December 14, 2013

Priced Out For-EVEH AGAIN!

Don’t look now, but the FHA just swiftly kicked California in the housing numb…ers.

Housing Agency Will Reduce Mortgage-Loan Limits

FHA will drop the maximum mortgage loan it will guarantee next month

131213-mortgageBy NICK TIMIRAOS, Wall Street Journal, Dec. 6, 2013 5:17 p.m. ET

The Federal Housing Administration will drop the maximum size of home-mortgage loans that it will guarantee beginning next month in nearly 650 counties, the agency said Friday.

The maximum for single-family homes in certain "high-cost" housing markets including Los Angeles, San Francisco and New York will fall to $625,500, from the current level of $729,750.

The FHA doesn’t make mortgages but instead insures lenders against defaults on loans that meet its standards. It allows borrowers to make down payments of just 3.5% and has played an outsized role backstopping mortgages in the aftermath of the housing bust.

You just know those New York and DC types are behind this, trying to harsh our mellow, and kill our housing price leadership.

131213-fhaWell, we just have one thing to say to that: PTHTHBBBT.  That’s not going to hurt us here where the Engines of Creativity run 24/7/365.25.  No FHA mortgage backstop means everyone has to put 20% down on their above-$625,000 loans.  But so what?  Everyone here has a brazillion stock options and can buy houses for cash found under their Tesla Model S seat cushions! You know who that’s going to hurt, instead?

Los Angeles.  Moohahahahaha!  Look at the reaction by the California Association of Realtards, who are terrified of county median values resetting downward.  Of course, in the Real Bay Area, prices continue to only go upwards.

And as this is the first Weekend Open Thread we’ve provided in a while, feel free to comment on government housing issues, why SoCal’s housing market sucks compared to ours, or anything on your mind.

Comments (7) -- Posted by: madhaus @ 7:03 am






August 25, 2013

You are SO priced out forever

Haven’t bought a house yet? Here’s some cheery news proving you waited too long.

Freddie Mac: 30-year mortgage jumps to 4.58%, highest in 2 years

130824-lat-builderBy E. Scott Reckard, Los Angeles Times
August 22, 2013, 10:59 a.m.

Fixed mortgage rates jumped again this week, with Freddie Mac‘s widely watched survey saying lenders were offering 30-year home loans at an average of 4.58%.

That was up from 4.4% last week and the highest rate Freddie has reported in two years.

Freddie Mac reported Thursday that the average for the 15-year fixed loan, a popular alternative for people refinancing mortgages, was 3.6%, up from 3.44% last week and 2.89% at this time a year ago.

The higher rates have sharply reduced the number of borrowers able to refinance their home loans at lower rates, and with delinquencies and foreclosures also on the wane, big mortgage lenders are cutting back on staffing.

Ruh-roh Raggy. When the banks don’t think they need staff anymore, you know this party isn’t going to end well.  Fortunately, this article was reporting from the Southland, which is most definitely not in the Real Bay Area. Everyone knows in the RBA home prices only go up because nobody here needs a mortgage at all.

Bring a suitcase full of cash to your closing or go home.

Comments (13) -- Posted by: madhaus @ 7:08 am

June 30, 2013

Mortgages Up Half Point in a Week: You are Officially Priced Out Forever

Here’s some cheery news for you from our local Website That Was Once A Newspaper Too!

Biz Break: Mortgage rate skyrockets amid housing market turnaround

By Jeremy C. Owens, San Jose Mercury News
Posted:   06/27/2013 03:47:57 PM PDT; ‘Updated:   06/27/2013 04:40:57 PM PDT

Today: 30-year mortgage rate takes a nearly unprecedented one-week jump to its highest point in two years as the real-estate market heats up. Also: Apple (AAPL) continues to decline even as Wall Street has third straight day of gains.

The average rate for a 30-year mortgage experienced its largest one-week increase in more than a quarter-century, as the housing market continues a booming turnaround from the crisis that precipitated the Great Recession.

Mortgage buyer Freddie Mac reported Thursday that the rate had increased from 3.9 percent to 4.46 percent in the past week, the highest rate recorded in more than two years. The rise in the mortgage rate is even more striking when comparing it to near-record-lows experienced less than two months ago — in early May, the average rate was 3.35 percent. Bankrate.com reported that the 3.35 percent rate on a $200,000 mortgage would result in monthly payments of $881, while the 4.46 percent rate would cost a buyer $1,008 a month.

