May 21, 2006

‘Own A California Home With 600 Easy Payments!’

The Housing Bubble Blog » ‘Own A California Home With 600 Easy Payments!’
“You, too, can own a home in California, with 600 easy monthly payments! Just get a 50-year mortgage! With any luck, you’ll have paid it off before you die!”

“The 50-year mortgage won’t keep monthly payments very low because it’s not really a 50-year mortgage at all. It’s an adjustable-rate mortgage with a 50-year amortization (meaning it’s paid off after 50 years). The interest rate is fixed for the first five years, then moves up or down thereafter, meaning the monthly payment fluctuates as well.”

“‘The monthly payment on the 50-year mortgage would actually be higher than it would be on the 40-year, because the (higher) interest rate overwhelms the (longer) term,’ Kieth Gumbinger explains. Someone who takes out a 50-year, $300,000 mortgage will repay $300,000 in principal and $714,000 in interest over the life of the loan. That compares to $382,000 in interest for a 30-year fixed-rate loan, and $543,000 in interest for a 40-year fixed-rate.”

Wow… that’s a lot of interest payment! But you have to do what you can to buy a place in the Best Place On Earth(TM).

Click here to post a comment -- Posted by: burbed @ 1:47 pm

What is a Median Home Price ?

Well here’s something to stew over during your Sunday morning coffee…

What is a Median Home Price ? information at the Largest Online Home Improvement and Repair Center.

Changes in median price measure changes in market activity. When there are more buyers buying less expensive homes than there are buyers buying more expensive homes, the median price falls. Conversely, when there are more buyers buying more expensive homes than there are buyers buying less expensive homes, the median price rises.

The median price indicates which price range is most active. Not all price ranges experience the same market activity at any given time.

So, when you read that the median home price increased 6 percent in the last year, this doesn’t necessarily mean that your home increased 6 percent in value. It could have increased more or less in value. Likewise, if the median price were to drop 5 percent, this wouldn’t necessarily mean that home values dropped by 5 percent. In fact, they might have dropped more.

For example, in California, the median sale price of existing single family homes dropped from approximately $202,000 in May of 1989 to about $185,000 in April of 1994. But during that time, the actual market value of homes in some areas of Southern California dropped a whopping 40 percent.

So does that mean prices are falling really rapidly here?

Click here to post a comment -- Posted by: burbed @ 5:00 am

May 13, 2006

Santa Clara's Poverty problem | 05/11/2006 | Study: State is one of poorest in U.S.
Critics have long complained that the federal government uses an outdated formula to calculate the official poverty standard, which determines individual eligibility for welfare and other programs, and is also used by the federal government when it allocates money to state and local agencies.

The formula is based on income levels and the cost of food, but does not take into account housing costs that vary greatly from one region to another, said Deborah Reed, who wrote the PPIC report.

For example, the federal poverty level for a family of four in 2004 was $19,157. But the U.S. Department of Housing and Urban Development estimated that fair market rent for a two-bedroom apartment that year in Santa Clara County was $21,852. That means a family earning $20,000 was above the poverty level, yet potentially homeless.

“There are people living just above the federal poverty level in California who are not doing as well as people who are officially living in poverty in Mississippi and Louisiana,” Reed said.

Using the official federal standard, California has the 15th-highest poverty rate in the country, with 13.3 percent of its residents living below the poverty threshold.

But when Reed adjusted the formula to reflect the cost of housing, California’s poverty rate rose to 16.1 percent. That gave it the third-highest ranking in the country, Reed said — behind only Washington, D.C., and New York.

Using Reed’s calculations, 15 percent of Santa Clara County residents live in poverty, compared with 12 percent nationally.

Wow… I never thought about this. 🙁
I love how people say “Oh, other than the cost of housing, living in the Bay Area isn’t that expensive.”

Does that make sense to you? Isn’t that like saying “Oh, other than the radiation, it’s pretty safe here.”

Click here to post a comment -- Posted by: burbed @ 5:00 am

May 12, 2006

Congratulations to Salinas, Santa Cruz, and Santa Rosa!

The Least Affordable Place to Live? Try Salinas – New York Times
IN 2005, the least-affordable place in the country to live, measured by the percentage of income devoted to mortgage payments, was Salinas, Calif.

