How's your housing market? (1 Viewer)

[tommyGunZ]

there is a fairly long standing mortage rates thread somewhere. I'd search for it and pose your question there - I think this thread only gets attention from a few of us renters these days.

 

[FatMax]

Oh I know man. I'm in no place to buy anything. Hell, I'm just saving up for a car right now since I refuse to pay for financing and I don't want a car payment.I think that after I/we save the $$ for the car, which should happen in Feb, I can start actually saving cash to put down. 20% is still a daunting figure though. I gotta think that I'm gonna need at least $65k+ as a down payment. It's gonna take like 10 years to save that kind of coin. Not something I look forward to.

From what I understand, FHA financing is still available if you have good credit and reliable income. I think the downpayment has been raised to 3.5%, but it's still a way to get into your first home w/o waiting to have 20% down.Obviously the mortgage brokers on the board will know for sure.

Ah... I see. I had forgotten about that. 3.5-5% is doable, even in the medium-short term. Can some of the mortgage guys on the board give me some info on these programs?

Not a mortgage guy, but I did this on a home that closed on October 31st. Just go talk to any reputable bank. Nearly all of them offer FHA loans. If you're serious about buying, get a pre-approval from the bank before you do anything else.

 

[OC Zed]

Oh I know man. I'm in no place to buy anything. Hell, I'm just saving up for a car right now since I refuse to pay for financing and I don't want a car payment.I think that after I/we save the $$ for the car, which should happen in Feb, I can start actually saving cash to put down. 20% is still a daunting figure though. I gotta think that I'm gonna need at least $65k+ as a down payment. It's gonna take like 10 years to save that kind of coin. Not something I look forward to.

From what I understand, FHA financing is still available if you have good credit and reliable income. I think the downpayment has been raised to 3.5%, but it's still a way to get into your first home w/o waiting to have 20% down.Obviously the mortgage brokers on the board will know for sure.

I believe that you still have to obtain PMI with an FHA loan (any mortgage brokers in here, please correct me if I am wrong). That is a significant add-on to your overall monthly cost.

 

[commisholio]

Z, note that all of that data cited above includes regions like Contra Costa or Solano or both in the data. Those places have been way harder hit than the nicer places in Alameda or SF or San Mateo, or Marin counties. We are, IMO, just now getting going on the declines in the nicer areas. I don't expect them to get the 50+% declines from peak that we are seeing out in BFE Solano county, but we could see somehthing like 30-40% declines, and there's still quite a ways to go to get there. All IMO of course.

 

[Michael Fox Fan]

A radio caller, a waitress in Scottsdale, said that she's been seeing a lot of Canadian customers lately. Last night she asked one what was up with all the Canucks, and he said they're getting Visas to come here to buy houses, with the US eventually becoming a "New Canada".

So, it looks like the Phoenix housing market will be picking up, however Woz and LHUCKS will need to watch "Bob and Doug McKenzie's Strange Brew" so they can work on their accents. :hosers:

Anecdotal evidence is cool and all, but the numbers suggest the Phoenix market isn't picking up at all, in fact it's getting worse according to the Case Shiller report released yesterday:

Wow, it really must suck to always look at things through doom and gloom glasses.

Um, no, it's actually quite refreshing to see things through the lens of analysis, data, reality, etc. It feels great knowing that taking a calm, rational view of the market saved my wife and I anywhere from $50-100K. And it's great to see guys like tommyG around here, staying chill while the rest of the board is freaking out.

 

[The Z Machine]

Z, note that all of that data cited above includes regions like Contra Costa or Solano or both in the data. Those places have been way harder hit than the nicer places in Alameda or SF or San Mateo, or Marin counties. We are, IMO, just now getting going on the declines in the nicer areas. I don't expect them to get the 50+% declines from peak that we are seeing out in BFE Solano county, but we could see somehthing like 30-40% declines, and there's still quite a ways to go to get there. All IMO of course.

Yeah, I know. I'm comparing the listing prices I see in the windows of the real estate agents in my neighborhood to where they were 6 months or a year ago. I think I'm seeing decreases of like 15% off their peak, maybe 25% in some cases, no more. Still ridiculously expensive to buy in Rockridge or South-East Berkeley.If you have any links on SF and Alameda counties specifically, I'd be interested. Are there tools/sites that generate statistics of home sale prices by zip code? Or maybe list prices is a better reflection? I dunno.TGZ, I know you're looking pretty much only at a small neighborhood in SD, so what do you use to analyze the prices in certain enclaves instead of way in-land SD where the run-up and subsequent fall has been greatest.

 

[commisholio]

Z, note that all of that data cited above includes regions like Contra Costa or Solano or both in the data. Those places have been way harder hit than the nicer places in Alameda or SF or San Mateo, or Marin counties. We are, IMO, just now getting going on the declines in the nicer areas. I don't expect them to get the 50+% declines from peak that we are seeing out in BFE Solano county, but we could see somehthing like 30-40% declines, and there's still quite a ways to go to get there. All IMO of course.

Yeah, I know. I'm comparing the listing prices I see in the windows of the real estate agents in my neighborhood to where they were 6 months or a year ago. I think I'm seeing decreases of like 15% off their peak, maybe 25% in some cases, no more. Still ridiculously expensive to buy in Rockridge or South-East Berkeley.If you have any links on SF and Alameda counties specifically, I'd be interested. Are there tools/sites that generate statistics of home sale prices by zip code? Or maybe list prices is a better reflection? I dunno.

TGZ, I know you're looking pretty much only at a small neighborhood in SD, so what do you use to analyze the prices in certain enclaves instead of way in-land SD where the run-up and subsequent fall has been greatest.

This is the best I am aware of. It's not aggregated data but it does report individual home sales by city and by zip code and, with a little work, you could probably paste the data into a spreadsheet and get an average.

 

[The Z Machine]

Z, note that all of that data cited above includes regions like Contra Costa or Solano or both in the data. Those places have been way harder hit than the nicer places in Alameda or SF or San Mateo, or Marin counties. We are, IMO, just now getting going on the declines in the nicer areas. I don't expect them to get the 50+% declines from peak that we are seeing out in BFE Solano county, but we could see somehthing like 30-40% declines, and there's still quite a ways to go to get there. All IMO of course.