The rise comes as the housing market roars back to life so quickly that some in the Bay Area have asked if the region has entered another housing bubble. Home prices in the Bay Area hit their highest average in five years in May, according to DataQuick, returning to levels last seen before the Great Recession had most of its effects on the market. That mirrors a national rise, with the Standard & Poor’s/Case Schiller index tracking the highest annual gain in home prices since 2006 in April, as San Francisco joined three other large metro areas in increases of more than 20 percent.

130629-mortgages-forsaleWe’ll stop you right there with a reminder that we called Bay Area Bubble 4.0 and have continued to call Bay Are Bubble 4.0 months and months ago. You can see how behind the Murky News is on this, running a story by one of their own reporters and using an AP photo of a house in, we kid you not, Illinois.

130629-mortgages-openhouseflagAlthough maybe we shouldn’t point and laugh, because houses in the Real Bay Area sell too fast for anyone to bother with For Sale signs anymore.  Instead they use For Sale flags.  Much faster to wave one around for a couple of minutes, collect the overbids, and head back to the air-conditioned office.

We like this one, especially because the tree is doing the agent’s job.

Are you trying to buy a house or do you know someone who is? Are you trying to refinance and are you kicking yourself for waiting too long? What kinds of rates are you being offered by your bank or mortgage broker? 

Comments (12) -- Posted by: madhaus @ 7:06 am

June 16, 2013

Fed Study: Angeleños really did use houses as ATMs

In the latest installment of Formerly Middle Class People Deserved To Lose All Their Money, the Wall Street Journal informs us of a study from the Federal Reserve Board’s Steven Laufer. Not too surprisingly, the paper says these longer-term FBs would have been fine if they hadn’t kept taking equity out of their houses just because they could.

Study: How Using Homes as ATMs Fueled Foreclosures

130614-la-townhomesBy Nick Timiraos, The Wall Street Journal
May 28, 2013, 11:58 AM

The conventional wisdom of the housing crisis goes something like this: Too many people bought homes as the housing bubble inflated. Some were unlucky in their timing, while others overextended themselves by putting too little money down. All of these top-of-the-market purchases led to an explosion of foreclosures once home prices dropped sharply and the economy hit the skids.

Amid the current debate about whether a new bubble is forming in the housing market, it’s worth looking at a paper published in March that challenges conventional wisdom by showing that a significant share of foreclosures came from people who bought their homes before 2004.

So why did so many people who bought their homes before the housing bubble fully inflated end up losing their homes anyway?

20130614-la-freemoneyThe paper concludes that if only California had laws like Texas (which forbids borrowing more than 80% of home equity), not only would fewer FBs gotten F’ed, but homeowners (as opposed to homedebtors) would have had more money to spend because houses wouldn’t have cost so much.

Which is ridiculous, because why do you think these FBs borrowed all that equity in the first place? They sure as heck didn’t invest it in infrastructure.  Heck, no.  They spent it.  We’re cheered to see Larry Roberts (OC Housing News) agrees with us.

Then again, that study also says people defaulted because (among other reasons) they assumed their home prices would keep going down. This shows why the study was in Los Angeles instead of the Real Bay Area. Everyone knows in the RBA, prices only go up.

There’s also a very important reveal in the paper. Laufer’s model shows that home prices would be 14% lower if all that equity extraction hadn’t taken place. And as we know, the Real Estate industry will simply not allow that to happen.  They might as well throw away tax-deductibility of mortgage interest too.

Comments (4) -- Posted by: madhaus @ 5:02 am

October 7, 2006

Our ramen-based economy – eating is overrated

MercuryNews.com | 10/03/2006 | ‘Burdened': Area owners pay a big chunk of their income for housing
Lenders and other home buying experts said they’re not surprised by the numbers, which they said reflect a long-running trend in the Bay Area. And some questioned whether the 30 percent figure was outdated, saying many people can afford to pay more.

[snip]

Lenders and real estate experts said home buyers in the Bay Area are used to paying more for housing than home buyers elsewhere, and that many, like Singer, use their homes as a savings plan. Most have figured out how to manage the extra debt, they said. In some cases, borrowers are making smaller down payments than previous generations of home buyers.

“(They) are going to make the lifestyle change necessary to own a home, which may mean that 50 percent of their income goes to their mortgage. . . . (They) don’t go out to dinner, they don’t go shopping anymore. It’s about changing their lifestyle,” said Andrea Lanier, a mortgage broker with the San Mateo office of Bankers Preferred Real Estate Loans.

The rules have changed! Everything is worth sacrificing to own a house!

Vacations, who needs those? Most offices have free sodas and ping pong tables! And, there’s always Great America!