The second was the Santa Cruz-Watsonville area of California.

The third? Santa Rosa-Petaluma, Calif.

In fact, California has the distinction of having the 11 least-affordable metropolitan areas in the country. One would need to go all the way down to 12th place — and across the country to the New York region’s northern suburbs — to find a non-California metropolitan area on the least-affordable list of 2005.

Congratulations! And why is California so unaffordable? Is it because it’s the most special place on earth?

Another quintessentially California issue is Proposition 13, the 1978 measure that slashed property taxes by more than 50 percent and ignited a national property tax revolution.

The measure, which was supposed to facilitate home buying, has backfired to some extent; local governments prefer that land be used for retailing rather than housing because they collect more from sales taxes than from property taxes.

“Proposition 13 is a big stop sign saying ‘no housing needed,’ ” said Peter Dreier, professor of public policy at Occidental College in Los Angeles and an author of “Place Matters: Metropolitics for the 21st Century” (University Press of Kansas, 2001). “Every municipality is engaged in a bidding war for retail — they’re battling for Wal-Mart, to keep the libraries open.”

It is unlikely that will change, Professor Dreier and others say, calling Proposition 13 “the third rail of government — it’s untouchable.”

Maybe they can build dual purpose Best Buy’s – stores during the day, houses at night. Then, instead of having a Best Buy every 5 miles (East Palo Alto, Mountain View, Sunnyvale) – we could have one every block. Everyone wins!

Click here to post a comment -- Posted by: burbed @ 5:00 am

May 11, 2006

$697,000 for a meth "super lab" in East Palo Alto

So I saw this article the other day:

EAST PALO ALTO / Hospital setup found during meth lab bust / Medical tools may have been intended for injured criminals
An East Palo Alto home where police found a “super” drug lab last week also housed an elaborate hospital-like operation — stocked with thousands of dollars in medical equipment, surgical tools and supplies — that authorities believe was to be used to treat injured criminals.

The top floor of the Runnymede Street home was filled with “boxes upon boxes upon boxes” of medical supplies and contained a room equipped with a hospital bed, fresh linens, scalpels, IV stands and surgical tools, according to Lt. Tom Alipio of the East Palo Alto police department.

“It was set up just like a hospital room,” said Alipio, who said a second room was in the process of being set up. “We found a kit that a surgeon would use to reassemble a joint — like a hip or a shoulder.”

So I found myself wondering… “Gosh! How much does a meth super lab/hospital cost these days?” Fortunately, with some simple sleuthing, I was able to find the address and this ZEstimate: – xxx Runnymede St, East Palo Alto, CA 94303

Residence: Single family
Bedrooms: 2
Baths: 1.0
Total rooms: 5.0
# Stories:
Sq ft: 760
Lot size: 18,768 sq ft / 0.43 acres
Year built: 1935

Hey! Wow… 760 sqft sounds small. Fortunately, the article provides more details…

Alipio, who said the items appeared to have been stockpiled to treat gunshot or chemical wounds, said everything appeared brand-new, but he couldn’t be sure if the room had been used to treat any patients.

Alipio said he was stunned by the sheer volume of the items, which he said would fill a semi-trailer truck.

“This goes above and beyond the taking of a garbage bag or a bottle of soap,” said Alipio.

Investigators said wounded criminals could use such a place to avoid going to regular hospitals, which are required to report suspected criminals to authorities.

The room and supplies were discovered in the upstairs front unit of a house that had been divided into three units and also contained a drug lab that had been fortified with concrete cinder blocks, steel doors and metal bars. The entire property had been wired with an elaborate security camera system that police said was not being monitored at the time of the raid.

A single mother of five young children had been living in the back of the home at the time of the raid but was not connected to the drug operation, police said.

Hey! That sounds like a lot of livable space! And its prewired for security! Keep your eye out for this jewel when it shows up in court. Could be a good buy!

Click here to post a comment -- Posted by: burbed @ 5:00 am

May 10, 2006

Nation's Highest Median Income: Santa Clara at $97,100

Region’s median income on the rise – Sacramento Business Journal:
Median family income rose 3.15 percent over the past year in the Sacramento area, based on Department of Housing and Urban Development figures for 2006.