Yeah, I know. I'm comparing the listing prices I see in the windows of the real estate agents in my neighborhood to where they were 6 months or a year ago. I think I'm seeing decreases of like 15% off their peak, maybe 25% in some cases, no more. Still ridiculously expensive to buy in Rockridge or South-East Berkeley.If you have any links on SF and Alameda counties specifically, I'd be interested. Are there tools/sites that generate statistics of home sale prices by zip code? Or maybe list prices is a better reflection? I dunno.

TGZ, I know you're looking pretty much only at a small neighborhood in SD, so what do you use to analyze the prices in certain enclaves instead of way in-land SD where the run-up and subsequent fall has been greatest.

This is the best I am aware of. It's not aggregated data but it does report individual home sales by city and by zip code and, with a little work, you could probably paste the data into a spreadsheet and get an average.

Where are you located BTW? I know there's some Peninsula peeps on here.

 

[commisholio]

Z, note that all of that data cited above includes regions like Contra Costa or Solano or both in the data. Those places have been way harder hit than the nicer places in Alameda or SF or San Mateo, or Marin counties. We are, IMO, just now getting going on the declines in the nicer areas. I don't expect them to get the 50+% declines from peak that we are seeing out in BFE Solano county, but we could see somehthing like 30-40% declines, and there's still quite a ways to go to get there. All IMO of course.

Yeah, I know. I'm comparing the listing prices I see in the windows of the real estate agents in my neighborhood to where they were 6 months or a year ago. I think I'm seeing decreases of like 15% off their peak, maybe 25% in some cases, no more. Still ridiculously expensive to buy in Rockridge or South-East Berkeley.If you have any links on SF and Alameda counties specifically, I'd be interested. Are there tools/sites that generate statistics of home sale prices by zip code? Or maybe list prices is a better reflection? I dunno.

TGZ, I know you're looking pretty much only at a small neighborhood in SD, so what do you use to analyze the prices in certain enclaves instead of way in-land SD where the run-up and subsequent fall has been greatest.

This is the best I am aware of. It's not aggregated data but it does report individual home sales by city and by zip code and, with a little work, you could probably paste the data into a spreadsheet and get an average.

Where are you located BTW? I know there's some Peninsula peeps on here.

Live San Mateo, work Palo Alto. I really like living in San Mateo. It's central, quiet, and has a large Asian population sho there's lots of good sushi/noodles.

 

[The Z Machine]

You're a lawyer that works in Palo Alto?

:bigmoneybigmoneybigmoney:

There's tons of jobs in my field in the South Bay. Nonetheless, I still wouldn't want to live there. It's SF or East Bay for me.

 

[joey]

You're a lawyer that works in Palo Alto?

:bigmoneybigmoneybigmoney:

There's tons of jobs in my field in the South Bay. Nonetheless, I still wouldn't want to live there. It's SF or East Bay for me.

I live/own in Marin and work in SF.We've definitely seen a drop in Marin (I'd say around 15% or so in Mill Valley, where I am)

but, as was said earlier, nothing close to the drop that's happening in the outer areas of the

Bay Area where there's tonnnnnnnnnnnnnnssssss of room to build, unlike SF and most of

Marin.

Good luck, Z, with the first home purchase. Hopefully some time next year or 2010 you can

have 5% or so saved up and get into a house at what will *hopefully* be the bottom.

ETA this link to a DataQuick table that is referenced in a Marin Real Estate blog showing the

declining Bay Area sales prices:

http://3.bp.blogspot.com/_aYmx3hE2E8E/SQU2...h/dq_Sept08.JPG

 

[BassNBrew]

Well my high risk adjustable loans...you know, the ones everyone said I was foolish to take out...are now priced 1% below my fixed rates. They dropped from 10.5-11% down to 6%.

 

[The Commish]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

 

[Not So Fast My Friend!]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

reading this thread i thought you'd be dumb to buy a house in the last couple years or anywhere in the near future.congrats.

 

[tommyGunZ]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

You must have gotten a steal. Congrats on defying gravity Commish.

 

[The Commish]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

You must have gotten a steal. Congrats on defying gravity Commish.

It was brand new. Construction was completed in Sept of last year and we closed on it in Dec of last year, so it wasn't on the market too long. The initial appraisal was about $11,000 more than what we paid, so in this past year, it's our equity via payment was about $5000 and the new appraisal amount will add an additional $9000 or so. We do have to take about $3000 to closing, but that will pay for itself in the first 5 months. This gives us a good amount of breathing room now, which is good. My wife's employer is already requiring all employees take 9 days unpaid vacation next semester, so this will help us greatly.

 

[Chadstroma]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

You must have gotten a steal. Congrats on defying gravity Commish.

It was brand new. Construction was completed in Sept of last year and we closed on it in Dec of last year, so it wasn't on the market too long. The initial appraisal was about $11,000 more than what we paid, so in this past year, it's our equity via payment was about $5000 and the new appraisal amount will add an additional $9000 or so. We do have to take about $3000 to closing, but that will pay for itself in the first 5 months. This gives us a good amount of breathing room now, which is good. My wife's employer is already requiring all employees take 9 days unpaid vacation next semester, so this will help us greatly.

The NC and SC markets have been fairly healthy in comparison to most of the country from what I have read. This is not all that surprising.

 

[The Commish]

We bought our existing house a year ago next week with 100% financing. This week I am refinancing with an 80/15 mortgage and reducing my payment by about $600 a month assuming the appraisal comes back ok, but the appraiser said it shouldn't be an issue. My last house it took almost 4 years to get 5% equity. We've done it here in less than a year

You must have gotten a steal. Congrats on defying gravity Commish.

