact, in a rational market, they should probably depreciate a bit because a 30-year-old house is going to need more repairs than a 3-year-old house.

Posted by SmashyCrashy on July 16, 2008 at 1:19 a.m. (Suggest removal)

guy133:"You are still building equity."

Explain how you can build equity while a market is falling? Equity is merely the price between what you owe and what you can net when selling a property after all the selling expenses. The only way to "build equity" in a falling market would be to pay off the loan faster than the house value is falling.

Price to income and Price to rent ratios are way out of whack. People buying now are just denying reality and letting emotion overcome logic. Some can afford to do so and others probably don't follow the market to know the tremendous mistake they are making and will only know in five or six years when they go to sell and are surprised they have to bring a check to the closing table.

And anyone who thinks rent is "throwing money away" versus owning simply either has never looked at the component cost of ownership versus renting.

Posted by freethought on July 16, 2008 at 6:46 a.m. (Suggest removal)

guy133 - No, that wasn't my worry. At least not in today's market. It would be if someone had bought when I did, but not now. When I bought in 2001, I paid $160K for my 4-bedroom, 2 and a half bath home (about 1,500 square feet on a tiny lot). When I sold, it was for $210K - that was in December 2006. The home was "worth" about $450K at the time based on comps. I could have easily sold for $400K if resale restriction didn't apply.

However, I must stress that it did not bother me at all. I walked away with $75K in my pocket, and that was fine with me. I just wanted out of a brand new neighborhood that went south very, very quickly. Now, that is my greater concern.When you have a tract built specifically for Affordable Homes, most neighbors will have come from places like La Colonia. Many bring with them bad natures that went unnoticed in their previous neighborhoods, like having multiple families living under one roof, kids playing loudly (soetimes roughly and always using the foulest language) until midnight in the streets - even on school nights, x-rated rap music blasting from cars and home stereos at any time of the day, and that's just to name a few.

SmashyCrashy - To be fair, an affordable home can actually appreciate in this kind of market, because it's price was pretty low t begin with, and it increases with the rate of inflation only. The home I sold a year and a half ago for $210K is probably worth around $225K or so today based on the Coty of Oxnard's assessment. As for renting versus owning today, I'm with you 100%.

Posted by freethought on July 16, 2008 at 7:09 a.m. (Suggest removal)

guy133 - One other thing. If you were to look at the price of an Affordable Home tract that was recently built and is selling right now, you'll see that the price they are asking is not far from the actual price you'd pay without all the restrictions (the newer ones are smaller than what I bought, and most are condos). While I bought at the low end of the market seven and a half years ago, someone buying today would be buying at the high end. If prices of homes in the area fall below the price paid for an affordable home, it's price will fall, too. That is because no one would want to pay more for a home with so many restrictions on it.

So, the question is: Will home prices fall that far? I am pretty sure they will, but time will tell.

Posted by freethought on July 16, 2008 at 7:19 a.m. (Suggest removal)

Basically, I'm saying this - why buy an Affordable Home today when you can wait a year from now and buy a home with no resale or rental restrictions for a better price?

Posted by machineart on July 16, 2008 at 8:07 a.m. (Suggest removal)

Folks --
After searching the web for realistic information about the Ventura County market and finding nothing but realtor moonshine (like this article) and bogus "foreclosure" sites etc. THIS FORUM is like Nirvana. Folks, my wife and I are going to move into the Thousand Oaks/Westlake Village/Agoura area for job-related reasons and I would really love to get your advice about a variety of things, including: where to look online as part of the process of maximizing our resources; what sites offer solid listings at reasonable prices? is there a realtor somebody reputable on this board can recommend? Which neighborhoods are preferrable, in Thosand Oaks especially? We've never bought before, and I feel like I'm wearing a "kick me" sign every time I talk to a realtor.

