May 19, 2013

Real American Area: No Bubble. Real Bay Area? Otherwise.

Here’s part 1643 of Proof there is indeed a Bay Area Bubble 4.0.

Housing Bubble Unlikely, Home Price Appreciation Should Slow – CoreLogic

BY JANN SWANSON, Mortgage News Daily
May 16 2013, 11:10AM

CoreLogic said today that home prices are projected to increase 3.9 percent on an annualized basis between the fourth quarter of 2012 and the same quarter in 2017.  However, a new housing bubble is not likely as market dynamics shift for both supply and demand.  Prices rose 7.3 percent in 2012.

The CoreLogic Case-Shiller Index report notes that the increase in 2012 was the strongest rate of appreciation in nearly seven years and projected that prices will continue to improve in 2013 and beyond in the more than 380 U.S. markets it tracks.  The company’s current analysis says that, "Cities at epicenter of housing bubble/crash are clocking highest rate of appreciation, largely driven by investor demand."

130518-homeprices-map

This map comes to us thanks to Burbed reader PKamp3 over at DQYDJ.net, who linked us to the story in Business Insider. However they got the story from Jim the Realtor’s BubbleInfo blog, who in turn got it from Mortgage News Daily.  And it’s a good thing we traced the map (and story) all the way back to the original article, because it has some seriously amusing conclusions to anyone who lives Where It’s Special.  And that’s without making fun of the name of the Chief Economist for CoreLogic/Case-Shiller.  Nah, we’ll just make fun of his opinions of whether there’s a housing bubble:

Dr. Stiff tamped down concerns of another housing bubble. "Even if double-digit price appreciation were to continue in the former bubble metro areas, there is no reason to believe that new home price bubbles are forming. That’s because single-family homes in these markets are still very affordable, even after last year’s large price gains. Consider Phoenix, where home prices rose 27 percent since the market hit bottom in 2011, making it the strongest residential real estate market in the U.S. Yet, home prices there are still 45 percent below their 2006 peak," Stiff continued.

Yes, if you would consider living in a hellhole like Phoenix with summer daytime temperatures routinely above 110 degrees Fahrenheit, of course you’d note that these markets are still very affordable. But nobody uses the words “Real Bay Area home prices” and “affordable” unless they are separated by some sort of negating construction.

Lest you think we are making this up, the San Francisco-San Mateo-Redwood City metro is the least affordable in the entire country, with only 28.9 percent of homes affordable by a median income household. That’s right, we’re Number One again, beating out 221 other metros for the crown!  Santa Cruz-Watsonville is #4 (37.1%), while San Jose-Sunnyvale-Santa Clara isn’t far behind at #6 (43.3%) and Salinas (44.4%) at #7.

130518-homeprices-paragonWhere’s Phoenix, the brick oven that’s still 45 percent below their 2006 peak? They’re at number 57 in unaffordability.

Let us remind everyone that San Francisco and San Mateo Counties never dropped 45 percent below peak. The reason the San Francisco Case-Shiller numbers dropped as much as they did is because they’re completely weighed down by Alameda and Contra Costa Counties.

It’s the East Bay that dropped like a rock after 2006, not the Real Bay Area.  And like a pair of cement overshoes, the East Bay took the whole SF Case-Shiller index down with it. Even the upper tier (the top third of home prices) is affected by this home distribution.

130518-homeprices-paloaltoAnd let’s check those East Bay numbers.  Oakland-Fremont-Hayward turns in a respectable #24 in the You Can’t Touch This index, showing it’s no Phoenix, either.

So we have some words for that Stiff Doctor: There is too a Bay Area Bubble 4.0. We see it every single day even outside the Real Bay Area. We see peak pricing. We see bidding wars. We hear from readers reporting lines to enter Open Houses, or appraisals coming in higher in just a few weeks, or as-is cash overbids on homes where the would-be buyers didn’t even bother going inside.

Inotherwords, Dr. Stiff, maybe you need to get over your Phoenix fixation and check out the parts of the country where the housing bubble is very much back.

Comments (4) -- Posted by: madhaus @ 5:04 am






January 1, 2013

A New Year, Same Old Resolutions ‘n Predictions ‘n Stuff

121231-newyear-2013Happy 2013 everyone!

We don’t have too many New Year’s Resolutions, although we invite you to let us know what they should be.  Here are some we’d probably get from the people who are thinking this but wouldn’t dare comment.