It was brand new. Construction was completed in Sept of last year and we closed on it in Dec of last year, so it wasn't on the market too long. The initial appraisal was about $11,000 more than what we paid, so in this past year, it's our equity via payment was about $5000 and the new appraisal amount will add an additional $9000 or so. We do have to take about $3000 to closing, but that will pay for itself in the first 5 months. This gives us a good amount of breathing room now, which is good. My wife's employer is already requiring all employees take 9 days unpaid vacation next semester, so this will help us greatly.

The NC and SC markets have been fairly healthy in comparison to most of the country from what I have read. This is not all that surprising.

Things are definitely slower here than I've ever seen them. Very hit and miss. The house across the street from us sold in 2 weeks, the one beside us sold before it was complete, but just down the road houses have been up for a year or so.

 

[moleculo]

we bought our house in a new development - maybe 75% finished. They are still building, and the sold signs are still going up (same market as Commish). However, I understand that the prices are dropping, and to compensate for falling prices the builder (Pulte) is lowering the standards - laminate instead of solid wood or granite, downgraded fixtures, etc.

we all knew that a downgrade in price was inevitable - I'm pleased to see the downgrade in options as that has got to leave me with at least some differentiating factor. Should I want to sell in the future, I will be able to justify a higher asking price than the new houses.

 

[The Commish]

we bought our house in a new development - maybe 75% finished. They are still building, and the sold signs are still going up (same market as Commish). However, I understand that the prices are dropping, and to compensate for falling prices the builder (Pulte) is lowering the standards - laminate instead of solid wood or granite, downgraded fixtures, etc.we all knew that a downgrade in price was inevitable - I'm pleased to see the downgrade in options as that has got to leave me with at least some differentiating factor. Should I want to sell in the future, I will be able to justify a higher asking price than the new houses.

I was out your way (off 521) this last week...you get to the middle of nowhere very quickly going out there. I liked it

 

[moleculo]

we bought our house in a new development - maybe 75% finished. They are still building, and the sold signs are still going up (same market as Commish). However, I understand that the prices are dropping, and to compensate for falling prices the builder (Pulte) is lowering the standards - laminate instead of solid wood or granite, downgraded fixtures, etc.we all knew that a downgrade in price was inevitable - I'm pleased to see the downgrade in options as that has got to leave me with at least some differentiating factor. Should I want to sell in the future, I will be able to justify a higher asking price than the new houses.

I was out your way (off 521) this last week...you get to the middle of nowhere very quickly going out there. I liked it

you do...I consider my development maybe a little past the edge of nowhere. Not quite the middle of nowhere, but we can see it from here. Certainly not somewhere, that's for sure.

 

[tommyGunZ]

San Diego median fell 5.7% last month, from 323k to 305k. Overall, the median is down 41% from the 517k peak in Nov. 05. Ouch... link

Median home price tumbles to 6½-year low

Foreclosures drive steady rise in sales across the county

By Roger Showley, Staff Writer

San Diego's median home price fell sharply again last month to $305,000, and foreclosures outnumbered nondistressed home sales for the first time, MDA DataQuick reported yesterday.

A 5.7 percent drop in the median price from October brought prices to their lowest level since April 2002. Since the peak of $517,500 in November 2005, the median has dropped 41.1 percent.

Of the 2,411 resales that closed escrow, 52.1 percent had gone through foreclosure in the previous 12 months. Overall sales were down 25.7 percent from October, the highest October-November drop in 20 years of DataQuick monitoring.

DataQuick analyst Andrew LePage said the monthly decline was accentuated because there were only 17 business days in the month, compared with the usual 19, while October counted 22 such days.

“It was not a blockbuster November, if you adjust for the unusually shortened month in which deals could close,” LePage said. “All things considered – some of the worst financial news in general – it wasn't that bad.”

Besides resales, there were 262 newly built homes or condominium conversions that sold in November, bringing the total for the month to 2,673, 11.4 percent higher than in November 2007. Sales have been rising on a year-over-year basis since July, after falling for 40 consecutive months.

The major factor behind the decline in prices continued to be the prevalence of low-priced foreclosures, which are driving down the overall median – the midway point of all sales, with half above and half below.

Paul Habibi, a lecturer at UCLA, said he expects San Diego prices to continue falling as foreclosures continue.

“If I had to guess, I would probably predict 5 (percent) to 7 percent before we hit bottom,” Habibi said, a decline that would bring the median down to around $275,000.

Habibi said the declining housing market, plagued by owners who can't afford resetting mortgage payments, is now also feeling the effect of the recession because owners have lost their jobs and watched their home equity slide with the general housing value downturn.

“It's really a negative equity problem and decline in the ability to pay that has exacerbated the issue,” he said.

Looking to 2009, Habibi predicted that rising unemployment could lead to rising apartment vacancies, as renters double up or move back home with their parents. An increase from 3 percent to 5 percent in vacancy rates can translate into a 15 percent to 20 percent decrease in rents as landlords rush to fill empty apartments to cover costs.

Against these gloomy prospects, Erik Weichelt, incoming president of the San Diego Association of Realtors, reported that agents are keeping busy, as falling prices are translating into greater affordability, particularly for first-time buyers.

“We feel the trend lines improving by the folks we see out there working, in conversations, in caravans, people at open houses,” Weichelt said.

Other indicators back up Weichelt's observations. The number of active listings stood yesterday at 16,028, down 4.8 percent from this time last month and off 22.2 percent from mid-December 2007, according to his association.

The days on the market to sell homes dropped to 70 days for attached and 67 days for detached homes, compared with 74 and 79, respectively, in November 2007.

DataQuick's LePage focused on the North County coastal area as a way to analyze the impacts of foreclosure sales on prices. The area as a whole reported the biggest decline in year-over-year median prices for resale houses, down 41.4 percent, plummeting from $656,500 to $385,000 over the 12-month period.

In that time, the sales in foreclosure-ridden Oceanside ZIP codes have risen dramatically, while sales in the other coastal communities have fallen. The non-Oceanside area median has declined 27.4 percent from its peak.

LePage said San Diego's home buyers resemble bargain-hunting holiday shoppers, only buying heavily discounted properties.

