24 replies to this topic

[Steve Heard]

Hi Folks

2010 proved to be another year of inconsistancy and uncertainty in the local real estate market, and there were mixed messages from the experts, the media and institutions involved.

In April there was a reported 16% increase in foreclosure filings, and in September another report came out claiming that August saw the highest number of foreclosures in history. Then last week RealtyTrac reported that California foreclosures were down 14% from last year.

I wrote in my blog and here on myfolsom about the difficulties with banks negotiating short-sales, yet I've had a few which went very smoothly.

Google '2010 home prices down' and you'll see articles claiming we're down .4% one month, up 3.8% the next.

Much of what happens in the market is based on the consumer's belief in what's going to happen in the market.

I've talked to folks who believe we'll have years of continuing decline, and those who think we're at or near the bottom. Some are waiting for the bottom before buying, but many are taking advantage of low interest rates and what they see as an undervalued market and are buying homes.

One home owner I know is paying over 6% interest, and he owes about $140,000 more than the property is worth. He can't refinance because he is so far upside down. He isn't worried though, because he believes that by the time he pays off his mortgage (in about 25 years), his property will be worth far more than it is today, so he'll make his money back. There are lots of these 'stay put' types, and I'm one of them. I love my house, and although it's not worth what it once was, I don't plan on moving any time soon, so I'll stay put.

Others I've talked to have found themselves upside-down and simply walked away, figuring they'll rent for a few years then buy when their credit gets better, confident that prices will stay were they are and homes will still be affordable. I call these the 'throw in the towel' home owners.

So I ask you, where do you think the market is headed? What's going to happen to prices? What do your neighbors, family and friends think? Do you hear more 'stay put' or more of the 'throw in the towel' attitude?

I'd really like to know.

[nomad]

If the house across the street from me ever sells (it's been vacant for 2+ years and had multiple signs/realtors come and go) then I will possibly change my mind about the state of things.

It's my belief that these blips of good news are mainly a result of all the TARP bailouts and that the banks, even though they claim to be profitable again, are still sitting on billions in toxic loans and that eventually we'll see this pattern occur again as the bailout will only carry things so far.

Plus lending is not really freed up and the banks are sitting on the cash and dragging out loans if they even complete them at all.

This entire housing scenario is full of corruption and bad deals and I'm afraid that reputation will last a long time. And until i see otherwise I'll continue to think that the housing crisis is still happening no matter what the figures say.

I am glad to say that I am still far on the plus side of my loan/house value so at least I got that going for me.

[Dave Burrell]

It's interesting to read what's been going on. From my end, I'm seeing more and more people staying put but I've also seen a small handful of folks moving out of state, going after business and better housing markets/prices.

Around my neighborhood I've seen several houses pop up for sale over the past year+ and the majority of them are still on the market.

It would be interesting to see a map of where the sales were occurring along with data on houses for sale with info on their time on the market

[AMETHYST PRODUCTIVITY]

For the first time in 25+ years, we have no intention of going anywhere. Every other time we moved and bought houses, we knew it would be a short term thing. It's a nice feeling to be able to look long term and "hold" our investment. Bottom line is this is a home for us. Someplace our daughter will be able to come home to from college and later and know she has a base.

I am still interested in housing prices improving but it's not as much of a focus for us as it once was.

[Steve Heard]

It's interesting to read what's been going on. From my end, I'm seeing more and more people staying put but I've also seen a small handful of folks moving out of state, going after business and better housing markets/prices.

Around my neighborhood I've seen several houses pop up for sale over the past year+ and the majority of them are still on the market.

It would be interesting to see a map of where the sales were occurring along with data on houses for sale with info on their time on the market

Ask and ye shall receive:

This one shows the average price for homes listed vs. average price sold. Note that the gap has been narrowing as sellers become more realistic in their pricing strategies.



This one shows average days on market as well as percentage of list price to sales prices at the time the offer was accepted:

[SunshineServices]

Several items of note:

In the past 3 years I have seen an increase in my own business in the number of remodels and fix-ups, where the owners intended to stay put, as opposed to 'punch-list' items as owners get ready to sell, or as the pest inspection(OH NO) reports come in.

In our neighborhood we had a foreclosure across the street that at the height of the craziness sold for over $550,000, and it was recently bought for about $350,000. The house next to just went into foreclosure this year, but everyone expected that, we will see how long it takes to sell, I think the asking price is way too high for what you are getting.

I've been here since '92, bought for $200,000, had a second or two along the way(who didn't?). Just refinanced into a 15-yr mortgage at 5%, should get it paid off in 13 years.

I think until the jobs come back, the housing situation will stay flat or get worse. People need jobs to make those payments.