Posted by freethought on July 16, 2008 at 9:26 a.m. (Suggest removal)

machineart - There is no such site that I know of. List home prices are what they are - the "asking" price. You can go to realtor.com to see what's available. They list just about every home sold through a realtor, including short sales, foreclosures, and REOs. If you're looking for FSBOs, then you'll have to Google "FSBO". There are many of these sites (specific recommendations, anyone?). For comps (comparable homes that recently sold), you can go to http://realestate.yahoo.com/Homevalues and punch in the address of a home you are looking to buy. That will give you a history of recently sold homes, and you can use the data to indicate a downtrend which might help you negotiate a lower price.

I would suggest, however, that you consider renting until at least late spring next year. Prices will become more affordable by then.

Posted by guy133 on July 16, 2008 at 10:02 a.m. (Suggest removal)

Smashycrashy, I assume that the "affordable" housing with fixed pricing structures is still below the typical housing prices. So, an owner would build equity based on mortgage payments, and the fixed appreciation built into the pricing structure.

Posted by guy133 on July 16, 2008 at 10:07 a.m. (Suggest removal)

machineart, I keep telling SmashyCrashy that he/she needs to create some kind of website that analyzes the Ventura County housing market. He/she keeps ignoring me. lol

Posted by freethought on July 16, 2008 at 10:44 a.m. (Suggest removal)

guy133 - I would not say that anyone is ignoring you. What you are asking for takes lots of time and effort. Some people have the means to do it (like Mish at http://globaleconomicanalysis.blogspo... and Calculated Risk at http://calculatedrisk.blogspot.com/), but most do not. That SmashyCrashy is even sharing his knowledge with us in this thread is a wonderful thing you should not take for granted. Maybe you could start the kind of web site you are talking about. I'd be interested to see how you interpret the market data.

Posted by venturapagan on July 16, 2008 at 11:46 a.m. (Suggest removal)

Jill- it wouldn't matter if we did get approved for as much as $350K; we can't make a $2200/mo for the $290K they did approve us at. And, of course, the last thing we need is to be paying an HOA on top of that. We'll be lucky if we get enough together for closing costs. We're at about $63K combined income, but paying off lingering debt from our respective divorces & work loss in recent past. While our credit scores are excellent, we still have some debt which includes large vehicle payments that we're trying to reduce the best we can.

Posted by guy133 on July 16, 2008 at 12:01 p.m. (Suggest removal)

Freethought - I know. I was joking.

Posted by freethought on July 16, 2008 at 1:03 p.m. (Suggest removal)

guy133 - Sorry, I didn't see the sarcasm.

Posted by freethought on July 16, 2008 at 1:06 p.m. (Suggest removal)

venturapagan - I have to tell you that your household income is below the median income for Ventura County, which has been at around $80K per household for the last two or three years. In Thousand Oaks, it was $92K in 2006 (probably not much different here). If the price of the median home in Thousand Oaks was to fall to what used to be considered in line with median household incomes, it would put the price at around $300K to $340K. I would highly suggest you scrimp and save over the next year or so while home prices continue to decline. You'll be better prepared to purchase the home you want by then.

Posted by jill on July 16, 2008 at 3:25 p.m. (Suggest removal)

venturapagan - Yeah, the last thing you want to do is overextend yourselves and end up in the same place a lot of people are in now. This is still a hard area to buy a home in. Just for kicks, I look up real estate in other parts of the country and other towns in California on craigslist. It's tempting to move just to get a nice home, but, of course, you don't have our wonderful weather, etc., in most of those places.

Posted by freethought on July 16, 2008 at 4:06 p.m. (Suggest removal)

Weather, views, and quiet neighborhood. That's my reason for living here (Camarillo).

Posted by SmashyCrashy on July 17, 2008 at 3:28 a.m. (Suggest removal)

guy133: Actually I do have a website but it semi-anonymous and in reality only holds about 1% of the data I have locally. It takes a lot of work to get it into a more human readable format and I am a bit too busy to give it it's proper attention. Right now it is mostly just high level stuff.

Posted by SmashyCrashy on July 17, 2008 at 3:45 a.m. (Suggest removal)

machineart: There is a couple really good reasons to rent right now. The housing situation is definitely starting to go into its next phase due to the local economy deteriorating. The local unemployment is rising and the effects of that are just starting to be felt. With the Amgen and Countrywide situations (2 major local employers) it is going to get worse.