“Sales remain pretty sluggish elsewhere,” he said. “We're still flailing around in a sea of uncertainty, because we don't know how long or how deep the recession will be, and it's very unclear how many of these problem mortgages will get worked out and how many will flip through foreclosure next year.”

He went on to connect unemployment and housing.

“Job losses will really be key,” LePage said. “San Diego has held up relatively well on that front, but job losses are traditionally the drivers of foreclosure. The more people worry about losing their jobs and know other people that lose their jobs, the less likely they'll make a purchase.”

As a reflection of how flat the future housing market appears, the Construction Industry Research Board reported that November saw only 87 permits issued locally for single-family homes, a record low going back to 1988. Local jurisdictions also issued permits for 150 multifamily units.

Going to be a very interesting ride for real estate in San Diego in 2009. The large price declines are now working their way to the coasts, as many of the higher end areas are now starting to show big cracks. With Alt-A option ARMs coming due, I expect a lot of pain in areas of San Diego where many thought big price drops were impossible.

 

[Chadstroma]

San Diego median fell 5.7% last month, from 323k to 305k. Overall, the median is down 41% from the 517k peak in Nov. 05. Ouch... link

Median home price tumbles to 6½-year low

Foreclosures drive steady rise in sales across the county

By Roger Showley, Staff Writer

San Diego's median home price fell sharply again last month to $305,000, and foreclosures outnumbered nondistressed home sales for the first time, MDA DataQuick reported yesterday.

A 5.7 percent drop in the median price from October brought prices to their lowest level since April 2002. Since the peak of $517,500 in November 2005, the median has dropped 41.1 percent.

Of the 2,411 resales that closed escrow, 52.1 percent had gone through foreclosure in the previous 12 months. Overall sales were down 25.7 percent from October, the highest October-November drop in 20 years of DataQuick monitoring.

DataQuick analyst Andrew LePage said the monthly decline was accentuated because there were only 17 business days in the month, compared with the usual 19, while October counted 22 such days.

“It was not a blockbuster November, if you adjust for the unusually shortened month in which deals could close,” LePage said. “All things considered – some of the worst financial news in general – it wasn't that bad.”

Besides resales, there were 262 newly built homes or condominium conversions that sold in November, bringing the total for the month to 2,673, 11.4 percent higher than in November 2007. Sales have been rising on a year-over-year basis since July, after falling for 40 consecutive months.

The major factor behind the decline in prices continued to be the prevalence of low-priced foreclosures, which are driving down the overall median – the midway point of all sales, with half above and half below.

Paul Habibi, a lecturer at UCLA, said he expects San Diego prices to continue falling as foreclosures continue.

“If I had to guess, I would probably predict 5 (percent) to 7 percent before we hit bottom,” Habibi said, a decline that would bring the median down to around $275,000.

Habibi said the declining housing market, plagued by owners who can't afford resetting mortgage payments, is now also feeling the effect of the recession because owners have lost their jobs and watched their home equity slide with the general housing value downturn.

“It's really a negative equity problem and decline in the ability to pay that has exacerbated the issue,” he said.

Looking to 2009, Habibi predicted that rising unemployment could lead to rising apartment vacancies, as renters double up or move back home with their parents. An increase from 3 percent to 5 percent in vacancy rates can translate into a 15 percent to 20 percent decrease in rents as landlords rush to fill empty apartments to cover costs.

Against these gloomy prospects, Erik Weichelt, incoming president of the San Diego Association of Realtors, reported that agents are keeping busy, as falling prices are translating into greater affordability, particularly for first-time buyers.

“We feel the trend lines improving by the folks we see out there working, in conversations, in caravans, people at open houses,” Weichelt said.

Other indicators back up Weichelt's observations. The number of active listings stood yesterday at 16,028, down 4.8 percent from this time last month and off 22.2 percent from mid-December 2007, according to his association.

The days on the market to sell homes dropped to 70 days for attached and 67 days for detached homes, compared with 74 and 79, respectively, in November 2007.

DataQuick's LePage focused on the North County coastal area as a way to analyze the impacts of foreclosure sales on prices. The area as a whole reported the biggest decline in year-over-year median prices for resale houses, down 41.4 percent, plummeting from $656,500 to $385,000 over the 12-month period.

In that time, the sales in foreclosure-ridden Oceanside ZIP codes have risen dramatically, while sales in the other coastal communities have fallen. The non-Oceanside area median has declined 27.4 percent from its peak.

LePage said San Diego's home buyers resemble bargain-hunting holiday shoppers, only buying heavily discounted properties.

“Sales remain pretty sluggish elsewhere,” he said. “We're still flailing around in a sea of uncertainty, because we don't know how long or how deep the recession will be, and it's very unclear how many of these problem mortgages will get worked out and how many will flip through foreclosure next year.”

He went on to connect unemployment and housing.

“Job losses will really be key,” LePage said. “San Diego has held up relatively well on that front, but job losses are traditionally the drivers of foreclosure. The more people worry about losing their jobs and know other people that lose their jobs, the less likely they'll make a purchase.”

As a reflection of how flat the future housing market appears, the Construction Industry Research Board reported that November saw only 87 permits issued locally for single-family homes, a record low going back to 1988. Local jurisdictions also issued permits for 150 multifamily units.

Going to be a very interesting ride for real estate in San Diego in 2009. The large price declines are now working their way to the coasts, as many of the higher end areas are now starting to show big cracks. With Alt-A option ARMs coming due, I expect a lot of pain in areas of San Diego where many thought big price drops were impossible.

When do you think you will jump in?

 

[David Dodds]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

 

[joey]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

 

[Sonny Lubick Blowup Doll]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

 

[OC Zed]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

This is timely for my wife and I as well. A little over a year ago, we walked away from purchasing a house that we considered our "dream home" because we thought the house and the market overall were still vastly overpriced. That same house came back on the market this week with an asking price slightly below what we were considering paying for it last year. Although we could afford the house at the existing asking price, we are holding back simply because of the heavy debt burden we would take on compared to what the much lighter debt load that we will have by waiting a couple more years (albeit with a different house unfortunately). But even though I know we are making the logical decision, it is still a very difficult emotional decision.

