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Uh, HARM, there aren't really any Victorian SFHs on Nob Hill. But that's OK, I'm sure you meant your chateau on Nob Hill.
Did anyone else get the email from Mercury News for
Montclair, San Jose, only $2139/month!
Then, the disclaimers on the bottom:
"All advertised loan programs may be subject to underwriting guidelines which may limit 3rd party contributions and are available to qualifying buyers for owner-occupied homes only through seller’s affiliated lender, Countrywide KB Home Loans™. Not all buyers will qualify."
It gets better:
"*[1–3] 1st-year monthly payment is for illustration only and is based on a sales price of: [1] $343,990; [2] $462,490; [3] $552,000 with (a) an 80% 3/1 fixed-period, interest-only, adjustable-rate 30-year 1st mortgage (“ARMâ€) with a 1st-year interest rate of : [1] 2.375%; [2–3] 3.500%, 2nd year rate of [1] 3.375%; [2–3] 4.500% and 3rd year rate of: [1] 4.375%; [2–3] 5.500%. 1st-year monthly payments and corresponding variable APRs are: [1] $545 (4.426% APR); [2] $1,079 (5.541% APR); [3] $1,288 (5.534% APR); and (b) a 20%, 25-year fixed-rate interest-only 2nd mortgage at 9.250% (9.250% APR), resulting in a monthly payment of: [1] $530; [2] $713; [3] $851 for the 1st 10 years. Reduced interest rates on the 1st and 2nd mortgage are a result of a note rate buydown paid by KB Home of up to 6 points. Both 1st and 2nd mortgage monthly payments include interest only; principal, taxes, insurance and any other fees such as HOA are extra. Rates effective 2/16/07 and are subject to change without notice. For the 1st mortgage, advertised monthly payments will increase at years 2 and 3; advertised ARM rates and monthly payments are subject to increase after the 3-year fixed period. For both the 1st and 2nd mortgage, after completion of the 10-year interest-only period, each loan will be fully amortized over the remaining term (as an adjustable-rate mortgage that adjusts annually for the 1st mortgage) and borrowers will be required to pay interest & principal on each loan, which may result in a significantly higher combined monthly payment. Interest rates and APRs may vary based on borrower’s credit score, actual closing costs and other variables. Scenario assumes the buyer has excellent credit, pays $0 down, provides full documentation, sets up a tax & insurance escrow account and pays estimated closing costs of $1,654. Closing costs estimate includes only lender costs, buyer may incur additional closing costs."
Did you catch that really good bit?
"which may result in a significantly higher combined monthly payment. "
EBGuy,
TICs are considerably less expensive in SF than condos because until very recently you had to share a loan, which many people are hesitant to do. Now a few banks are offering individual TIC loans. It is very, very difficult, nearly impossible to go condo in SF with a greater than 2 unit building, however. Our board of supervisors severely limited the number of condo conversions that can take place yearly, and there is a huge lottery each year to do that.
I still do not understand exactly what is the legal difference between a coop and a TIC. Coops tend to be in more expensive buildings here and tend to have higher down payment requirements (505 at each of the coops I looked at), but I don't understand any other difference.
So much for the myth that the GSEs only buy bullet-proof, AAA-tranche "conventional" loans:
Freddie Mac also said it would limit the use of loans that don't require income verification or other documentation, and will recommend that lenders collect adequate escrow for taxes and insurance payments.
Moreover, the company said it's developing new fixed-rate and hybrid adjustable-rate mortgages with the aim of giving lenders "more choices to offer subprime borrowers."
The firm said its new requirements cover mortgages known as 2/28 and 3/27 hybrid ARMs, which currently make up about three-quarters of the subprime market.
Specifically, Freddie Mac said it will require that borrowers applying for these products be underwritten at the fully indexed and amortizing rate, as opposed to the initial "teaser" rate
In other words, they are tacitly admitting that they HAVEN'T BEEN requiring borrowers to be qualified at the full rate before.
The company also will limit use of low-documentation loans, so-called "no income verification" products in combination with the 2/28 and 3/27 hybrid arms.
In addition, the company won't purchase "no income, no asset" documentation loans and will limit so-called "stated income, stated assets" products to borrowers whose incomes derive from hard-to-verify sources, such as self-employed persons and those who participate in the cash economy, the firm said in a press release.
In other words, they're tacitly admitting that NINA/liar-loans make up a substantial % of their MBS portfolio.
Glad to hear that the MBS carnage will be restricted only to the BBB & Alt-A tranches.
Was this already posted? Where's Nigel? SP- I hate malls too. And I particularly hate the smell of Cinnebon!