Jeff

[Bill Z]

I don't know if the housing market is near the bottom or not, I would hope that it is. While the bubble did need to pop, it almost feels like it has over-compensated in it's adjustment. But with the news I hear of 50% rate hikes in Healthcare coming, this isn't going to help the economy recover. This will add to the existing burden on employee's and with gas creeping back up, that's another drain on "disposable" income. With higher gas prices will come higher food prices, inflation on required spending while unemployment is high and raises are few and far between, I don't know that we've seen the bottom like we were told by the FEDs. I hope I'm wrong, but I think we might be in for another slump before we see a real recovery in the economy.

And NO, not everyone takes 2nds out on their homes. I've watched friends and co-workers take out 2nds to buy new cars, jetskis, or re-model, while I continued working to pay off my home, buy used cars I could afford, etc. I've never tried keeping up with the Joneses, I don't even look to see what the Joneses have. I once had a dream to build my own house, I even bought a vacant lot with plans to build my dream home on it, but when I got layed off almost 7 years ago, I realized my dream wasn't going to materialize, so I sold the vacant Lot ASAP to eliminate that debt from my cashflow.

[asbestoshills]

Well, the City of Folsom obviously is gambling or using an educated guess and are going to develop the other side of 50 without any regard to the people who have homes here already. I say this, b/c those new homes are going to be cheap. Don't think of ever getting your money back on your home unless you bought in the early 90s. I think we will never see the prices in Folsom inc once they develop that part of 50. What do I see? I see Folsom becoming a hybrid of how Folsom used to be with an Elk Grove/Rancho Cordova vibe. Tons of cheap homes that will be gobbled by first time home buyers which will decrease any value u thought u may have had in your Folsom home. Just my two cents.

[Robert Giacometti]

Well, the City of Folsom obviously is gambling or using an educated guess and are going to develop the other side of 50 without any regard to the people who have homes here already. I say this, b/c those new homes are going to be cheap. Don't think of ever getting your money back on your home unless you bought in the early 90s.

They are most definitely gambling, our quality of life against some land investors getting a return on their investment sooner!

[Robert Giacometti]

I'm afraid the outlook for values doesn't look good.

As Jeff pointed out, the region needs jobs. Two of the biggest componets of the job Market for our area are Construction and Government Jobs. Poor Jerry Brown, he has to make drastic cuts for the State so there will be sigificant job losses in a sector that historically NEVER suffers from reductions. Since we live in the Capital region, this is going to have substantial impacts on our regional economy. This will damper any hopes for improvement for construction activity.

There was a great article in the Bee just the other day talking about how cuts to States government will hinder any economic recovery.

With Local businesses closing at alarming rates, this means more job losses and less revenues to the City. This means the City of Folsom will be forced to make more cuts, reducing our services and our quality of life.

I'm afraid 2011 will be the year with the greatest number of Foreclosures. This coupled a lack of job growth indicates a continuing decline in Real Esate values for us in 2011.

The Good news is Folsom is still a very desirable community to live in and as prices drop, people from other areas outside of Folsom who are working and have stable jobs, may consider leaving their community to move here, since it may be affordable now for them. It is crucial that the citizens unite and protect our Quality of Life

I was talking to my sister today who lives in Illinois and she told me the projected high on Thursday was going to be 12 degrees Below Zero, just in case anyone is thinking about greener pastures.

[caligirlz]

There were a couple of interesting articles in the Bee yesterday.

1) "Loan modifications elude local homeowners"
http://www.sacbee.com/2011/01/17/3329181/loan-modifications-elude-local.html#disqus_thread

So it looks like the loan mods still aren't working & it is expected that the #'s will be increasing in 2011. I don't know if this is true or not, but one of the commenters said the banks get a fee for every loan mod filed regardless of whether it is approved or not.

2) "Folsom dumps affordable housing mandate"
http://www.sacbee.com/2011/01/17/3329051/folsom-dumps-affordable-housing.html#storylink=omni_popular

I find the comments to be sometimes more informative than the actual article, since they involve perceptions. Some of the commenters from Folsom were saying that Folsom is middle class. My tendency would be to say that Folsom is middle, but more towards the upper-middle class. I think it's a beautiful community, but I do have to agree, that without jobs, or a stronger job market, very few will be able to afford the cost of a home.

I sold my home in Visalia in 2005 at the top of the market to move to Sacramento. I thought I'd be able to turn around & repurchase right away, but I was shocked when I arrived & saw the outrageous prices. Instead, I rented from a friend in East Sac & recently moved to Folsom to be closer to my job. I don't know how stable my job is, since it's in healthcare industry (insurance). I suppose I could return to a "higher-paying" position in acute care so that I can afford a house, but I don't really want to do that with all the added stress. I don't NEED to own a house. Yes, I do PREFER to own, but I don't NEED to own. In 2007/08 I almost made the mistake of buying a condo in Folsom. Once I read the CC&R's, I cancelled & got my deposit back within the week.