Not only is the quantity of jobs going down but the quality of jobs is going down as well.

Here is the LAEDC report as of February (page 39):
http://www.laedc.org/reports/Forecast...

Here is the LAEDC updated report as of yesterday (page 43):
http://www.laedc.org/reports/Forecast...

You are getting management, financial, construction and administrative support positions being replaced by hospitality and leisure and some healthcare.

Check out the population growth (p 41 of the newest forecast), it is all internal (births deaths), any growth we currently do see won't have an economic effect for 15-20 years.

If you look at the tone of the reports from February to today it is completely different and marks a very negative turn to the local forecast from just six months ago. There is no visbility past 2009 but the trend is unmistakably downward.

Renting in the the LA/Ventura area isn't like other parts of the country. Because prices are high the majority of LA County is rentals and it makes up a significant part of Ventura county. If you plan on staying mobile due to a career it is definitely the way to go. You can look at rentals both on Craigslist, the local MLS ( http://vcrdsmls.rapmls.com/ ) and places like the Kitter Letter (recommended) ( thekittyletter.com ).

For websites to look at listings I'd use Redfin.com , there a couple others but that is the only one that doesn't treat you like a lead and try and close you.

If you have any other questions feel free to post them here.

Posted by CAPEDad on July 17, 2008 at 9:07 a.m. (Suggest removal)

redfin.com is an excellent site and my favorite because it provides the sales history of each listing (like zillow.com) along with the pricing history of each listing. It's very revealing of the seller's plight. It also gives a good map of the property, comparable sales AND listings - something zillow doesn't.

Posted by lia1 on July 17, 2008 at 12:09 p.m. (Suggest removal)

The forum in housing-related articles is dominated by this cat SmashyCrashy, who, waiting ready in the wings to pounce on the next housing-related fish, makes much the same comments over and over and over again, reiteriting his mantra of renting not buying. Cat, you need to stop chasing your tail & be let out...

One wonders what these fora might look like were it not for Smashy and others of his ilk (FreeThought, Fred, etc).

The thing is, some people, maybe they're retired, lacking social connection or aversion to being outside for a walk in the hills, or maybe they're skimming time off their employers - whatever - these people somehow feel it their prerogative to ensure that the rest of us are properly informed, nay, bludgeoned, about the impropriety of a home purchase in this environment.

Give us a break - some of us have brains; a few have even stuffed them with a doctorate or two.

And lest the realtor crowd (& Jenni Mintz, with her regurgitated cud) feel comforted by this note, I might hasten to disabuse them of any kindred notions.

I'd just like to see some of the quieter kids have their say...

Posted by freethought on July 17, 2008 at 3:48 p.m. (Suggest removal)

lia1 - "One wonders what these fora might look like were it not for Smashy and others of his ilk (FreeThought, Fred, etc)."

What ilk (kind, type) is that? Based on your tone, we're all a bunch of loud mouths. Well, join the crowd sister. Your post is your initiation into the club.

I'm really not sure what you're trying to say. "Be quiet and let those who normally don't speak up have a say" or something like that? This board would then be dry and pretty worthless. We speak because we have something to say. We counter opinions that differ from our own (that includes both sides), because we have the right to. This thread is a perfect venue for that.

You just thrashed pretty much everyone on this and every other thread. So, this "cat" is biting back. I'm not sure if you're aware of this little fact, but we all live in this country we like to call the good ol' U.S. of A. (not sure where you live) - we state what we want, and the likes of YOUR ilk can do nothing but complain about it. Ain't it great? Maybe you should be commenting on a thread based in Beijing or North Korea.

Posted by freethought on July 17, 2008 at 3:49 p.m. (Suggest removal)

Of course, you are probably just looking for attention for whatever reason. Well, consider this a favor I'm granting you.

You're welcome.

Posted by freethought on July 17, 2008 at 3:54 p.m. (Suggest removal)

By the way, if you and/or your doctorate-holding friends have something to contribute to this thread regarding the subject matter, why isn't it here? What's your take on it? You do have an opinion, don't you?

