WSJ.com – For-Sale Signs Multiply Across U.S.
Conditions can vary considerably within a metropolitan area and among different types of housing. Sherry Chris, chief operating officer of Prudential California Realty, says condo prices in downtown San Francisco are about level with a year ago because new buildings have helped supply catch up with demand. Overall, the number of homes on the market in the Bay Area has more than doubled from a year earlier.

But in the suburb of Palo Alto, where the median home price is nearly $1.4 million, the inventory of homes has declined 2% from a year ago. Ms. Chris says she believes that reflects lots of hiring by Google Inc. and other technology firms.

What would we do without Google!

Finally! A house that’s priced appropriately in San Jose:

MLSlistings Property Detail for MLS number 639572
16 ARLETA AV
San Jose, CA 95128

$55,900

This Single Family Residence has the following features:
MLS#: 639572 Approx Age: 67 Years Approx Sq Ft: 773

What? It’s a mistake? Oh come on – the  Ford pickup truck is larger than the friggin house!

MONEY Magazine: Best places to live 2006: Top 25 Pricey homes
Pricey homes / Home appreciation
Here are the cities with the highest median home price.
Rank City Median home
sale price 2005
1 Newport Beach, CA $1,362,500
2 Greenwich, CT $1,129,000
3 Santa Barbara, CA $979,500
4 Palo Alto, CA $929,000
5 Cupertino, CA $880,000
6 Goleta, CA $870,000
7 San Clemente, CA $848,500
8 Bethesda, MD $790,000
9 Pleasanton, CA $785,000
10 Santa Monica, CA $784,000
11 Redondo Beach, CA $777,500
12 Redwood City, CA $767,500
13 San Francisco, CA $755,000
14 Yorba Linda, CA $750,000
15 San Rafael, CA $745,000

Congrats to Palo Alto and Cupertino!

The Housing Bubble Blog » ‘The Unstoppable Ascent Has Stopped’ In San Diego
“San Diego had the wildest run-up among major California cities. The boom was stoked by cheap loans, changes in tax law, creative financing and a generalized mania that fed upon itself. The market also began to fade first in San Diego. Whatever happens here, optimists and pessimists agree, will happen later in the rest of the state.”

“At a sales office in the Ocean Beach neighborhood, broker David Davis said the market had already bottomed out. ‘Our No. 1 industry is now tourism,’ Davis said. ‘Unless they take away the sun, we’ll be fine.’”

“If Davis radiates cheer, the fliers taped to the window outside the office door tell a different story. ‘Huge Price Reduction,’ one says. Another says both ‘Reduced’ and ‘$15,000 Credit.’”

“In some cases, the prices are dropping faster than the fliers can be reprinted. A two-bedroom town home has its price of $324,900 crossed out with a marking pen, replaced by $309,900. Another house, a four-bedroom in suburban La Mesa, has a printed price of $575,000. Below that is handwritten $549,000. Scribbled below that is a new minimum: $499,000.”

This will never happen in the Bay Area. Two reasons:

1) The Bay Area is special.

2) They’re not making any more land.

This showed up in the comments recently:

Keep Eyes Fixed on Your Variable-Rate Mortgage – New York Times — Burbed.com: Your Silicon Valley Home and Mortgage Insanity Blog
My name is Steven Krystofiak, President of the Mortgage Brokers Association for Responsible Lending. www.mbarl.org I have a letter in a word document form that highlights the risks of the current loan industry unrealized by regulators and economists alike, mainly due to stated income loans.
Email me at contact@mbarl.org if you want me to send you a copy.

~ Steve Krystofiak
13 main points in the letter are;
1. Stated income loans are associated with fraud, and started to become popular in 2002.
2. Banks originate these loans because they are profitable and then sell them to reduce their risk.
3. Fraud is encouraged by the banks
4. Stated income loans help no one.
5. Exotic loans originated with stated income are now causing foreclosures or forcing homeowners to refinance into negatively amortized loans.
6. Stated income loans are why home prices have skyrocketed. They have caused a large demand in the US housing supply.
7. Banks have sold their loans and have already made their profit. Investors will soon realize stated income loans are too risky and stop purchasing them.
8. Almost anyone can get a stated income loan for $950,000.
9. Stated income loans cost consumers hundreds of dollars a year because of higher interest rates.
10. Stated income loans allow tax cheats to purchase homes easier.
11. Stated income loans are not always faster than fully documented loans.
12. Appraised values are often inflated. Underwriters are basing their decision on inflated home values, inflated incomes and inflated assets. The only “real” number is the FICO (credit) score. This is why underwriters have become focused on FICO scores.
13. Rules are not enough, they must be enforced.

