patrick.net

bigbrother: your high as a kite;

Fed is unlikely to make a substantial rate cut this year, while other central banks are raising rates (china/japan) and the us dollar is in serious danger of falling into the toilet.

Furthermore, a rate cut is unlikely to truly stop the downward spiral in prices, as the Fed cuts the short end of the yield curve, and mortgage rates are determined by the long end of the curve. Long term rates are much more sensitive to perceived inflation risks then to the short term rates.

Housing is very unlikely to resume upward price moves in the near term (at least 5 year) future.

BigBrother Says:

> Guess nobody is willing to go against my
> expectation that the Fed will cut rates end of year

Why will the fed need to cut rates with almost everyone in their 30’s making $300K to $1.5mm a year and the C level guys in their 40’s and 50’s making $1mm to $10mm a year?

Anyway, I just have a quick question survey for all of you. Do you guys think the the Fed will cut rates end of this year, and also in 2008?

Probably yes. The only reason I can think of that they might *not* be likely to cut rates (in a vain attempt to help 'rescue' the mortgage lenders & banksters), is if the dollar really crashes hard.

Do you think there is a possibility that the housing market will start going gangbusters again once the Fed cuts rates, and the 10-yr yield, which has hovered between 4.5-5% starts dropping below 4.5%?

Hell no. Japan had ZIRP for over a decade, and it *still* did not stop RE real price declines in the neighborhood of 65-75%. It might possibly prolong the inevitable correction (like Japan), but this market's toast. Stick a fork in it.

@eburbed (re ACORN housing):

They were mainly educational and not allowed (as a non-profit) to steer you to one particular lender or another, but I do recall they had something called "ACORN partnership loan programs" with some local banks like BofA, Citibank & Chase-Manhattan. Basically, if you qualified as "low income" (tough to do in CA), they would shave a point off the loan, only require 3% down and waive PMI, or some such.

I'm sure the details vary by area (and the current lending environment). You might also look into the CalFHA program like Surfer-X did, whenever you're ready to start seriously looking.

I got a good deal on a refi by going to LendingTree and doing the "three mortgages bid against each other" deal. One wheeler-dealer from ABN Amro offered me 5 1/8% on a jumbo for a 2-unit building, which the E*Trade Bank woman claimed was "illegal" since the best she would offer me was 5 3/4%. The ABN guy told me he was going to bundle up my loan with a bunch of other $1M San Francisco properties and get me single family home rates that way. I didn't complain. On the day of closing he bumped the rate up to 5 1/4% but it was still by far the best I could get, so I took it. I made sure on the closing papers that I disclosed that it was a two unit building.

My first loan, when we bought the property, I got a far worse deal. We took the mortgage broker our realtor recommended and she initially tried to ream us with a 6 1/2% loan. When my wife, who works in real estate, told her that was too high, they immediately lowered it to 6%. It didn't matter in the long run, since rates when down after that and we re-fied.

Randy, San Francisco homes are mostly going for over asking, at least according to the Alexander Clark newsletter I get every week. Maybe he is lying, I don't know, but he includes the asking and sales price for every property in The City. Last month in Noe Valley, 17 single family homes were sold, all for over asking, with an average sales price of 10% over asking. The average price is $1.5M which is up, but part of that is because the homes here are getting bigger. Quite a few larger, luxury homes have been built over the last few years and they are pushing the market up.

I said earlier that a 3/2 was $1.2M and reviewing the recent sales data I guess I have to admit that I am wrong. The last four 3/2's all sold for $1.4M. Take that for what it is worth.

Everything Jimbo writes is nonsense...
building more homes does not push the market up ...anybody heard of supply and demand?
sf homes are not in general selling over asking...
a 30yr fixed rate is flat not available from anyone anywhere at the rates he is quoting. Nobody with any experience in real estate (as allegedly this mogul with a realtor@ wife is) would bother with the scam artists one finds at lending tree... what a crockpot full...