 

[BassNBrew]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

This is timely for my wife and I as well. A little over a year ago, we walked away from purchasing a house that we considered our "dream home" because we thought the house and the market overall were still vastly overpriced. That same house came back on the market this week with an asking price slightly below what we were considering paying for it last year. Although we could afford the house at the existing asking price, we are holding back simply because of the heavy debt burden we would take on compared to what the much lighter debt load that we will have by waiting a couple more years (albeit with a different house unfortunately). But even though I know we are making the logical decision, it is still a very difficult emotional decision.

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

 

[tommyGunZ]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

This is timely for my wife and I as well. A little over a year ago, we walked away from purchasing a house that we considered our "dream home" because we thought the house and the market overall were still vastly overpriced. That same house came back on the market this week with an asking price slightly below what we were considering paying for it last year. Although we could afford the house at the existing asking price, we are holding back simply because of the heavy debt burden we would take on compared to what the much lighter debt load that we will have by waiting a couple more years (albeit with a different house unfortunately). But even though I know we are making the logical decision, it is still a very difficult emotional decision.

Reminds me of several houses my wife and I thought we'd be stoked to live in the past few years. While none of them was our "dream house", we thought many of the 400-600k townhouses and homes were perfect for our needs. Now that they've dropped into the 3's, and homes in the 7-800k range are falling to the 4's and 5's, we don't even want the old homes we were looking at even though they're now well within our price range. When you see how much of a nicer home you can get for the same $ by practicing a little patience, it makes it much easier to wait it out. I'd be absolutely sick to my stomach if I was chained to a 4-500k /condo/townhouse now selling for 300k, while newer, nicer single family homes were dropping to the same price as I had paid for my condo/townhouse at a year or two ago.

 

[OC Zed]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

This is timely for my wife and I as well. A little over a year ago, we walked away from purchasing a house that we considered our "dream home" because we thought the house and the market overall were still vastly overpriced. That same house came back on the market this week with an asking price slightly below what we were considering paying for it last year. Although we could afford the house at the existing asking price, we are holding back simply because of the heavy debt burden we would take on compared to what the much lighter debt load that we will have by waiting a couple more years (albeit with a different house unfortunately). But even though I know we are making the logical decision, it is still a very difficult emotional decision.

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

 

[Sonny Lubick Blowup Doll]

I am dying to buy a house here, but just don't think it is wise to buy right now. My dream house (2868 sq feet on 2.3 acres, built in 2006 and never lived in, tons of upgrades, etc all in the foothills of Northern California) just dropped another $10K this week to $380K. According to Zillow.com, my community Foresthill has sold just 6 houses in the last six months. We have pure stagnation here with more options to the buyer every week while recording no sales. I am going to sit on the fence unless they offer the "proposed" 4.5% loan for buyers with Grade A paper. Just no reason at all to enter this market when every house isn't getting any reasonable offers at all.

If it's truly your "dream house" and it's not over-priced for this crazy marketand you can easily afford it and you plan on making it your home for the next5-10 years, I say just go for it. Happiness > shrewdness

Totally disagree. Not now, we're not out of this by any means. And I would rather buy on the way back up anyway, instead of hoping, which is really what you'd be doing at this point. If it is the "dream house" part that you think should tip the scales, that's silly. Not the time to get emotional...Granted, I get the happiness/shrewdness thing, but there is too much money at stake to not be prudent. I wouldn't call some patience, "shrewd".

This is timely for my wife and I as well. A little over a year ago, we walked away from purchasing a house that we considered our "dream home" because we thought the house and the market overall were still vastly overpriced. That same house came back on the market this week with an asking price slightly below what we were considering paying for it last year. Although we could afford the house at the existing asking price, we are holding back simply because of the heavy debt burden we would take on compared to what the much lighter debt load that we will have by waiting a couple more years (albeit with a different house unfortunately). But even though I know we are making the logical decision, it is still a very difficult emotional decision.

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

I wouldn't touch OC with a ten foot pole...you know better. You're actually sounding emotional. Where is it Zed? You were in CDM, no?

 

[OC Zed]

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

I wouldn't touch OC with a ten foot pole...you know better. You're actually sounding emotional. Where is it Zed? You were in CDM, no?

You are absolutely right. Detached, single-family homes in CDM are off-the-charts expensive right now and might never be in our price range even at the market bottom. We have actually been looking in West Newport, specifically the Newport Shores neighborhood, which has small lots like CDM, but is a lot closer to the beach (which we frequent quite a bit) and historically half to a third of the price as CDM. There is also much less of the cougar/sugar daddy vibe in West Newport as well. The big downsides are that there are some rougher blocks in that part of town compared to CDM and the ocean water quality can be suspect at times due to the Santa Ana river jetty on the border with Huntington (but we typically frequent Peninsula or Bolsa Chica beaches anyways). In all likelihood, we will end up renting out a house down there for the next year or two and then determine where we want to buy (we will probably have started a family by then and might have different priorities).

 

[17seconds]

A guy in my neighborhood with the same model house just did something that is depressing the hell out of me....

I purchased my house in 2005 for $580K, which was a great deal at the time. It had been reduced from $670K because it was a fixer. I just applied for a property tax adjustment because after looking at the market and comparables I feel it's worth about $535K now. We've put in about $60K in upgrades (new kitchen, new MBATH, landscaping, etc...). We currently owe $464K.

So this dip#### across the street who apparently can't make his payments just listed his for $399K. I'm sure it will sell right away and be a comparable for my house later.

 

[tommyGunZ]

A guy in my neighborhood with the same model house just did something that is depressing the hell out of me....

I purchased my house in 2005 for $580K, which was a great deal at the time. It had been reduced from $670K because it was a fixer. I just applied for a property tax adjustment because after looking at the market and comparables I feel it's worth about $535K now. We've put in about $60K in upgrades (new kitchen, new MBATH, landscaping, etc...). We currently owe $464K.