Fortuantely, there’s a lot of Asian supermarkets in the Bay Area, so that the price of ramen is very competitively priced.

My prediction for 2020? When you get a new job, your pay check will be direct deposit to your mortgage payment. Safeway will be out of business – but that’s ok because you will be shopping at the local food bank.

And it’ll be cool – just like how bragging about working 100 hours a week used to be cool.

“Are you going to FoodMax?”
“No way… I’m going to Mountain View Community Center”
“Dude you so rock – that must be a killer condo.”
“Yeah, it’s really special and it’s only going to go up. I love it here – it’s paradise.”

Comments (6) -- Posted by: burbed @ 5:50 am

September 28, 2006

"their mortgage payments are more than their income"

Central Valley Business Times
More foreclosures loom as pace of mortgage defaults quickens

A softening home market is not by itself to blame for the jump in California home foreclosures says a San Diego attorney who specializes in helping those faced with losing their homes.

The most common reason is an event such as loss of job or illness to a family’s major income producer. But attorney John Brady says there are other causes that he is seeing more often.

“It could be predatory lending,” he says.

“I’ve had a number of people in this last month – this is completely unbelievable and so foreign – their mortgage payments are more than their income,” Mr. Brady says.

Why don’t people understand that you need to pay to live in a place as special as California?

Besides, everyone knows real estate only goes up in the long run. So if you wait long enough, you’ll be able to sell and be a millionaire.

Click here to post a comment -- Posted by: burbed @ 5:31 am

September 13, 2006

Europeans are Funny: "First-time buyers borrow record amounts"

Guardian Unlimited Money | Property | First-time buyers borrow record amounts
First-time buyers risk over-stretching their finances by borrowing 3.24 times their income to buy their homes, the highest amount ever, it was announced today.[snip]
The average first-time buyer took out a mortgage of £110,000, 90% of the value of the property they were buying.

The typical income of a first-time buyer has increased from £32,285 to £34,216 since July 2005, an increase of £1,931. However, the average amount borrowed on a mortgage for a first property has increased by more than £10,000 over the same period.

The interest payments alone on the typical new buyer’s mortgage accounts for 16.7% of monthly income.

Oh my god… you’re kidding right?  Only 3.24 times an income? Interest being 16.7% of monthly income?
UK: 3.24 times your income. Interest is 16.7% of monthly income.
California: 8-10 times your income. Interest is 40% of monthly income.
It makes sense if you think about it – California is the center of the universe and very special. UK is not. That’s why it is essential you live here – you pay more, and as we all know, paying more is better.

Right?

Click here to post a comment -- Posted by: burbed @ 12:35 pm

September 6, 2006

Map of Misery

Apparently this was in the most recent BusinessWeek :

Red means good, right?

Click here to post a comment -- Posted by: burbed @ 12:48 pm

August 31, 2006

Cory Doctorow learns about Bay Area living

Boing Boing: Exotic debt-trap mortgages about to turn on their owners
Exotic debt-trap mortgages about to turn on their owners
It’s amazing that banks can get away with offering these “option ARM” mortgages that let people buy way more house than they can afford, and then give them the option of actually making no mortgage payments so that the interest owed is added to the principal, in a cascade of compound-debt that will rapidly mount.

The only question I have is whether the banks will be able to cash in on all those repossessed houses after the real-estate tumble, or will prices be so low that they also lose their shirts?

In order to get the $800,000 house he bought early last year in California’s Silicon Valley, Joe got an “option ARM,” an adjustable-rate loan that lets him choose from a variety of payments every month. The smallest payment included no principal and less than 100 percent of the interest due. The unpaid interest was tacked onto the principal, creating “negative amortization…”

The [lender’s warning] letters contain hypothetical examples of what lay ahead. One is a California homeowner making only minimum payments on a $402,000 loan. The current full interest rate on the loan is 7.6 percent, but the borrower has been paying just $1,348.47, far less than what’s needed to fully amortize the mortgage over its 30-year term. If the loan reset at today’s rates, the full payment required would be $2,887.50 — more than double what the homeowner is currently paying.

Apparently Cory has never looked at buying a Bay Area house. It’s special here – and that means you have to have 50 year neg am loan to buy an entry level house. Like this classic from earlier this year:

Cory… haven’t you heard?  Real Estate only goes up! There’s nothing to fear! BTW, I’ve got some houses near a jail that you might be interested in… buy now! Don’t get priced out! They’re not making any more land! It’s special!

Click here to post a comment -- Posted by: burbed @ 6:12 am