Sorry reality is such a bummer to you azrob. I refi-ed in March 2004. I can send you a copy of the loan papers if you like.

If you want to review the data on home sales yourself, subscribe to the sfnewsletter and tell me what you think:

http://www.sfnewsletter.com/

Like I said, perhaps the guy is perpetuating some kind of elaborate scam, but he seems legitimate to me.

My wife is not a Realtor, btw, she actually works for an insurance company, helping finance non-profit real estate. I am not necessarily endorsing Lending Tree, but I am sharing my experience with them. I thought things worked out well.

I don't know if anyone has heard of Ted Lui, and what he's proposing, but I thought I'd post what I found on another board.

"TED LUI (CA assemblyman) and others on the California banking and finance committee passed a proposal Monday to use money from the Affordable Housing Bond to bail out homeowners who were “victims” of “predatory” financing and can’t make their mortgage payments. CALL Ted Lui’s office, talk to Tiffany or Mark, 916-319-2053, and call every assemblyman on the appropriations committee (that’s where it goes to a vote next), and call your local state assemblyman, tell them you don’t want your hard-earned tax dollars going to bail out buyers who overpaid and didn’t read their loan documents, tell them the affordable housing bond money was to be used for affordable housing not for bailouts, call or don’t complain when it happens!"

Here's a response that one poster received after calling Mark...

"I gave Mark every completely rational argument I could give, not screaming or yelling, just speaking in a controlled, professional voice, against this bailout idea…all he could counter was “that’s your opinion”, “I’m sorry you feel that way”, “we’ll just have to agree to disagree so there’s no point discussing this”, and he just kept going on and on about how many people were “victims” of “predatory” lending and that was what this was trying to correct. No explanation as to how such lending was predatory, why the ADULTS who signed the loan documents were not responsible for their actions, why it is my problem as a taxpayer, nor why we should reward those alleged predators by making payments that didn’t pencil for the borrowers to begin with. I hope every one on this board calls him and every other assemblyman you have time to harrass, I mean contact."

Sounds like a prick, but I'm going to call him tomorrow. Might not help, but it certainly won't hurt to give this idiot a call.

Correction, the assemblyman's name is Ted Lieu.

jimbo quote, "my wife, who works in real estate"

but now she doesn't work in real estate, she works in insurance? interesting.

Real estate reality isn't a bummer to me, read my previous posts. I own 3 homes free and clear, so I don't need to refi any of them. I have been an active realtor for almost 20 years, now I am less active as I don't need the money, and prefer my other business and academic endeavors.

But i reiterate, there is no way in hell you got a 5.25 fixed loan on a refi in the last 2 years, period. Perhaps you are in the 35% of people who don't know what type of loan they have. Take another good look, and see if a disclosure box about adjustment isn't marked on page one or two. Second, it wouldn't make too much sense to refi a 6% loan into that product anyways, the payment difference would take a half dozen years to offset the expenses of writing the loan. And if your going to say you got a no cost refi to fixed at 5.25% you might as well say the toothfairy brought the docs to the closing. There are enough other people on this blog who will recognize that as nonsense, not just me

Not advice of any kind, but:

My experience is that agents and lenders use the standard model form without alteration. I handle my parents' contracts and they always use the cheapest services, so I always see forms that come straight out of the form book with absolutely no alteration.

On the other hand, based on a couple professors who are good transactional attorneys, they always revise their forms based on client. Including excessive language or inappropriate language can get you in trouble if you ever have to go to court.

azrob,

Jimbo is what's known around here as a "reason-a-bull". To be distinguished from "perma-bull". Even though he and I disagree from time to time (he's generally flirting with the truth).

Interesting snippet on the "Father of MBS"

http://www.economicpolicymonitor.com/2007/04/ranieri-first-time-in-history-median.html

HARM's "buddy" :)

@Portland Girl,

No one appreciates the last few relatively rain free days more than I but we shouldn't let that go to our heads. We have problems here in Stumptown. I certainly hope that with the exodus of some major employers and a city council that is outright HOSTILE toward business that you're not implying somehow our "special-ness" will provide insulation from a NATIONAL BUBBLE? (Yes I said national).