So this dip#### across the street who apparently can't make his payments just listed his for $399K. I'm sure it will sell right away and be a comparable for my house later.

Sorry to see that bro. You're in Encinitas, right? If 399 really is way below market, there will be multiple offers and it will get bid up to where the actual market price is.North County Coastal is going to get clobbered over the next 2 years, IMO. Thus far, the pain has been felt mostly in the east and down south. There is no way the market will support $300-400 sq ft when you can go 10 miles east or south and get a brand new house for less than 200 sq ft.

This blog follows the North County Coastal market and shows the 900k+ market fell off of a cliff recently. Once those $900 to $1.5M homes start selling for 6-800k, the current 500-800k market will get hammered.

 

[OC Zed]

I found this graph today showing GDP from 1996 to 2005 and GDP factoring out mortgage equity withdrawal.

 

[The Z Machine]

I found this graph today showing GDP from 1996 to 2005 and GDP factoring out mortgage equity withdrawal.

In 10-20 years time this is gonna look REAL bad for a lot of people. This might top the list of things that GWB is remembered for, and that's saying something.

 

[OC Zed]

I found this graph today showing GDP from 1996 to 2005 and GDP factoring out mortgage equity withdrawal.

In 10-20 years time this is gonna look REAL bad for a lot of people. This might top the list of things that GWB is remembered for, and that's saying something.

I don't think many of the borrowers responsible for this will truly feel the consequences of their actions as our government is doing everything it can to bail these people out. Instead of facing foreclosure, these people are now getting pain-free loan mods and, in a growing number of cases, significant principal writedowns. ...All with my and my children's ####ing money.



ETA: And pinning the blame on GWB is a bit short sighted as much of this was fueled by the Fed's cheap money policies and the market distortions created by the GSEs and our tax code. The Fed's policies were obviously out of Bush's hands and while he was unsuccessful in curtailing the market distortions from the tax code and the GSEs, those were in place long before Bush took office.

 

[OC Zed]

I found this graph today showing GDP from 1996 to 2005 and GDP factoring out mortgage equity withdrawal.

In 10-20 years time this is gonna look REAL bad for a lot of people. This might top the list of things that GWB is remembered for, and that's saying something.

I don't think many of the borrowers responsible for this will truly feel the consequences of their actions as our government is doing everything it can to bail these people out. Instead of facing foreclosure, these people are now getting pain-free loan mods and, in a growing number of cases, significant principal writedowns. ...All with my and my children's ####ing money.



ETA: And pinning the blame on GWB is a bit short sighted as much of this was fueled by the Fed's cheap money policies and the market distortions created by the GSEs and our tax code. The Fed's policies were obviously out of Bush's hands and while he was unsuccessful in curtailing the market distortions from the tax code and the GSEs, those were in place long before Bush took office.

I will add, however, that Bush does deserve plenty of blame for all of Paulson's meddling in the last year of the Administration, the effects of which are a prolonging and worsening of the market correction at the cost of trillions of dollars to our national debt. Unfortunately, the Obama Administration seems to think that Paulson's policies did not go far enough. This isn't hope and change, folks. It's a further step in the wrong direction.Ugggghhhh.

 

[jonessed]

I found this graph today showing GDP from 1996 to 2005 and GDP factoring out mortgage equity withdrawal.

In 10-20 years time this is gonna look REAL bad for a lot of people. This might top the list of things that GWB is remembered for, and that's saying something.

I don't think many of the borrowers responsible for this will truly feel the consequences of their actions as our government is doing everything it can to bail these people out. Instead of facing foreclosure, these people are now getting pain-free loan mods and, in a growing number of cases, significant principal writedowns. ...All with my and my children's ####ing money.



ETA: And pinning the blame on GWB is a bit short sighted as much of this was fueled by the Fed's cheap money policies and the market distortions created by the GSEs and our tax code. The Fed's policies were obviously out of Bush's hands and while he was unsuccessful in curtailing the market distortions from the tax code and the GSEs, those were in place long before Bush took office.

The loan mods that banks are giving out are piddly and the principal writedowns are non-existent. I don't know if the government is doing anything on the side, but the banks have not changed much of anything. Some of the legislation is making foreclosures take longer, but very few people are actually keeping their homes due to outside "aid".

 

[drpill]

Speaking of jaw-dropping charts, I saw this one for the first time today.

 

[zander_s]

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

I wouldn't touch OC with a ten foot pole...you know better. You're actually sounding emotional. Where is it Zed? You were in CDM, no?

You are absolutely right.

Detached, single-family homes in CDM are off-the-charts expensive right now and might never be in our price range even at the market bottom. We have actually been looking in West Newport, specifically the Newport Shores neighborhood, which has small lots like CDM, but is a lot closer to the beach (which we frequent quite a bit) and historically half to a third of the price as CDM. There is also much less of the cougar/sugar daddy vibe in West Newport as well. The big downsides are that there are some rougher blocks in that part of town compared to CDM and the ocean water quality can be suspect at times due to the Santa Ana river jetty on the border with Huntington (but we typically frequent Peninsula or Bolsa Chica beaches anyways).

In all likelihood, we will end up renting out a house down there for the next year or two and then determine where we want to buy (we will probably have started a family by then and might have different priorities).

Sorry Zed, i just find that funny. I know what you mean as i lived down in Newport as a youth, but when i read it i immediately thought of a little Compton area in the middle of W Newport.

In comparison to the surrounding cities inland and north West Newport is still pretty tame!

 

[OC Zed]

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

I wouldn't touch OC with a ten foot pole...you know better. You're actually sounding emotional. Where is it Zed? You were in CDM, no?

You are absolutely right.

Detached, single-family homes in CDM are off-the-charts expensive right now and might never be in our price range even at the market bottom. We have actually been looking in West Newport, specifically the Newport Shores neighborhood, which has small lots like CDM, but is a lot closer to the beach (which we frequent quite a bit) and historically half to a third of the price as CDM. There is also much less of the cougar/sugar daddy vibe in West Newport as well. The big downsides are that there are some rougher blocks in that part of town compared to CDM and the ocean water quality can be suspect at times due to the Santa Ana river jetty on the border with Huntington (but we typically frequent Peninsula or Bolsa Chica beaches anyways).