Median family income for the Sacramento Metropolitan Statistical Area is $65,400, up from $63,400 in HUD’s 2005 estimates.

The median means that half the households in the region make more and half make less.

The highest median-income metropolitan area in the country is San Jose-Sunnyvale-Santa Clara, with a median income of $97,100, up 3.4 percent from the previous year. The second highest in the country was Bridgeport-Stamford, Conn. which had a median income of $95,900.

The median income in San Francisco-San Mateo-Redwood City was $91,200. Santa Barbara-Santa Maria’s median income is $65,800. The median in San Diego-Carlsbad-San Marcos was $64,900.

Wow… a median income of $97,100. No wonder real estate is so expensive. Maybe prices will never fall!

Click here to post a comment -- Posted by: burbed @ 5:41 pm

Debt! It’s better than working!

I keep seeing that real wages have held steady or have fallen in the last few years – yet people are living better than ever. What’s going on? Where is this money coming from (when not from Asia, anyway)?

Sonoma Housing Bubble
“A decade ago, I remember my mother telling me that after nearly 20 years of residing in their home, which my father had designed and built for about $75,000, my parents had a mortgage of over $500,000.”

“What happened?” I asked my mother disapprovingly.
She waved my concerns aside. “This house is a bank,” she said. “We’ll never pay it off.”
A bank?

“After that, I could never think about our lives in quite the same light. My parents were self-made. They were from poor, working-class families with five and eight siblings, and had put themselves through college, worked hard, and never got a dime from any parent or grandparent, dead or alive.”

“But suddenly I realized that their college educations and hard work might not have been enough to cover certain … luxuries.”


“Lynn Ruth Miller, who bought her Pacifica home for $97,000 in 1985, is living on the equity from her house and investing part of that money to get earned income.”

“I could not survive if I didn’t do that because my fixed income is $720-plus a month,” she wrote. “Because of the rise in property values I am living very comfortably and could not possibly pay my bills otherwise.”

“Some even factor the monthly payments of the equity line into the equation. My mortgage broker, Michael Simmons, once had a client who took out a $500,000 equity line to pay for her elderly mother’s home care and the monthly payments of the equity line itself.”

“Geoff Caldwell of San Francisco, used an equity line to avoid expensive dormitory fees, by buying a house for his daughter to live in during college.”

Edward Malouf of Novato funded a condo for his son. “We paid all cash for it, and our son made every payment, as agreed,” he explained. “Because of this, we allowed him to keep the appreciation when he sold the condo, so he could buy a larger, three-bedroom one.”

“Equity lines and second mortgages haven’t always played such an integral role in American life. In the old days, taking out a second mortgage or an equity line had a certain stigma attached.
“It meant you were the sort of person who couldn’t pay your bills — that you were living above your means,” Simmons explained. But over the past 20 years, he’s seen things change.”

Indeed, treating the home as a bank has grown naturally out of a sea change in our attitudes about debt. Once, credit cards also carried a stigma; now they are ubiquitous in all classes of society. As more and more people began to pay exorbitant credit card interest rates, equity lines — with their relatively low interest rates — suddenly looked downright practical.


“Say you have a house that’s worth $1.3 million. Is it a reasonable expectation that you’ll ever pay it off? Probably not. The most people hope for is that someday they’ll sell it for a profit or leave it to the kids, who might have to sell it but will maybe make a little money.”


Ten years ago I was horrified by my parent’s use of our family home as a source of cash, but now I see things differently. Would it have been better to have paid off the house and lived mortgage free? Maybe. But going that route would surely have meant curtailing their choices earlier — never giving their kids college tuition, or working extremely long hours, or having to get corporate jobs instead of working for themselves.

Oh crud… this is what my mortgage broker friend has been telling me for a while. I guess I was all wrong after all.

Click here to post a comment -- Posted by: burbed @ 5:00 am

May 8, 2006

Shocker! Selling houses means doing work!!

The Housing Bubble Blog
“Jamie Granada, a real-estate agent in Stockton, is relatively new to the field, launching her new career in January. ‘Now you actually have to work hard to sell,’ she said. ‘It’s to my advantage to be new.’ Buyers know it’s a buyer’s market, she said. ‘They’re in the looky-loo mood, trying to see what kind of deal they can get,’ she said.”