· How about being nice in that True Bay Area Spirit you never stick to, you hypocrite?

· You’re too nice to the whiners.  I liked the site better when you were 10 kinds of rude.

· How come you never do a house in my neighborhood?  There’s all kinds of crap here!

· How come you always do my neighborhood?  My neighborhood is more elegant than Cupertino!  Quit dumping on us!

· When will you get rid of Commenter XYZ?  I cannot stand XYZ!  I won’t comment here until you ban XYZ.

· Stop censoring XYZ’s posts!  XYZ is the best commenter on your stupid site.

· Please no more Guest Posts!

· Hey, you haven’t run a Guest Post in months!

· How come burbed went away?  You suck. Bring back burbed!  burbed was funny.

· Where did you go? Are you on vacation or something? This burbed poster is no good.  Why didn’t you ask Commenter XYZ to fill in for you instead?

· Enouhg wit the gramer Natsy stuf. Noboddy cars how abut my speling.

· Can you write a post in less than 200 words?  I don’t think you can.

 

Nope, and when we answered the last question this article went to 427.  Okay, now here are some of our predictions for the New Year.

  • Real estate prices will go up where it’s Special and stay flat or even drop where it isn’t.  Are you selling a house? Did you have to lower the price?  Then it isn’t Special.  Q.E.D.
  • Rents will go up some more in late Spring and Summer.  If you got yourself a rental last summer, we suggest you look into how much breaking the lease will cost you, because you could get something cheaper right now.
  • Spring Bounce officially starts today and continues until the end of December.  Look for higher asking prices… where it’s Special.
  • As long as They Aren’t Making Any More Land, Burbed will continue to have plenty of material!

Stop in on comments to wish everyone a Happy New Year, and feel free to make your predictions for 2013, or give us your advice on how to improve this site (which we promise we will ignore completely).

Comments (3) -- Posted by: madhaus @ 5:01 am

April 7, 2012

Foreclosures, Ho!

Americans brace for next foreclosure wave

120405-foreclosure-waco-belongingsBy Nick Carey, Reuters
GARFIELD HEIGHTS, Ohio | Wed Apr 4, 2012 7:09pm EDT

(Reuters) – Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end. House sales are picking up across most of the country, the plunge in prices is slowing and attempts by lenders to claim back properties from struggling borrowers dropped by more than a third in 2011, hitting a four-year low.

120405-foreclosure-fullerton-evictBut a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.

"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio’s People (ESOP), a counseling group with 10 offices in Ohio.

"Last year was an anomaly, and not in a good way," he said.

In 2011, the "robo-signing" scandal, in which foreclosure documents were signed without properly reviewing individual cases, prompted banks to hold back on new foreclosures pending a settlement.

120405-foreclosure-ny-busBut nobody in the Real Bay Area got foreclosed on, right?  This is what happens in flyover states.  And flyover cities, like, um, San Jose.

And while nobody would mistake the Bay Area for the troubled city of Stockton (where home values are not expected to hit 2006 values again until the year 2030), the resumption of the Foreclosure Express by many banks will be leading to more short sales and bank-owned properties.

Blame it on the settlement that 49 states made with the major banks.  Now that the process is no longer under so much uncertainty, foreclosures that have been put on hold will resume.  And this time around, the lucky participants won’t be brought in courtesy of high-interest, no-down subprime loans.  Plain old unemployment will be the cause of most of the unpaid mortgages.

Zillow is projecting all kinds of gloom and doom because of this, including a housing market that won’t hit bottom until next year, and stay on the bottom until 2016. 

"The hangover from this crisis will far outlast the party of the boom years," said Zillow chief economist Stan Humphries.

Share your predictions on how this economic tragedy that could evict millions of homeowners will affect the Real Bay Area.  This is an Open Thread.

Comments (9) -- Posted by: madhaus @ 5:10 am

January 8, 2012

What will be hot for 2012?

What are the hottest neighborhoods for 2012? (aside from all of them)

What will be the hottest architecture trends for 2012 in the Bay Area?

Aside from adding the word “Facebook” to every listing, what else will be hot for listings for this year?

What will the median price per square foot in Palo Alto for houses on Redfin be by the end of the year?

Discuss!

Comments (16) -- Posted by: burbed @ 5:48 am

January 1, 2012

Good Riddance to 2011

imageHappy New Year 2012!  We’re SO DONE with 2011, and don’t have to hear any more Negative Nancy Nay-Saying about the housing market!