In all likelihood, we will end up renting out a house down there for the next year or two and then determine where we want to buy (we will probably have started a family by then and might have different priorities).

Sorry Zed, i just find that funny. I know what you mean as i lived down in Newport as a youth, but when i read it i immediately thought of a little Compton area in the middle of W Newport.

In comparison to the surrounding cities inland and north West Newport is still pretty tame!

I was specifically referring to a really nasty trailer park on the border of town by the river mouth (this place looks like something out of the Everglades combined with a dozen meth labs) and all of the townhouse rentals which attract the beach/party riff-raff. Both the trailer park and the rentals surround the neighborhood we want to move into.

But ya, I concede the danger factor here isn't that high. I just have to make sure I keep my white gloves on at all times and that I upgrade to bullet-proof windows for my next Bentley.

 

[moleculo]

so I bought my current house in June. I just had it re-appraised for a re-fi purpose (knocked off almost 2 points!), and lo and behold, the price hasn't dropped!

 

[zander_s]

There's no such thing as a dream house. Give me a year and I could always find a "dreamier" house unless the fountain of youth and a money tree sit on the first. In this market I likely could find it cheaper.

My wife and I have been observing the market for the last 3 or 4 years and are very familiar with what is existing in the location we want. This is the only modern house around within our price range.

I wouldn't touch OC with a ten foot pole...you know better. You're actually sounding emotional. Where is it Zed? You were in CDM, no?

You are absolutely right.

Detached, single-family homes in CDM are off-the-charts expensive right now and might never be in our price range even at the market bottom. We have actually been looking in West Newport, specifically the Newport Shores neighborhood, which has small lots like CDM, but is a lot closer to the beach (which we frequent quite a bit) and historically half to a third of the price as CDM. There is also much less of the cougar/sugar daddy vibe in West Newport as well. The big downsides are that there are some rougher blocks in that part of town compared to CDM and the ocean water quality can be suspect at times due to the Santa Ana river jetty on the border with Huntington (but we typically frequent Peninsula or Bolsa Chica beaches anyways).

In all likelihood, we will end up renting out a house down there for the next year or two and then determine where we want to buy (we will probably have started a family by then and might have different priorities).

Sorry Zed, i just find that funny. I know what you mean as i lived down in Newport as a youth, but when i read it i immediately thought of a little Compton area in the middle of W Newport.

In comparison to the surrounding cities inland and north West Newport is still pretty tame!

I was specifically referring to a really nasty trailer park on the border of town by the river mouth (this place looks like something out of the Everglades combined with a dozen meth labs) and all of the townhouse rentals which attract the beach/party riff-raff. Both the trailer park and the rentals surround the neighborhood we want to move into.

But ya, I concede the danger factor here isn't that high. I just have to make sure I keep my white gloves on at all times and that I upgrade to bullet-proof windows for my next Bentley.

I don't like Newport Dunes either!Riff raff wanna be beach

 

[The Z Machine]

Oh I fully concede that Bush is only partly to blame for this fiasco, but as it happened under his watch, he'll be left holding the historical bag on this, much like Carter suffers for being at the helm of some terrible economic times.

 

[OC Zed]

More and more weakness is showing up in existing jumbo loans. Looks like the high end is finally starting to crumble...

Link

Banks and Investors Face 'Jumbo' Threat

By NICK TIMIRAOS

Rising defaults by affluent homeowners are raising the specter of another cloud over banks and investors, which could get stuck with thousands of expensive homes.

About 6.9% of prime "jumbo" loans were at least 90 days delinquent in December, according to LPS Applied Analytics, a mortgage-data research firm. The rate was up sharply from 2.6% a year earlier. In comparison, delinquencies of non-jumbo prime loans that qualify for backing by government agencies climbed to 2.1% from 0.8% in December 2007.

Jumbo mortgages average about $750,000 and can run as high as $5 million or more. More borrowers with such loans are being hit by layoffs that are spreading through practically every sector and pay level of the U.S. economy.

On Tuesday, the Labor Department reported that the jobless rate rose in December in all 50 states, hitting at least 10% in Michigan and Rhode Island. States that suffered the biggest jumps in unemployment in the past year include California and Florida, where the largest number of jumbo loans were made.

That means trouble for banks that made those loans when times were good and investors who snapped up jumbo loans packaged into mortgage-backed securities. Defaults on jumbo mortgages tend to result in especially steep losses for lenders, because pricier homes are tough to sell in the current market.

"There is more pain to come," says Herb Blecher, vice president of analytics at LPS.

Last month, the mounting defaults prompted Moody's Investors Service to downgrade hundreds of tranches of prime jumbo loans sold to investors as securities. Moody's has downgraded more than 75% of all prime jumbo loans originated in 2006 and 2007 that carried the top rating of triple-A.

From 2002 to 2006, banks originated an average of $557 billion a year in jumbo loans, according to Inside Mortgage Finance, a trade publication. About 40% of the total was sold to investors as securities.

Three lenders accounted for nearly half of all jumbo loans made in the first nine months of 2008. The top two originators, Chase Home Finance and Washington Mutual, both part of J.P. Morgan Chase & Co., made more than 25% of all jumbo loans, while Bank of America Corp. and Wells Fargo & Co. each accounted for 11% of the jumbo market.

Some of the largest financial institutions held on to many of their loans. Last July, J.P. Morgan disclosed that it had $34.4 billion in jumbo mortgages. Chairman and Chief Executive James Dimon acknowledged that the New York bank expanded too aggressively into the market in 2007, particularly in places such as California, where home prices later collapsed.

"We were wrong," Mr. Dimon says. "We obviously wish we hadn't done it."

Jumbo mortgages aren't a big part of J.P. Morgan's loan business anymore; government-backed loans now account for more than 90% of originations. "We continue to make [jumbos] as an accommodation to customers," said spokesman Thomas Kelly. "It's not a big part of what we do."

