Bay Area Real Estate appreciation set to resume 10%!
Did you see this?
Stop the presses everyone.
OMG.
At last! Mortgage rate relief arrives - San Jose Mercury News
Months after many eager homeowners started gearing up to refinance their mortgages, interest rates for Bay Area-size mortgages are finally falling.Lower rates may at last bring the savings many owners and would-be home buyers have been looking for since February, when Congress passed an economic stimulus bill that aimed to deliver lower rates on mortgages of up to $729,750 in high-priced parts of the country.
Borrowers who last week would have been quoted a 7 percent rate for a 30-year mortgage of $500,000 could find a rate of about 6 percent on that loan by Friday. That difference could save a homeowner more than $300 a month on mortgage payments.
“People have been waiting for this to happen ever since they signed it,” said Susan McHan, president of Opes Advisors, a mortgage brokerage in Palo Alto, referring to the stimulus bill.
[snip]
But until last week, rates for loans of more than $417,000 remained stubbornly high at about 7 percent. Meanwhile, rates for loans of $417,000 or less have been hovering around 6 percent. The gap between rates for conforming loans and jumbo loans has been stuck at about a full percentage point since the credit crunch struck in the summer last year.
What happened to finally push down rates for jumbo-conforming loans? Fannie Mae Chief Executive Daniel Mudd announced last week that the company will purchase jumbo-conforming loans from lenders using essentially the same pricing structure it uses for conforming loans. Freddie Mac has done the same.
“That brought a lot of certainty to what had been a very cloudy picture,” said Greg McBride of Bankrate.com, a financial information company. With more clarity about how Fannie and Freddie would handle their loans, lenders began dropping rates for jumbo conforming loans last week.
“There are decent loans again,” McHan said, “and it’s the first time in a long time.”
In another effort to spur home buying, Fannie Mae announced Friday that it would back loans made with as little as a 3 percent down payment, even in markets where prices are declining.
Didn’t buy a house in the Real Bay Area this year so far? Or even in the Marginally Real Bay Area?
Guess what!
You’re now priced out forever.
May 18th, 2008 at 11:07 am
Yesterday I drove by a huge encampment of homeless waiting to recycle their cans over in Noe Valley. I also saw a bunch of bums sleeping in Esprit Park next to a million dollar condominium project. I’m starting to think it might be a good idea to join them.. why.. for zero down $0 a month I can have my place in Noe Valley too, I might even be able to build equity from can recycling and the occasional coin in my coffee cup!
May 18th, 2008 at 11:37 am
Damn! In the end Fannie Mae has to rescue RBA housing market by backing up 3% down payment! I thought RBA residents are wealthy and sitting on tons of stock options!
May 18th, 2008 at 12:26 pm
Hey, folks, there is no floor to greed. Our government is desperate to prop up Wall Street, and we will all pay until we clean out Congress and start over, but Americans do not wish to contemplate responsible government as long as they can still drive their SUVs and delude themselves that they’ll all get a piece of the pie someday.
May 18th, 2008 at 3:48 pm
buckborden, SUV sales have crashed and people trying to get out of them are finding that the blue book values aren’t being heeded when they trade them in.
Kind of like property in
StocktonGilroyMilpitasSanta ClaraRedwood CitySunnyvale 94086Mountain View 94043Willow Glen…Coming Soon to a former RBA lot next door!May 18th, 2008 at 7:40 pm
Madhaus, I’m not disagreeing. Prices are plunging everywhere and will until normalcy prevails or when every dumb American, rich and poor, is bankrupt and broke (except those of us few intelligent ones left who don’t borrow and who don’t need everything the marketers tell us we do, including an overpriced house). I’ll stick to renting for the long term. One payment every month, zero taxes, zero bills, zero hassle, small life, immense happiness with zero attachments. Homeownership is vastly overrated, and I speak from experience.
May 19th, 2008 at 7:57 am
This article is making a HUGE deal out of a whole lot of NOTHING. a 1% cut in the rate and a savings of $300? That isn’t going to do one bit of good or make any kind of difference.
May 19th, 2008 at 3:08 pm
This article is making a HUGE deal out of a whole lot of NOTHING. a 1% cut in the rate and a savings of $300? That isn’t going to do one bit of good or make any kind of difference.