The last time we had 2 (let alone 3) decent days in a row would have been in September. Enjoy! :(

Raider Jeff,

Too funny! From now on, any time I get caught with my pants down I'll simply say "I'm sorry you feel that way. We'll just have to agree to disagree so there's no point discussing this" and see if my clients let me off the hook?

You will wish me luck, won't you?

I just got an interesting rental observation here in SF. A friend who owns a lovely small building on Nob Hill just renovated a unit in her building that was vacant for the first time in about 25 years. She put in a nice kitchen (yes, stainless/shiny granite), redid the floors, painted. The unit has Golden Gate Bridge to Alcatraz views and is on a very good part of Nob Hill. No parking comes with it.

She said that she received almost no interest in the unit, where as a year and a half ago, when a similar unit she had came up the place was swarmed with applicants.

She told me she had to lower the rent and practically agree to fix the woman up with guys from the yacht club to get her to agree to rent the place. She only had a couple other people come through and look at the place, no one else made an offer to rent it. She said it was hugely different from last year, yet she listed the place in the same listing places as the other apartment.

SFWoman,

Welcome back!

Btw, that makes almost NO sense? Sounds like someone should have snatched that up if for nothing else than the view? Has shiny and dense material gone out of fashion?

Jimbo

My data is coming from the largest agency dealing with +$2.5m homes in SF, and probably the 2nd biggest in the sub $2.5m market. They had a red hot Feb., strong March, but April is showing a lot of under-asking deals and slowing volume. In fact, April seems like the door got slammed there are so few deals. I believe a lot of this is because of the obscenely high asking prices. Also, word is these guys are severely vetting seller clients and not taking on any who aren't willing to "be flexible" on price, or who won't set a market asking price to start with. They're also clearing out old clients who've been too long on market and won't drop price.

If you want to review the data on home sales yourself, subscribe to the sfnewsletter and tell me what you think:

Like I said, perhaps the guy is perpetuating some kind of elaborate scam, but he seems legitimate to me.

Jimbo,
I can't let this one slip by. The supposedly "legitimate" site you refer to is a realtor (TM) and his spinmeister newsletter/blog. How can you call this guy on the up-and-up? Yes, I didn't subscribe to his newsletter, but (a) I don't have a realtor (TM) 's MLS number, and (b) I don't want to pay $100/month to hear his musings about SF real estate.

skibum Says:

> I can’t let this one slip by. The supposedly “legitimate”
> site http://www.sfnewsletter.com/
> you refer to is a realtor â„¢ and his spinmeister
> newsletter/blog. How can you call this guy on the up-and-up?

This guy is basically saying “all you Realtors should pay me since I’m so good at spinning data to trick people in to buying”…

SFWoman Says:

> I just got an interesting rental observation here in SF…

It’s good to have SFWoman back from “Spring Break”…

This guy is basically saying “all you Realtors should pay me since I’m so good at spinning data to trick people in to buying”…

Exactamundo! He's got a slick site, I'll admit. If I were a lowly newbie realtor, I'd consider paying for this Alpha realtor's spinletter and "blog." "Hey, if I can't come up with the fake stories and data, maybe I'll just let someone else do it for me!"

SFWoman,

Good to hear from you! Were the yacht club dates written into the lease agreement? Maybe it was the clause right after the "feed the squirrels" clause? :)

"Too funny! From now on, any time I get caught with my pants down I’ll simply say “I’m sorry you feel that way. We’ll just have to agree to disagree so there’s no point discussing this” and see if my clients let me off the hook? You will wish me luck, won’t you?"

LOL!!! How's it going DinOR.

Yep, I'm going to use those words next year when the time comes to pay taxes.

