Comments on: 8 people living in a house in Redwood City

By: RWCJim

RWCJim — Fri, 20 Jun 2008 18:39:04 +0000

So, the real story here is probably Illegal Aliens purchase house with no money down, that they can’t actually afford and cram everyone inside.

For $4300 a month they could have rented a house in Emerald Hills.

They probably thought that prices were going to go up and they could make a lot of money.

I don’t buy their sob story for one minute.

By: DreamT

DreamT — Fri, 20 Jun 2008 08:01:07 +0000

sorry, rephrasing last sentence:
Maybe lower inventory in an established neighborhood is a greater sign of worry by the locals, justified or not.
There ought to be a formula combining inventory delta, sales delta and median delta and maybe something else to speculate if the locals are comfortable or worried.

By: DreamT

DreamT — Fri, 20 Jun 2008 07:57:54 +0000

The sellers I was referring to – no idea. But I thought their offer price was consistently rather high (save for one). If they were worried they’d have tried and stayed within the comps from two years past rather than price 5% to 10% higher. Anyway as I said that was just an anecdotal observation.
So how does one interpret inventory down in Campbell, I’m curious? Maybe fewer sales in an established neighborhood is a greater sign of worry by the locals, justified or not.

By: Pralay

Pralay — Fri, 20 Jun 2008 07:44:45 +0000

DreamT,
Inventory up is a good sign provided median price (or dollar per sq-ft) goes up. That was the case in 2003-2004-2005. Now median dropped across the board. What makes sellers comfortable? Are they really comfortable or just worried?

By: DreamT

DreamT — Fri, 20 Jun 2008 07:23:42 +0000

Pralay, anecdotally it can be a good sign if inventory is up. There was only one house for sale in my neighborhood last year. Now four long-time residents so far have placed their house for sale, and they’re going one by one above asking price, bringing local median up (above 2006 prices). So inventory being up is a sign that people are comfortable selling again. So the inventory numbers really should include at least % short sales&foreclosures for better interpretation. Why does it mean that campbell inventory is down, for example, how do we interpret that?
-39% median price at Alum Rock, that’s nasty. Bet that one isn’t done crashing either, what with the meth factories in the hills.

By: Pralay

Pralay — Fri, 20 Jun 2008 07:10:29 +0000

Let’s look at Santa Clara County Report from Realtor Ken Callahan’s website.

Year-Over-Year comparison for month of May:

Campbell: Sale drop 60%, Inventory drop 8%, Median drop 13%
Cupertino: Sale drop 23%, Inventory up 12%, Median up 6%
Milpitas: Sale up 29%, Inventory up 29%, Median drop 23%
MV: Sale drop 13%, Inventory up 45%, Median drop 15%
PA: Sale drop 24%, Inventory up 26%, Median drop 5%
Santa Clara: Sale drop 29%, Inventory up 68%, Median drop 11%
Saratoga: Sale drop 33%, Inventory drop 11%, Median drop 4%
Sunnyvale: Sale up 3%, Inventory up 66%, Median up 1%

Lastly,
Overall San Jose: Sale drop 6%, Inventory up 31%, Median drop 17%
Neighborhood-wise,
Willow Glen: sale drop 40%, Inventory up 12%, Median drop 8%
Evergreen: Sale up 9%, Inventory up 29%, Median drop 18%
Alum Rock: Sale up 85%, Inventory up 38%, Median drop 39%

So, except Campbell and Saratoga, inventory is up across the board.

By: DreamT

DreamT — Fri, 20 Jun 2008 06:59:15 +0000

Frank, I’m not as convinced as you are. maybe the people buying REOs are overbidding because that’s still the cheapest way to get into a specific neighborhood today. Some non-REOs still get multiple offers. Maybe they’re thinking that if they hold 5-10 years it is a good deal. Maybe they plan to sell next year, more REOs will flood the market, and it’ll be their loss. That last scenario certainly occurs, but for how many REOs? REOs aren’t reserved to investors: there are people out there who still buy houses for living in long-term, and I’d wager these are the ones who tend to overbid because they’re more emotionally attached to the purchase than pure investors.

By: Frank Jewett

Frank Jewett — Fri, 20 Jun 2008 06:45:38 +0000

DreamT, I think the people buying REOs right now do think they are making an immediate profit because they are comparing the REO discounted price to the “market price” set by the non-sellers. Why do I think this? Because I’m hearing stories about REOs getting multiple offers (more than 10) and selling for well above asking (more than 10% over).

Here’s my question? If the market is flooded with REOs with more on the way, why overbid by more than 10%? The answer is pretty obvious. Buyers still think they are getting a steal. I bet I know who is reinforcing that perception, too. Like I said, we’ll see if the number of REOs increases and prices fall. No point in calling scoreboard today.

By: R

Fri, 20 Jun 2008 06:37:26 +0000

What site are people using to locate REOs? Is there a site tracking REO data?

By: madhaus

madhaus — Fri, 20 Jun 2008 06:09:01 +0000

I would not consider an appraisal necessarily an accurate depiction of true market activity. The appraiser has to justify the price you paid for the house, so the bank can sign off on the loan. Too many lowball appraisals and the bank won’t rehire. Guess what the appraiser will decide to do.

Every time I refi’d my house, the appraisals were complete bull. They’d use comps from different school districts. They’d just plug in houses from a mile away across the dividing lines. They just picked 3 houses to make the numbers work. They’d pick crappy houses so my house would come in higher. I’m amazed they didn’t try a few places in East Palo Alto as comps.

I’ve refi’d 4 times, so I have 5 appraisals on this one house, not one is worth the market analysis. Plus I’ve also played with rental property (and got out), so I’ve done this in another county, same problem with the appraisals. There is nothing to stop these people from saying anything they want as long as they make your loan fly.