Au contraire, mon ami! That’s $3600 a year! Why that’s $100,800 that won’t go to those blood-sucking banks! That does it! I’m going to buy 60 acres in Woodside!
May 20th, 2008 at 8:56 am
>>SUV sales have crashed and people trying to get out of them are finding that the blue book values aren’t being heeded when they trade them in.
Madhaus,
You really don’t know how to play the economics game, do you? Now is the best time to drive a SUV. You can go into a dealership can get a whopping deal. The money you save will keep you filled up for years. Besides, if you live in the real Bay Area, the commute isn’t very long anyways.
The other thing a smart investor should be doing is investing in the oil companies. I got in a few months ago, and have been cheering high oil prices ever since.
May 20th, 2008 at 9:20 am
The other thing a smart investor should be doing is investing in the oil companies. I got in a few months ago, and have been cheering high oil prices ever since.
————-
I am curious what kind of portfolio you have, RE. Because I have some investments in energy sector and their returns are moderate - not something to cheer about. Do you have investments in other sectors (other than energy)? How are they doing compare to energy sector?
May 20th, 2008 at 10:31 am
bob Says: This article is making a HUGE deal out of a whole lot of NOTHING. a 1% cut in the rate and a savings of $300? That isn’t going to do one bit of good or make any kind of difference.
1% is a big deal. The fact that it happened literally overnight is also noteworthy. 1% drop on a 700,000 loan is about $450/mo, or a 10% discount. If home prices dropped 10% overnight, would that be a big deal?
Real Estater Says:
The other thing a smart investor should be doing is investing in the oil companies. I got in a few months ago, and have been cheering high oil prices ever since.
Hmm, isn’t that a few years late to the party? Smart investors bought energy 5 years ago. It’s been averaging 35%/yr for 5 years. Buying anything at all time high should be done with caution.
May 20th, 2008 at 10:32 am
Pralay,
On March 31st, I bought VGENX. You can check the return for yourself. In the past 12 months, the fund returned 25%. In the past 5 years, it returned 32%.
I really should start charging you for my advice, but then again you might start name-calling me a stock broker.
May 20th, 2008 at 10:37 am
>>It’s been averaging 35%/yr for 5 years. Buying anything at all time high should be done with caution.
Island Boy,
That’s true. Equities is risky compared to real estate. However, I think the energy sector should perform well throughout the summer driving season.
May 20th, 2008 at 10:41 am
On March 31st, I bought VGENX. You can check the return for yourself. In the past 12 months, the fund returned 25%. In the past 5 years, it returned 32%.
———–
How is your portfolio in general? Is it all energy sector?
May 20th, 2008 at 11:50 am
>>How is your portfolio in general? Is it all energy sector?
If you want more info, I need to start charging you.
May 20th, 2008 at 11:54 am
RE,
I am not interested in real estate. But certainly I would like to hear about stock market, because that’s where my main focus is. I would like to know people’s portfolio who are currently making money in stock market. It looks like you are the guy.
May 20th, 2008 at 6:32 pm
RE, would you charge me as well for a glimpse of your portfolio, or only Pralay because you two have feelings for each other? I want to get into stocks and you sure sound like a real professional, whereas I am not even worthy of contempt just yet (but planning to be an amateur soon).
May 20th, 2008 at 8:02 pm
RE, would you charge me as well for a glimpse of your portfolio, or only Pralay because you two have feelings for each other?
DreamT, what’s in RE’s portfolio can now be revealed:
- 10 shares K&B
- 200 shares Pets.com
- 5 shares Cisco (bought in September, 2000)
- 10% investors share in condo in Hercules
- 8% equity in actual house in Gilroy (paid 20% down, no wonder)
- 53 cents under the couch cushions
- 200 38 cent postage stamps
- $50 US Series EE Savings Bond, matures in 2015
- 4300 S&H Green Stamps
- 172 Pokemon cards, including rare Wailord
- $21.72 in wallet
- Another $1.06 under the drivers seat of the
- 1973 Chevy Nova
May 20th, 2008 at 9:22 pm
madhaus -
If only burbed had set up his site 5 years ago! We would all be holding pokemon cards now instead of being priced out forever. O tempora! O mores!
