Most everyone reading this blog is reading it because they are looking to purchase a home. I am wondering what it will take for you to take the plunge.
There are some facts we know and some we don't. We know prices have fallen considerably in the last 2 years. We know that prices in most of the IE are still above historical norms. We know the economy is in bad shape. Interest rates are still low. Inventory is still high. Sales numbers have picked up but they are still some of the lowest in the last 20 years.
We don't know how much farther the prices will still fall. We don't know what the interest rates will do in the future. We don't know how bad this recession will be. Some of us are in industries that may be affected by job losses (like me in defense) and we could lose our jobs.
So what will it take to get you to buy?
The Bankers are SHOCKED!
From the LA Times
A record 10% of the nation's mortgage-burdened homeowners fell behind on their loan payments or were in foreclosure during the third quarter, according to a survey released Friday by the Mortgage Bankers Assn., which said California and Florida were the biggest contributors to the worsening picture.
The percentage of loans at least a month overdue or in foreclosure was up from 9.2% in the second quarter and 7.3% a year earlier, the trade group said. In Florida, 7.3% of home loans were in foreclosure at the end of September. The figure was 3.9% in California and just under 3% for the nation.
In a grim report Friday, the government said U.S. employers cut 533,000 jobs in November, the weakest performance in 34 years, sending the jobless rate to a 15-year high of 6.7%. California unemployment is now well over 8% (about 10% in the IE, we are fast approaching the levels of the early 90's).
Combined with a 40% decline in California's median home price, the faltering economy is resulting in the highest rate on record of troubled home loans actually going into foreclosure, said Jay Brinkmann, chief economist for the Mortgage Bankers Assn.
California represents 13% of the loans in the country, Brinkmann said, but is recording 19% of all new foreclosures.
"California has lost more than 100,000 jobs over the past year, compared to Michigan, the usual poster child for unemployment, which only lost 70,000," Brinkmann said.
"Things are going to get worse before they get better," said Thomas Lawler, a housing economist based in Virginia. (DUH!)
At first glance, California's troubles seem little different from those anywhere else, because just under 7% of borrowers in both California and the nation are behind on payments. But Brinkmann said a clearer picture emerges when you compare the number of newly delinquent loans in one quarter with the number of loans entering the foreclosure process the following quarter.
That foreclosure "roll rate" was about 10% to 12% nationally in the 1990s and ran from 12% to 15% for most of this decade, Brinkmann said. The percentage is now 30% nationally but has reached 79% in California and 65% in Florida, he said.
"This is nothing like anything we've ever seen before," Brinkmann said. "We were shocked when we saw the California roll rates."
location location location
That's been a real estate catch phrase for years. Once upon a time it was true. A nice location fetched a premium over a poor location. During the bubble years however the line between a premium location and a poor one got a little fuzzy. Take 303 Madera Privado in Ontario. This home was built in 2004. It sits in a small gated tract with community pool and spa. Sounds good so far right? During the bubble years that was all it took. This home sold new in 2004 for $476k. It sold again a year later for $640K.
But now that the bubble is over the location is coming back to bite this home. Taking a closer look you quickly see this small tract is surrounded by appartment complexes. There's no nice way to say it, but it's not in the best part of town. It's more like, in the best part of the barrio. Another huge problem is the fact that you can hit a golf ball from the house and reach Ontario Airport's runways. It's a perfect location for a deaf family, but for people with ears that function this has got to be a serious irritation. The only good thing I can think of about the location is there's an In n Out Burger close by.
If you are deaf and looking for a nice house in the barrio you may want to check this one out. It is currently listed at 52% off the last sale at $305k. (still too freaking high btw)
The IE is #1
First American Core Logic has placed the IE in the top spot for the highest risk market.
TOP 10 HIGHEST RISK AMONG LARGEST 100 MARKETS
Of the 100 largest U.S. MSAs (out of 381), the following ten markets are at highest risk:
1. Riverside-San Bernardino-Ontario,
2. Los Angeles-Long Beach-Glendale, CA
3. Phoenix-Mesa-Scottsdale, AZ
4. Sacramento--Arden-Arcade--Roseville, CA
5. Miami-Miami Beach-Kendall, FL
6. San Diego-Carlsbad-San Marcos, CA
7. Oakland-Fremont-Hayward, CA 7
8. Stockton, CA
9. Santa Ana-Anaheim-Irvine, CA
10. Bakersfield, CA 1
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