Besides, if you’ve been paying attention, you already know that all that housing bear news you’ve been hearing from the usual suspects doesn’t even APPLY in the Real Bay Area!  Things in the RBA could not be better, and 2012 is the year that market conditions start TRICKLING DOWN for everyone to enjoy.

Let’s examine some of the excellent conditions in place for you to BUY OR SELL A HOUSE THIS YEAR.

imageFirst, there will be PLENTY OF FORECLOSURES.  This is a GOOD THING because it will ensure PLENTY OF INVENTORY to choose from.  That means PLENTY OF OPPORTUNITY for you!

INTEREST RATES on mortgages will remain low.  Or maybe they will quickly rise.  LOW rates are good because you can buy MORE HOUSE.  Rates going up are GOOD because you can lock in today’s low rates and laugh at the LOSERS who waited.  But you’d better lock them in TODAY.

Why are you still reading this?  Go LOCK THEM IN!  Get going and BUY A HOUSE!

JOB CREATORS won’t get their TAXES RAISED no matter what Obama says.  As long as Wall Street continues OCCUPYING THE FEDERAL GOVERNMENT, there’s no chance of any millionaire tax.  And even though banksters don’t create that many jobs (heck, they just use all that cash as insulation in those drafty castles), fewer jobs means YOUR MONEY WILL GO FURTHER because you won’t have much competition.  And if you don’t have any money then why the heck are you reading a real estate site?  Go look under the couch cushions, you can probably find something.

imageMeanwhile, the EMPLOYMENT OUTLOOK shouldn’t have anything to do with home prices.  If you have a job, buy a house!  If you don’t have a job, it won’t be long before another bubble, and you’ll be able to buy a house with a no-doc loan!  You can fog a mirror, can’t you? 

HOME PRICES FORECAST: RBA Real Estate only goes UP UP UP!  Non-RBA Real Estate is not worth considering, so save up for the RBA.  Real Estate in areas that aren’t even in the Bay Area?  Choose wisely, knowing you’re probably going to lose it all.

This is an Open Thread.  What are your predictions for 2012, other than the world will end?

Comments (10) -- Posted by: madhaus @ 5:08 am

November 19, 2011

FICO Now Predicting Mortgage Walkaway Likelihood

imageOwe more than your house is worth?  Is your credit otherwise good?  Do you have few credit cards but pay them on time?

Congrats.  You’re a likely candidate for strategic default, according to FICO (formerly Fair, Isaac), the company synonymous with credit scoring.  And now Moody’s took a look at the mortgage market and said the most likely homeloaner to default is sitting on an upside down jumbo mortgage.  Why?  Because the subprime mortgages already shook out the people who couldn’t pay, the prime market has some risk of strategic default, but the Jumbo pool lost the highest quality mortgages due to refinancing.  Most mortgages left didn’t refinance because they couldn’t.  And this is spooking the PrimeX, the index fund of prime RMBS (Residential Mortgage Backed Securities).

Given how Special it is here with our high prices, we have plenty of Jumbos both in the Real Bay Area and outside it.  That means Walking Away all around the Bay.

Jumbo mortgages may be next in line to default

By Kenneth R. Harney, Washington Post, Published: November 11

Do you have a big mortgage and good credit scores but not much equity — maybe you’re even underwater? Do you see little chance that your home’s market value will improve much during the coming three to seven years?

If you answered yes to both questions — and thousands of homeowners across the country could do so — new research suggests that you are in a category that lenders need to worry about most: prime jumbo borrowers who once were thought to be among the safest bets but who now are the most likely to opt for a strategic default and walk away from their homes.

In a study released Oct. 31, the ratings agency Moody’s said that based on its analysis of mortgage-backed bond portfolios, homeowners with jumbos now constitute “greater strategic default risk” than any other type of borrowers, including subprime. That’s because an exceptionally high number of jumbo owners — many in high-cost markets hit by real estate deflation over the past several years — are stuck with persistent negative equity. More than half of the jumbos analyzed by Moody’s where owners are still making payments have home market values lower than their outstanding loan balances.