May 20th, 2008 at 10:25 pm
>>RE, would you charge me as well for a glimpse of your portfolio, or only Pralay because you two have feelings for each other? I want to get into stocks and you sure sound like a real professional
DreamT,
I’ll be the first to tell you I am not a stock pro. Stock is side-show for me, and most of my actions are traded within my 401K and IRA accounts to avoid paying taxes. My portfolio is currently heavily biased toward energy and emerging markets, with only about a quarter exposed to U.S. stocks through managed funds.
On the taxable side, I have a portfolio of tech stocks, including a small stake in Yahoo. The Yahoo play is just another example of “follow the money”, “be where the billionaires are”, rather than any technical analysis.
May 20th, 2008 at 10:30 pm
>>But certainly I would like to hear about stock market, because that’s where my main focus is.
My advise is, don’t focus there. After a lot of work, uncle Sam will take away any winnings you have, and the Arnold will take another cut.
May 20th, 2008 at 11:02 pm
RE,
sarcasm aside, I really do believe that both real estate and stocks hold great opportunity for the discerning eye right now. I cannot comment on your allocation choices, my personal tendency is to avoid US holdings and seek small cap/international growth. The problem with stocks is that it’s often the most unethical industries that have the most growth, and I’m not old enough to get over that. I do know that contrarians beat the market, but when you know enough about an industry you can be right and not a contrarian anymore… in short in my opinion stock investment is a knowldedge- and research- intensive game, much more so than real estate which mostly requires patience and common sense.
May 20th, 2008 at 11:28 pm
My portfolio is currently heavily biased toward energy and emerging markets, with only about a quarter exposed to U.S. stocks through managed funds.
On the taxable side, I have a portfolio of tech stocks, including a small stake in Yahoo. The Yahoo play is just another example of “follow the money”, “be where the billionaires are”, rather than any technical analysis.
——–
Sorry RealEstater, that was just a trick question.
Because I did remember what you said on March 14 and I was under impression you have “liquidated large portions of stock holdings in Jan, and have mostly cash position at this time“. I understand that comment was made immediately after Bear Stearns collapse. He he! 
May 20th, 2008 at 11:31 pm
DreamT,
I’m all for knowledge and research, but I’m a result oriented guy. If at the end of the day, the reward of my risk taking is to be donated to fight the war in Iraq, I’m not interested.
Many people are interested in playing stocks, since there’s no barrier to entry (unlike real estate), but I’ve been there, done that. I have a good chunk of stock options, but over half of that money went to the government — 50% taken right off the bat, plus the entire amount gets added to my income, causing me to pay both Fed and State at the highest tax bracket, then AMT gets added. With the amount of taxes I paid, I could’ve bought a pretty decent condo. That’s why I have very little appetite for stocks.
May 20th, 2008 at 11:35 pm
>>I was under impression you have “liquidated large portions of stock holdings in Jan, and have mostly cash position at this time“.
That’s absolutely true. As I explained, my energy holdings are done within my 401K/IRA, which is not part of my regular stock holdings.
May 20th, 2008 at 11:38 pm
10 shares K&B
- 200 shares Pets.com
…..
…..
- $21.72 in wallet
- Another $1.06 under the drivers seat of the
- 1973 Chevy Nova
———–
Madhaus,
You are talking about pre-January portfolio. He liquidated large portion of it already in January and moved to cash mode. Then he bought VGENX and Yahoo stocks. That’s heck of a portfolio, reshuffled faster than anything else.
I love the way he makes thing up as he goes.
I would be waiting for next level of entertainment: how March 14 comment is consistent with todays comment. Ha ha!
May 20th, 2008 at 11:39 pm
RE,
I am personally able to separate money going to taxes with government use of tax money - they are policed by separate laws & regulations - so I do not condone negative opinions about taxing based on its use. However I am right with you about inappropriate taxing regulations on stock holdings, and more than knowledge & research, that’s what has been holding me back so far.