“Dale Gray, CEO for the Central Valley Association of Realtors, said that not only are most sellers shocked by this slower market, so are many real-estate agents. ‘You can’t just throw in on the wall and know you’ll get multiple offers in a few days,’ he said.”

Wow, I bet these people had their reality totally shattered. What? Selling a house means actually doing work to get paid?

Will Real Estate Agents start to have bumper stickers that say “Please, just one more bubble!” as well?

Click here to post a comment -- Posted by: burbed @ 10:28 pm

May 2, 2006

Tips for Living with Liquefaction

So you live in a place where the median house is $740,000. In some parts of the country (like that expensive “New York” place), you’d get a 4 bedroom house with a great school district. Here, you get sunshine and termites. Oh… and Liquefaction!

ABAG Tips for Living with Liquefaction
ABAG Tips for Living With Liquefaction

Did You Know? – Areas with moderate to very high LIQUEFACTION susceptibility have many more water and natural gas pipeline leaks in earthquakes.
Do you have a 3 – 5 day supply of drinking water for your family?
Do you know how to turn off your natural gas if you smell a leak?
Think about installing a gas shut-off device!

Did You Know? – Areas with moderate to very high LIQUEFACTION susceptibility have many more buckled roads in earthquakes.
Do you have a 3 – 5 day supply of food and medications for your family?
Do you keep walking shoes at work?
Does your child’s school have a list of others authorized to pick them up if you are delayed?
Do you have back-up plans for feeding and safety of pets?

Did You Know? – The Port of Kobe, Japan, handles over 10 times the cargo of Oakland. LIQUEFACTION caused major damage in a 1995 earthquake. After 3 years, 10 – 15% of business had still not returned to the Port of Kobe.
Plan other ways to get your products to other parts of the country!

I bolded the last sentence – because of its sheer ridiculousness. How can one even think of going to another part of the country?! Absurd!

Besides, everyone knows that Liquefaction means higher house prices.

Click here to post a comment -- Posted by: burbed @ 4:00 am

April 30, 2006

The new American Dream: Eternal Debt

My mortgage broker friend swears to me that this is normal – that not ever paying off a mortgage is the new hotness and that it is what everyone else is doing. I guess keeping up with the Joneses means eternal servitude to Wells Fargo. | 04/30/2006 | Homeownership a struggle for many
Homeownership’s advantages, such as tax credits and rising home values, mean people can increase their loan value and have extra cash on hand for other expenses.

“In some way, you say that’s someone owns a home they can’t really afford, but it’s an investment, it’s making money for them,” Lawson said. “It’s a big asset, it’s a big chunk of money that keeps going up every year.”

For some consumers, homeownership is as likely an option as winning the lottery.

“In California, the starter home market has really disappeared,” said Tamara Draut, author of “Strapped: Why America’s 20- and 30-Somethings Can’t Get Ahead.”

Younger adults are struggling to make ends meet, Draut said, because many have student loans and start with low wages, which make it hard for them to save and build wealth.

“Definitely, this generation has resigned itself to live in debt to live in a middle-class lifestyle,” she said. Many consumers are comfortable with debt, but too much debt leaves people vulnerable, living paycheck to paycheck.

Some homeowners take advantage of rising property values to take on more debt and use the influx of cash to pay other debts, such as credit cards.

“The market keeps bailing people out of trouble,” Lawson said. “Because people don’t really get in too bad of position, they never really learn the lesson, and a year later they turn around and get themselves in the exact same spot.”


Deborah Bennett considers herself lucky — she bought her home in Pleasanton years ago, and her career as a computer scientist has provided steady, well-paid work.

The 59-year-old said she goes on the vacations she wants and buys what she wants.

“I feel sorry for the people who (are) just coming in,” Bennett said. “I have lived here since ’68.”

This isn’t surprising though – the California real estate is designed to as a massive transfer of wealth (meaning: future earnings) to the previous generation. Case in point? Prop 13.

(Thanks to Marin Real Estate Bubble for this find.)

Comments (3) -- Posted by: burbed @ 2:42 pm