SmashyCrashy is at the very least doing that. His posts are quite informed. I'd like to se you pick it apart if you feel he's being too repetitive.

So, what's your take? Anything to say?

Posted by freethought on July 17, 2008 at 3:56 p.m. (Suggest removal)

SmashyCrashy - Thanks for the Redfin info. I'm always looking for more web sites to add to the list I already have.

Posted by lia1 on July 17, 2008 at 4:33 p.m. (Suggest removal)

freethought...

You want statistics - how about these?

29 posts from you here alone...33% of all posts until now! If you include the Smash...you've both hogged 43% of all posts. This seems to be quite the pattern. He pounces first and then you follow to gather the entrails...

I'll leave you alleycats to brawl and spit at the mirror.

meow

Posted by speaktruthtopower on July 17, 2008 at 4:40 p.m. (Suggest removal)

I'll second lia1 in her rather lucid/erudite admonition!

I've stopped opining here for a while now, for much the same reasons.

By the way, I found your response to this story to be far more thought-provoking and interesting than the usual, and I recommend that folks here read it.

http://www.venturacountystar.com/news...

I'm out too!

Hiss

Posted by guy133 on July 17, 2008 at 4:50 p.m. (Suggest removal)

Thanks for your input Lia. Your contributions have been very enlightening.

Wait...did you have a point about the story?

Posted by freethought on July 17, 2008 at 5:15 p.m. (Suggest removal)

lia1 - Pouncing? Gathering entrails? Your therapist must be making a small mint off of you.

So what if we have loads of posts? Are you personally offended? If so, I do not care.

speaktruthtopower - I remember the article you referenced. I went back and read lia1's comment. It sounded a bit too "bleeding heart" to me - sort of "don't judge, because you don't know what they're going through" rheteric. The bottom line opinion for that article is that certain people, either naive, greedy, or impatient, got into loans they could never handle. I'm glad they have a support group to turn to, but I have trouble feeling sorry for whomever signed the loan documents in those cases. I do feel very sorry for the children caught in the middle of an adult's horrible business decision.

It seems that lia1 loves pushing the feeling of shame. He/She even tried with me on her las post("You want statistics - how about these? 29 posts from you here alone...33% of all posts until now!"). Well, he/she is easy to see through. I eagerly await his/her counter.

Posted by freethought on July 17, 2008 at 5:25 p.m. (Suggest removal)

lia1 - I must say, though, that I am flattered by your unsolicited attention. That you went through the extra effort to count all my posts on this page, and name me in your attack on SmashyCrashy is making me blush. Would you like to be friends? maybe have a cup of tea sometime?

So, how many posts do I have on this thread now?

Posted by Fred on July 18, 2008 at 1:44 a.m. (Suggest removal)

lia1
count me in with freethought and smashy - I believe you should only buy now only if you have tons on money and you dont care if your house drops in value 100K (300k in newbury park where I am renting - million dollar houses everywhere)

Fred
2300 per month, 4bed 2bath, free to bail whenever

p.s. my doctorate is really not very useful in these matters and I find smashy and free to be outstanding sources of info - keep it up guys (or gals, whichever the case may be!)

Posted by Fred on July 18, 2008 at 1:48 a.m. (Suggest removal)

oops - sorry you already did count me in - I am honored!!!

Posted by machineart on July 18, 2008 at 10:28 a.m. (Suggest removal)

Guys --

Wow! Thanks so much for your advice -- you've given me a lot to think about. I'm already looking at Redfin, which is an excellent site but has few houses in the areas we're keeping an eye on. I'll check out zillow. Smashy, I think you could make a killing if you ever find the time to collate your site. I for one would pay a premium to pick your brain. best M

Posted by venturapagan on July 18, 2008 at 10:40 a.m. (Suggest removal)

We'd prefer to move out of Ventura (maybe even Calif)to buy our first home, but then, a lot of the places with affordable homes don't have much to offer for work opportunities, so we're really not sure what to do. (We love NoCal). Several ppl we spoke to up there said they were able to buy there because they sold a home down here, and bought their new homes outright from the sale. Now they work part time to pay Prop tax, utilities. So that's probably what we'll end up doing, if we can manage to find SOMETHING in our price range that isn't in a war/gang zone.