If I had enough $$ for a condo downpayment (assuming I already have a house), I wager the best use would be for me to step out of work for a year or so and kickstart a startup, rather than buy into real estate or stocks. Ever thought about that?
May 20th, 2008 at 11:56 pm
>>I love the way he makes thing up as he goes.
Like everything else I’ve been saying there, it’s always been shown to be the truth one way or another. You can try to make up stories (e.g. I’m not a tech guy, but a realtor), but the record here shows that you always end up being the loser.
Where’s the inconsistency? I sold a bunch of stocks in Jan. What’s left of it is a small stake in Yahoo and some tech stocks. The 401K money is a different bucket altogether. How can the cash generated out of my stock sale go into my 401K to buy energy? Do you have any basic knowledge of 401K and IRA?
May 20th, 2008 at 11:59 pm
>>If I had enough $$ for a condo downpayment (assuming I already have a house), I wager the best use would be for me to step out of work for a year or so and kickstart a startup, rather than buy into real estate or stocks. Ever thought about that?
No way. Do you know the burn rate of a startup? Your money will disappear in no time.
May 21st, 2008 at 12:03 am
RE -
burn rate? I was talking about producing value yourself, not investing into some statistics. You must have that recent American disease - leverage others’ work and mistakes to produce gain, rather than produce value yourself. And you must miss that old American trait - optimism.
May 21st, 2008 at 12:09 am
DreamT,
I prefer to work for somebody else, and deliver value through my work. If you have a problem with that, you have a problem with most everyone here.
May 21st, 2008 at 12:13 am
RE- that was quite a twisted statement. I can see Pralay’s point about you.
My quote:”I was talking about producing value yourself, not investing into some statistics”
Your quote:”I prefer to [...] deliver value through my work.”
Not only there is no contradiction whatsoever, but you’re sidestepping the issue about investing your hard-earned cash. Poorly done, RE.
May 21st, 2008 at 12:32 am
DreamT,
You asked me about delivering value. I answered you in that regard. Investment is a separate matter. The purpose of investment is to earn a return (If you look up the dictionary that’s exactly what it says). What am I trying to twist?
May 21st, 2008 at 12:33 am
>>You must have that recent American disease - leverage others’ work and mistakes to produce gain, rather than produce value yourself.
That’s the mentality of guys like Pralay and Madhaus, who are hoping the market to crash, so they can scoop up some benefit. Isn’t my position the exact opposite?
May 21st, 2008 at 12:49 am
RE - OK, as a manager I see added value and return on investment as the same thing, not separate matters. Working for a company is value you add through your work, and you are an investment as a (typically costly) resource for the company.
You’ll disagree because you’ll say that return on investment is disconnected from actual value due to groupthink and market irrationals, and you’ll be right.
However my statement applied to energy one would furnish alone, where the burn rate of sales, marketing & advertising does not apply yet - this would be postponed until the product is completed and funding is sought from VCs. So in that sense, the value you add and the $$ investment you make in yourself is equivalent up to the time you meet with the VCs. Note that I haven’t been through this personally so my statements may not be realistic. Hope that clarifies my statement.
May 21st, 2008 at 8:37 am
Great news! Oil hits $132.
May 21st, 2008 at 8:52 am
DreamT,
Are you saying investing produces no value? Why do we need a stock market then? Isn’t the purpose of raising money through stock offering to allow companies to develop more products and services? Do you not see the underlying value there? Can you not tell the difference between Wall Street and Las Vegas?
May 21st, 2008 at 8:58 am
RE - I said there is a disconnect (as in not a linear correlation), not that there is no value. Go get coffee.
May 21st, 2008 at 4:00 pm
DreamT. Please stop feeding the troll.
May 22nd, 2008 at 7:49 pm
madhaus - just having fun, the thread is dead so who cares?:)
May 22nd, 2008 at 11:05 pm
DreamT, once you feed the troll, it will follow you home to current threads and demand to be fed there too. Are you willing to care for the troll every single day? Why don’t you just release it at that park in Cambrian where you found it?
May 22nd, 2008 at 11:40 pm
madhaus - No I don’t care much for feeding this particular one on an ongoing basis. Some answers are too hypocritical for my taste, although some of his postings I admit I agree with. But thanks for your concern.