"I sent Ted Liu and email as well. Do these things help? I haven’t been in the habit of “writing my representative”. How many emails before they start to take notice? 1000? 10000? 100000??"

Good justme, I'm glad you took the time to email, I did as well. I don't know what'll take to get through to these people, but I'm sure going to take note of who is doing what now because someone is going to pay later when elections roll around. What else can I do?

New thread: Housing Un-American Activities Committee

Interesting post, DinOR --thanks. I didn't know there was one such person. I just assumed MBSs were something the banksters or GSEs gradually cooked up, while thinking of new ways to avoid having to do proper underwriting.

"for the first time in history the median home sales price in the United States is likely to decline." Is that true? Hard to believe it is the first time *ever*

The homes closest to me are priced from about 900k to 2.4m. Nothing has sold in the last 3 months, according to ZipRealty.

I think the property that sums up what is happening out here in San Remote is this one:

Price Increased: 12/14/06 -- $744,900 to $775,000
Price Reduced: 01/08/07 -- $775,000 to $739,900
Price Reduced: 04/09/07 -- $765,000 to $749,000

I'm getting queasy on this rollercoaster....

skibum,

I don't think the fixing-up-with-sailors was in the lease, but my friend swears that was part of the agreement. She's bummed because the last time she rented an apartment the market was extremely overheated, and now it seems to be cooling for rentals, although neither she nor I had seen anything in the papers about a cooling rental market here.

She does legal stuff for TICs and she said they are still very hot in SF because they are priced a lot lower than condos and now you can get separate loans on them.

FAB,

I spent part of spring break on the Kona Coast (very easy vacation with kids, expensive food) and a realtor there, who said he was the island's top producer, said the market is starting to tank and he thinks it's in for a major correction. Interestingly, I hadn't heard much about the earthquake there this past winter, but there was a fair amount of damage because of it.

Ooh, SFWoman is back! Was the expensive food at least good?

Anyone know what the Danville area is like/doing?

Claire

Hard to tell. It looks as if asking prices in Alamo have gone up this Spring. I'm tracking a few houses there and they are not selling. I went to a few Open Houses on Sunday and things were quiet.

I checked the Sold homes in the local paper in San Ramon and there seems to have been lots of sales in the past month in the lower price points, however, the prices at the Bridges seem a little softer.

Danville woman,

Thanks for the reply - what's the rental market like too?

Also, do you know if forclosures are on the rise there?

SFWoman,

Welcome back! We really missed you (not in a creepy or pathetic way though).

The newsletter is free. If you want to redistribute, you have to pay.

But i reiterate, there is no way in hell you got a 5.25 fixed loan on a refi in the last 2 years, period.

Perhaps you did not see where I said that I refi-ed in March of 2004. That was more than two years ago. I paid 3/4 of a point to do the refi. It lowered our monthly payment $350 and has already paid for itself. I think it took about two years to pay back the refi cost. We plan on keeping the place as rental property when we move up, so it made sense to do the refi, even if it would have taken longer.

My wife helps finance real estate construction. I know you in the industry have all these gradations of what being in "real estate" means, but to the rest of us, it is all real estate. She is certainly familiar with what the going rate for borrowing money is.

Also, azrob, a few months back FAB was telling us that he got a 10 year fixed 4 1/4% mortgage. So while mine was good, it is certainly not the best one out there.

http://patrick.net/wp/?p=399

Claire

We pay $1995/month for a 3+ bedroom townhouse in Danville. The house has an outdated kitchen but a nice little yard. We started renting this place in June 2005. Our landlord hasn't raised our rent but I have heard that rents are going up.
Lots of nice places to rent in San Ramon, I hear. School system is good and the places there are newer. Having a dog presented some difficulty renting. If you have no pets it will be easier for you.
Check out the local newspaper - San Ramon Valley Times - Hunting for a place is very time consuming and frustrating. Hang in there !

CalHFA

Thanks Danville woman:-)