Very interesting. To be honest, I didn’t know that much about stated loans – and now I do. Thanks for writing in, Steve.

Keep Eyes Fixed on Your Variable-Rate Mortgage – New York Times

Someone now paying $350 a month for a $100,000 interest-only loan could be facing payments of $680 both because of the shift to the higher rate and because the borrower would have to start paying off the principal as well as the interest.

“You need a couple of good pay raises in order to afford it,” said Mark Fleming, chief economist with CoreLogic, which develops risk models for the mortgage lenders. “It’s pretty hard to deal with a payment shock of 80 percent or 90 percent,” he said.

The mortgage industry is not worried about payment shock. Why?

“It offers an opportunity,” said Brad Brunts, managing director of portfolio management at Citi Mortgage, a unit of Citigroup.

He, like others in the mortgage industry, sees the higher payments as a boost to the flagging mortgage refinancing business. Lenders will adjust about $500 billion in mortgages this year and $700 billion next year, according to Freddie Mac, the quasi-government agency that repackages mortgages for investors. Expect to find the mailbox stuffed with refinancing offers.

Oh great. That explains the recent explosion of SPAM in my inbox for refi offers.

As an aside, does anyone actually have a $100,000 mortgage? What the heck?

Property values (still) point up?
Front page headline read:
“Property values point up” followed by a sub-headline:
“ASSESSED VALUES INDICATE VALLEY ECONOMY RALLYING”

First of all, “Assessed values indicate valley economy rallying”?

So it’s true? Real estate is now the bellwether of the Silicon Valley economy? Not the NASDAQ? Not VC funding? Not IPOs? Not even Google, but real estate??? Apparently, we missed the memo…

Or maybe it’s just that all the traditional Silicon Valley measures benefited so few residents during the recently-alleged “boom” that real estate is the cheerleaders’ chosen platform to keep us in line, waiting for the next big pay day.

Uh oh… sounds like someone’s not a fan of the Merc.

How would you measure the health of Silicon Valley?

MLSlistings Property Detail for MLS number 638455
2164 POPLAR AV
East Palo Alto, CA 94303

$529,000

This Single Family Residence has the following features:
MLS#: 638455 Approx Age: Unavailable Approx Sq Ft: 480
Detached Single Family 1 Story Cottage/Bungalow
3 Bedrooms Ground Floor Bedroom 2 Bathrooms
1 Stall Shower Eat in Kitchen Electric Heat
City/Public Water Lot: 1 to 4,500 Sq Ft Free Standing Range/Oven

Wow… that’s over $1,102 per square foot in East Palo Alto. I guess the good part about this house is that when you put up the chain-link fence with
razor wire on top, you don’t have to spend so much. Plus, how much can you be burglarized when your house is only 480 square feet?

Article: Money – Refi loans could prove costly in foreclosure
Homeowners behind in their mortgage payments after hocking the house to pay for a major remodel or a new boat or car may be in for a rude awakening.

If they previously refinanced and their lender decides to foreclose, they may not only lose their house, but the bank also may be able to go after their other financial assets including stocks, savings and their paycheck.

And even if the bank doesn’t go after their other assets, a foreclosure may mean a big tax bill from the IRS and state Franchise Tax Board for any shortfall between what the bank gets for the sale of the owner’s home and the value of the loan.

[snip]

In the past, when a lender foreclosed, the homeowner usually still had the original loan they got when they purchased the house. Original loans, considered purchase money, are non-recourse loans that limit lenders to recovering only what they can get when they sell the house. They can’t go after the owner to pay any difference between the foreclosure sales price and the loan balance.

But in California, refinanced loans, second trust deeds and home equity lines of credit are generally considered recourse loans. In these cases, a lender can file suit and go after almost any of the borrower’s assets once they obtain a court judgment.

“They can literally go after everything you have,” Hall says.

There are a few limited exceptions. Retirement accounts are excluded, and declaring bankruptcy could protect some homeowners.

Interesting times lie ahead!  I guess the lesson is to put as much money as you can into your retirement accounts!

MLSlistings Property Detail for MLS number 616552
73 N 25TH ST
San Jose, CA 95116

$586,000

This Single Family Residence has the following features:
MLS#: 616552 Approx Age: 74 Years Approx Sq Ft: 780
Detached Single Family 1 Story Spanish

If you bought this house, would you hope for an earthquake to level it?