I do a lot of reading & have been following local real estate blogs & some of the non-industry blogs (the best, I think is www.thehousingbubbleblog.com) and they have enlightened me on the state of the market. I'll keep watching. I don't know if I will actually stay in Folsom or not, so until I do know, it is prudent to continue to rent.

[SacKen]

I am one of the lucky ones that had a short-sale go fairly smoothly. Even though there were no issues, it still took about three months for the bank to get their act together.

We bought the home for around what it originally sold for in 2002 as a new house. I do think the value will still drop some. Barring some unforeseen event, we plan to raise a family in this house and don't want to move until retirement so we were ok with the potential short-term losses. We felt that the low rates made it worth it. It's hard to beat a 30 year at 4.25%!

I think we had a smooth short sale because we had a knowledgeable agent (MyFolsom's Steve Heard, of course that gave us all the info we needed to make educated decisions. There were other homes that we like, but not all sellers or short-sales are created equal Knowing the little details allowed us to pick the one that was most likely to be successful in a short time, rather than wasting months on another home only to never close the deal and end-up not getting any of the ones we liked. Even though the bank is usually the main player in a short-sale nightmare, I think buyers can avoid it by being realistic and not getting into a deal that looks like it has a high potential for pain.

It does irk me that the sellers probably maxed out their 2nd to buy toys and maybe even another house, then are allowed to just walk away, bag of goodies in hand. I have a family member that just did the same thing. Bought a new house, corvette, Harley, some misc toys, and even spent a month in Maui. All with his HELOC and credit cards. Then he stopped paying his mortgage and credit cards, banked the cash until they came after him, then simply walked away and into his new toy-filled home down the street. His credit score is the only scarring he received.

Far too many foreclosures and short-sales I am aware of seem to be cases like this where people walk away for reasons other than lack of ability to pay their debt. I think one way to help us get out of this mess and create a more solid financial foundation for the country is to change bankruptcy and debt laws so that you can't get away with this type of legal theft.

[Redone]

I'd say the median will be down slightly , but mostly due to higher end corrections. Lower and mid priced homes will still be moving nicely. There is a great deal of pent up demand to move up for those who chose to pay and stay. Once the can become free you'll see a brisk market. 2011 is the year of the buyer and somewhere in the long bottom.

[folsom500]

Prices in Folsom continue to erode and I have seen nothing to suggest that they will not fall further.
I do hope that nothing happens SO50 for many years as I would agree with another poster that it would only erode existing homes prices further in the rest of Folsom.
We are OK in our house as we bought in 2002 and current valuations suggest it is worth about 8% more than we paid. But that is not much.

What really bothers me is the banks that will not modify loans on those that are not totally underwater.
I have a 79 year old friend in the older section of EDH that has lived in his house for 27 years, but has a current mortgage nearly what the house is worth. He has never been late on his payments, but due to income loss, he has been trying for over a year to get B of A to modify his loan to reduce his monthly payment by 20% which is more than a new buyer would be paying monthly at the going rate for one with an over 800 credit score as he has. After BoA saying twice they lost the paperwork , he now has a second denial to modify.
After seeing that Bof was one of the WORST for modifications at barely over 20% ( Bee Article) I am not that surprised. They told him he did not qualify- he asked and they said that he has been making his payments so they would not modify.
Well, as of October last, he decided to stop making the payments and plans to walk away.
One can only do what one can do and when they hit a wall - it is time to make that horrible decision - It should have to be that way- especially at 79 years old with perfect credit and perfect payments that has had a reduced income...
I just say this is really messed up ...

[SacKen]

Prices in Folsom continue to erode and I have seen nothing to suggest that they will not fall further.
...

One thing that I have noticed is that custom home construction has picked-up. The hill near Costco has a handful of homes under construction right now. This is a sign that construction prices have leveled off to a point where people are building again. Contrary to popular belief, mortgage funding from the banks has started to flow again. It started to loosen around last summer. My refinance 6-months before that was a nightmare. My mortgage in September was about the same process as I experienced in 1998, before they started throwing money at people.

What really bothers me is the banks that will not modify loans on those that are not totally underwater.
...

Unless I misread something, it sounds like your friend is one of the ones that could have been in a good spot, but chose to give away his many years of equity, now can't pay for it, and expects the bank to take the loss for his poor financial management choices. That really bothers me.

What other investments or purchases could you make where you would get a future refund for lost value? Even with housing, those that are underwater relative to purchase price, but just happen to still have a mortgage that is lower than the value, don't get a break! I'd love for the bank to give be back some money.