Jumbo loans shriveled when credit markets seized up in July 2007, and originations slid 71% to $87 billion in the first nine months of 2008, down from $303 billion a year earlier. Only 7% of the loans made last year were securitized, according to Inside Mortgage Finance.

Originations are expected to fall even further in 2009. Earlier this month, Wells Fargo stopped buying jumbo mortgages originated by mortgage brokers. The San Francisco bank still is making loans through retail channels.

Other big jumbo-mortgage lenders still are advertising their loans but have "intentionally priced themselves out of the market" by charging high rates, says Peter Boger, operating chief at Ridgewood Savings Bank. The Queens, N.Y., bank was one of several regional banks, including Hudson City Bancorp, of Paramus, N.J., and Astoria Financial Corp., of Lake Success, N.Y., that increased jumbo lending in 2008.

Conforming-loan limits top out at $625,000 in the highest-cost housing markets. To buy a more expensive home, buyers must put up larger down payments -- between 30% and 40% -- and pay higher mortgage rates. Rates on 30-year fixed jumbo mortgages stood at 6.87% last week, compared to 5.34% for conforming mortgages, a difference of 1.53 percentage points, according to HSH Associates, a financial publisher.

"Your potential community of buyers for a particular house ... is smaller because you've got fewer people who can afford the payment," says Jay Brinkmann, chief economist for the Mortgage Bankers Association. "That is going to have an impact on price."

Some analysts believe tighter credit could be exacerbating jumbo defaults by making it harder to refinance.

"Throughout 2008, even in the worst of market conditions, conforming borrowers had some access to refinancing," says Navneet Agarwal, a senior mortgage-backed securities analyst at Moody's. "But most of the private-label borrowers have been shut out."

Nearly 25% of prime jumbo mortgages exceeded the value of the homes they backed in September, according to Credit Suisse. That figure would increase to 42% given home-price declines of 15% over the next two years.

The delinquency rate on jumbo loans still is far lower than that of subprime mortgages and Alt-A loans, a category between subprime and prime. Both those delinquency rates now exceed 17%.

The final statistic of 42% of jumbo mortgages being underwater is a given as there is nothing stopping the high end from falling another 15% considering that the high end is only starting to correct.

 

[The Z Machine]

If there were a God, I'd be praying that my Mom isn't in such dire straights and near default. I *think* that she's currently losing money on her rentals, or is just about even. If something happens to one of her two tenants, she could be up #### creek real quick.

During Christmas, I told her that could help her out financially if she needed it, but she said it wasn't necessary. She's coming up to visit this weekend, and I'll tell her again that I can assist her if need be. I know that my brother can as well, but he might be such a cheap ******* that he won't ante up to help his mother.

Thankfully, I don't have a mortgage myself.

 

[the rover]

Tgunz, are you watching prices in any particular neighborhoods? I may be moving back to San Diego. I'm wondering if I can afford Pt. Loma or OB at this point.

 

[joey]

More and more weakness is showing up in existing jumbo loans. Looks like the high end is finally starting to crumble...

Link

Banks and Investors Face 'Jumbo' Threat

By NICK TIMIRAOS

...SNIP...

Conforming-loan limits top out at $625,000 in the highest-cost housing markets. To buy a more expensive home, buyers must put up larger down payments -- between 30% and 40% -- and pay higher mortgage rates. Rates on 30-year fixed jumbo mortgages stood at 6.87% last week, compared to 5.34% for conforming mortgages, a difference of 1.53 percentage points, according to HSH Associates, a financial publisher.

"Your potential community of buyers for a particular house ... is smaller because you've got fewer people who can afford the payment," says Jay Brinkmann, chief economist for the Mortgage Bankers Association. "That is going to have an impact on price."

Some analysts believe tighter credit could be exacerbating jumbo defaults by making it harder to refinance.

...SNIP...

I'm feeling pretty good about refi-ing my jumbo 2.5 years ago to a 5.75%, 30-year-fixedbut, as I watch many of my co-workers refi their conforming loans to unbelievably low

rates like 4.75%, I've been sitting and waiting anxiously for the jumbo rates to take the

same kind of big dip. (5% or so makes it worthwhile for me to refi)

Maybe this kind of news will lead to jumbo rates falling a bit so I can take advantage

of this crazy situation.

thanks for posting that article.

 

[OC Zed]

More and more weakness is showing up in existing jumbo loans. Looks like the high end is finally starting to crumble...

Link

Banks and Investors Face 'Jumbo' Threat

By NICK TIMIRAOS

...SNIP...

Conforming-loan limits top out at $625,000 in the highest-cost housing markets. To buy a more expensive home, buyers must put up larger down payments -- between 30% and 40% -- and pay higher mortgage rates. Rates on 30-year fixed jumbo mortgages stood at 6.87% last week, compared to 5.34% for conforming mortgages, a difference of 1.53 percentage points, according to HSH Associates, a financial publisher.

"Your potential community of buyers for a particular house ... is smaller because you've got fewer people who can afford the payment," says Jay Brinkmann, chief economist for the Mortgage Bankers Association. "That is going to have an impact on price."

Some analysts believe tighter credit could be exacerbating jumbo defaults by making it harder to refinance.

...SNIP...

I'm feeling pretty good about refi-ing my jumbo 2.5 years ago to a 5.75%, 30-year-fixedbut, as I watch many of my co-workers refi their conforming loans to unbelievably low

rates like 4.75%, I've been sitting and waiting anxiously for the jumbo rates to take the

same kind of big dip. (5% or so makes it worthwhile for me to refi)

Maybe this kind of news will lead to jumbo rates falling a bit so I can take advantage

of this crazy situation.

thanks for posting that article.

Unfortunately for your situation, I think these numbers will only push jumbo rates higher to account for the losses on the impending defaults. I do know there is some talk in the Senate now about extending the jumbo conforming loan limit in the high priced areas to $730,000 (or around that figure). If that happens, expect to see a slight drop in rates for conforming jumbo loans that would then be under the cap, but not as low as the current jumbo conforming rates.