Home price slump continues
Realtors report that year-over-year slide hit its sixth straight month in January despite pickup in sales pace.
By Chris Isidore, CNNMoney.com senior writer
February 27 2007: 11:41 AM EST
NEW YORK (CNNMoney.com) -- Housing prices continued to fall in the latest reading on the battered real estate market released Tuesday from an industry trade group.
The median price of an existing home sold in January was down 3.1 percent from a year earlier, according to the National Association of Realtors.
The slump in existing home prices reached a sixth straight month in January, according to the latest report from the National Association of Realtors.
The slump in existing home prices reached a sixth straight month in January, according to the latest report from the National Association of Realtors.
Bankrate.com
Current Mortgage Rates
It marked the sixth straight month that prices have shown that year-over-year drop, a relatively rare condition for home prices before the current slide. Before the Realtor's price readings showed a year-over-year drop for August sales, it had gone more than 11 years without that kind of drop.
@SFWoman,
My bad. Of course, I don't live there, so I defer to your first-hand knowledge. Perhaps I got Nob hill confused with Russian Hill?
HARM,
Oh, I'm sorry. I hadn't realized that "Alt-A" wasn't "as safe as houses"? (And we're already seeing holes punched through it?)
This is the "bleed through" we couldn't get people to see 6 months back. I'd read earlier today that MBS defaults could effectively bleed through to fixed income in general. Amazing.
It’s good. I don’t think I’d even like downtown Palo Alto.
Downtown Palo Alto is full of demons (bums).
Now, if we can only get another asset class, real estate, to drop 3+% in one day, we bubble sitters will be a lot happier.
HARM,
That actually looks like a picture of Haight-Ashbury, perhaps. Russian Hill has some Victorians.
This is what happen when euphoria has been ruling the market. Any external event - just ONE event - is enough to cause panic. Last few days the -ve breadth was telling a story which culminated in today's plunge.
Tomorrow should be interesting. The Asian markets may continue sell-off or suddenly reverse to upwards. More chance of a big move either direction than a stabilization. The Indian stock market has been crashing (or correcting) for a week as well.
The herd (of global investors) has suddenly woken up from the Goldilocks dream. And it is scared.
DinOR :
I know what you think about the covered calls. But boy, do I love my covered positions right now or what ! Closed some today. This is as close to free money as it can get in stock market.
GC,
Firstly, Hats Off to *astrid! She made the call for the sell off in China several months ago saying that it was a given. I agree. Many of my clients are up substantially so they're not that concerned, but we'll continue to monitor that.
This correction "should" have come late last year. Had we given in to that our "numbers" as managers would have suffered as far tax managed efficiency. Retail guys can't move the market like this so it will be interesting to see after the close and the dust settles.
Sorry about the late response, we had power go out briefly during our little storm.
StuckinBA,
I noticed some of my India holdings were selling off and was a little concerned. I'm well up there too but this correction looks pretty determined. My guess is we'll see a little "reflex rally" at the open and then trade lower for the balance of the day tomorrow.
The treasuries have rallied strongly over last few days. Man, I want to kick myself over this. I was under-weighted in bonds because I thought the bond market was wrong about inflation. Now not just stocks, but gold and commodities is down too. Live and learn.
I know what you think about the covered calls. But boy, do I love my covered positions right now or what ! Closed some today. This is as close to free money as it can get in stock market.
Covered calls still have downside risks. Just a little bit less than long stocks.
Covered calls still have downside risks. Just a little bit less than long stocks.
Yes. I don't buy stocks to write calls. If I like a stock for a long term, I buy it and then write the covered call. Then I close them on days like this. Sometimes the stock is called away and I am fine with that too.
Sometimes the stock is called away and I am fine with that too.
That has tax consequences though. Would you consider buying back the call at a loss instead (realized option loss, unrealized stock gain)?
Not investment advice. Not tax advice.
"Now not just stocks, but gold and commodities"
Good point. I guess there are flights to quality and then there's just plain flights!
That has tax consequences though. Would you consider buying back the call at a loss instead (realized option loss, unrealized stock gain)?
Good point. I have preferred to let the stock called away. There are always other opportunities. For me, realized gain is better than realized loss. If I am making money, I don't mind paying tax. For some holding on to the stock makes more sense. Buying back the call, and writing another one is also a viable strategy.
For me, realized gain is better than realized loss.
I understand...
But to me...
Realized loss is better than unrealized loss.
Unrealized gain is better than realized gain.
BTW, how much do you pay for option commissions?