Posted by SmashyCrashy on July 18, 2008 at 9:59 p.m. (Suggest removal)

machineart,

Just looking on redfin it looks like it has VC MLS listings and SO CAL MLS listings, I think the Conejo MLS is wrapped up in the VC MLS so all the listings should be shown on that site.

The public portal of the VC MLS is here: http://vcrdsmls.rapmls.com/

Just click on Find Properties and you can use the map near the bottom to narrow the area where you are looking.

If you have any questions just shoot me an email @ smashycrashy@gmail.com , Best of luck with the hunt and I hope you find something that fits your needs.

Posted by heregoes on July 19, 2008 at 7:31 a.m. (Suggest removal)

Since home values have already dropped significantly, I think at this point interest rates have become more important than home value.

Just last week rates went up quite a bit - almost 1/2% (from about 6% to 6.5%).

$400,000 at 6% = about $2,400/mo
$400,000 at 6.5% = about $2,528/mo

To get back to the $2,400 payment you would have had at 6% the home value would have to drop another 10% (on top of the 20-30% that they have already made) down to $380,000.

Investors are starting to buy up these bargain homes and will be renting them out until the market turns. IMO - They will be the ones who get rich when the market turns.

I have never seen in California a time when you could rent a house out for enough to cover the payment. It seems that time has come.

Posted by SmashyCrashy on July 19, 2008 at 10:19 a.m. (Suggest removal)

If you believe that traditional lending has returned. That someone will get approved for a loan based on the income they make (novel idea!) then a buyer shouldn't be worried about interest rates at all.

The reason is that your monthly payment you qualify for isn't changing for you or for anyone else when interest rates go up. The people who take the hit are the sellers. The buyers can't pay more and the value of something is the price at which someone can pay for it. The sapping of purchasing power is just another blow to sellers. And any potential buyer should understand that dynamic, since we are at historic low interest rates and you are on the hook for the loan amount you take out.. what happens in the future if we aren't at historic low interest rates? Selling in a normal 8% rate enviroment means the ability for people to pay will be reduced greatly because of the debt service cost.

For investment purposes their are several things working against the investor. NOO (non-owner occupied) loans are both more expensive (higher interest rates compared to OO) and require higher downpayments. And you are ignoring taxes, property management, maintenance and insurance (which is higher for NOO properties) when making a comparison to rent, you just looked at principal & interest payments. One of the benefits during the boom for investors was the ability to use leverage, maximize borrowed money. The opportunity cost part of the equation of the money sitting in the house not working for you was relatively insignificant, now it pretty large. Investors could also get IO (interest only) loans at very low cost so they didn't have a bunch of dead money sitting around in the house (if you presume houses aren't going down and they are building equity with each payment). With the lack of appreciation, and the prospect for significant depreciation the numbers look pretty grim for an investor.

Maybe you can point out to me a few cash flow positive properties and break out the numbers. Usually when I see people breaking down a property by the numbers they are overly optimistic on rents they can get and forget significant costs (property management cost is often left off and is significant if you pay for it, and you're working for free if you are doing it yourself).

Posted by Fred on July 19, 2008 at 4:02 p.m. (Suggest removal)

p'oherlihy relentlessly claimed here 6month-1year ago that the saavy buyer was cherry picking the best deals. Those cherries are not so nice now.

Home ownership is simply overrated - dont bother.

Posted by guy133 on July 21, 2008 at 10:33 a.m. (Suggest removal)

Sawyer,

If the housing market continues to drop (it will), the rents for those houses will drop as well. If the cost of renting is greater than all costs involved with buying (mortgage, insurance, taxes, maintenance, etc.) then most people would choose to buy instead of rent. Which means if more people are buying than the rent prices are going to go down.

Here's a great article about the fundamental values of home pricing: http://www.irvinehousingblog.com/blog...