Wow... it's been quite a day for the Stock Market.
If it slips to a full 10 percent correction, I wonder how the 'spring bounce' is going to look?
BTW, how much do you pay for option commissions?
Forgot the exact amount. Both Etrade and Ameritrade have very low rates. 9.99 + per contract fee.
Harm - Just wanted to state for the record two things:
1. We are not in the Bay area - I rent near Pasadena
2. Not trying to show off my fancy codpiece - I just wanted to point out that although we can afford to purchase a house at these prices, it would be insane. The fundamentals are SO out of whack it makes buying seem foolish. I am not buying a $800k house despite our houshold earnings/savings.
I hope the market tanks and validates our decision to sell and rent...
If it slips to a full 10 percent correction, I wonder how the ’spring bounce’ is going to look?
This 400+ drop is a BIG psychological blow. In BA the mood is a lot more dependent on stock market than many other parts of the country. (Not counting NY, Chicago etc.) Suddenly the stock options and ESPP are no longer that valuable.
I am not sure we will see 10% correction soon. But if that happens, BA market will be more affected than most of the country. The house are not appreciating any more. Now if people think that the stocks also won't appreciate, they will be less inclined to take a big risk.
I always look at stock market corrections as happy little moments for my IRA and 401K. Each deposit buys a little more than at the peak...
The fact that I'm late sending in my IRA makes me giggle right now. My wife is mailing hers off today, so she'll get a little 'buying boost' from the drop if it sticks for a few days, which I think it will.
"ESPP are no longer that valuable"
My husband's ESPP program has been suspended due to a stock option investigation. Are many companies still offering ESPP?
Most real companies of any size have ESPP as a benefit. By 'real' companies, I mean companies that have at some point or another produced profits for multiple consecutive years. :)
Peter P :
Realized loss is better than unrealized loss.
Unrealized gain is better than realized gain.
That's a primary reason to buy a house for many people :-)
tannenbaum,
Or why not just BUY Oregon? :)
You know us right? (Washington's "Mexico"?)
Wow, today was /fun/. Since the market seemed to be climbing so well for so long, I had told myself that I'd wait 'til just before March to start buying puts. At least I got some orders in late last week!
Anyway, to speak to the topic, I'm still renting and don't plan on buying until I can afford a place with a decently sized yard (i.e. quarter acre). I'm still hoping that things will unwind over the coming year, possibly with some sort of credit event to make things really exciting. Of course, even if it doesn't happen, I don't see giving myself the mental greenlight to buy until 2010 or so.
On ESPP:
Yes, the real companies offer them. I opted out a little while ago when the company shares started representing too large a chunk of my portfolio. (I've been wondering if it makes more sense to ramp up the buying, and set up rolling sell orders to take advantage of the minimum 15% discount while keeping the proportions balanced.)
After the market closed, I watched a little of the commentary ad nauseum on TV. Most of the discusssion was not about the market, but MBS, Freddie, and FB's. Interesting that on a correction day, that would be the center of attention.
One of the guests was the head of Century 21. Just so you know, it's "official"......'06 was the RE market's correction, and it's over now. He's GOT to know, after all, Suzanne researched this! :)
DinOR:
I believe it's lower of 85% of purchase price date or 85% of subscription date value (for the given offering).
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Fellow "Bubbleheads", let this thread be a periodic update on your own personal position in this Great Bubble cycle.
No shame, no insults. I'll delete any comments that mock or ridicule anyone else for decisions they've made. i.e., No piling anyone willing to admit they've bought, for whatever reason. Pilers oners know who they are.
I'll start things off:
---
Randy H and extended family:
In 2007 we continue to rent, closing in on the start of the third year of renting after over a decade of happy home ownership. We are preparing to rent for another year or longer, but continue to try our best to keep our situation flexible. Renting is an enormous pain in the ass given our situation. We're prepared to pay a reasonably hefty premium for a house: Wheel chair ramps for elderly parents don't easily install in rented McMansions. But these prices are nowhere near a "reasonably hefty premium" yet.
I'm still unsure of how long the correction will take. I'm still sure it is underway. I'm vindicated in my sticky price calls. I'm also sad I was right. I occasionally have wonderful waking dreams in which the remainder of the correction occurs in a single day, and I'm suddenly BBQing in the back yard, all my Patrick.net friends over drinking beer and consuming various charred flesh, surfer-x demonstrating his cannon ball dive into the pool ... oh wait, that's another dream.
Anyway, we're still renting, and still pissed off about it. And it rains too damned much in prime Marin.
---Randy H
#bubbles