Whoa.  More than half the current jumbos are on upside down homes?  Good thing that doesn’t happen in the RBA!  Instead, we concentrate the upside down jumbos in subprime territory: Vallejo, Oakland, Antioch, Concord, Salinas, Fremont, Hayward, East Palo Alto and Redwood City!  And South San Francisco and Daly City and most of San Jose and half of Sunnyvale and three-quarters of Santa Clara and San Mateo, but it’s not like you should be worried, I am sure your house  is just fine!  And if it isn’t, let’s find out what FICO is doing to predict your behavior so you can stay a few steps ahead of them.

imageFICO says 67% of strategic defaulters are within the bottom quintile of nondelinquent mortgage holders, and 76% within the bottom 30% of late payers, ranked according to their model.  Obviously they’re not going to give away their Secret Formula of Doom, but they admit defaulters have high FICO scores.  That’s right, the more likely their other model says you’re a great credit risk, the more likely you are to be a terrible mortgage risk to the innocent dupes at the hapless bank.  Although this isn’t exactly rocket science here: why would someone default on their mortgage for nonstrategic reasons if they have a FICO of 845?  A high score means excellent ability to pay, so this chart really says among mortgage deadbeats, the better your credit, the more likely you’re playing the bank instead of vice versa.  I think Occupy Wall Street has been telling us the same thing for a couple of months now.

Here are the other “red flags” FICO admits to using in creating their new predictive model:

  • Lower utilization, as shown in the chart below. We also saw less overlimits on credit cards, reflecting better credit management behavior.

imageThis means, duh, people with high credit scores don’t use more credit than they need, which is, duh, why they have high credit scores in the first place (see above).  This also means that Joanne Gaskin, who developed this model, doesn’t understand the difference between less and fewer

(Free grammar clue: Use fewer for quantifiable amounts and less for amorphous abstracts.  Example: FICO has fewer exogenous variables in this model than the blog entry suggests, as utilization is directly linked to FICO score.  That makes their claims of this Predictive Deadbeat Model’s awesomeness less believable.)

  • Less retail balance—chances are that they spend money carefully.

Does spending less than the typical But I Want It Now consumer contribute to a higher or a lower credit score?  I’ll give you three guesses here.  (This is also an exception to the fewer vs. less rule. Time, money, and distance, while countable, use the term less because they still have abstract tendencies as opposed to, say, the 14.6 million underwater houses in this country.)

  • Shorter length of residence in the property—and thus, likely less attachment to that property.

The real estate market peaking between 2005-2008 (depending on where the house is) should have absolutely nothing to do with this brilliant insight (which only coincidentally has a high correlation with an individual’s Loan to Value ratio).

  • More open credit in the past six months—perhaps in anticipation of damaging their credit?

imageOkay, this one makes complete sense.  If you’re going to Walk Away on purpose, you might as well be ready for it by piling up on credit, because it’s going to dry up as soon as the first NOD hits.  Renting an alternate place to live before pulling the trigger is another thing to look for. 

If I were coming up with a model for strategic defaulters, I’d just look at the advice on the Walk Away discussion boards and see how many can be quantified via credit reporting tools. Opened new lines of credit in the last six months? You’re giving FICO too much lead time. Better open them in the last week if you’re going to walk.


Comments (33) -- Posted by: madhaus @ 5:14 am

November 14, 2010

Stemming the Flood of Red Ink that Threatens the Nation’s Future

While national problems rarely affect the Real Bay Area, it’s important that the brilliant people of Silicon Valley come up with solutions.  After all, solving difficult challenges is part of what makes the RBA so Special.  Are you up for it?

Big ideas for cutting deficit, but they’d hurt

By ANDREW TAYLOR, Associated Press Thu Nov 11, 4:17 pm ET

WASHINGTON – Voters who demanded Washington rein in the nation’s spiraling debt are getting a message from President Barack Obama and leaders of his deficit commission: It’ll hurt.

Erskine Bowles, Alan Simpson A proposal released Wednesday by the bipartisan leaders of the commission suggested cuts to Social Security benefits, deep reductions in federal spending and higher taxes for millions of Americans to stem the flood of red ink that they say threatens the nation’s very future. The popular child tax credit and mortgage interest deduction would be eliminated.

Interest groups on the right and the left squealed, predictably, about the plan, which would cut total deficits by as much as $4 trillion over the next decade — much of it from programs long considered all but sacred.

The full commission has yet to make its recommendations, and the chairmen acknowledged their plan was so controversial that it’s dead on arrival. But they said putting it forth would prompt a more realistic national debate about what it will take to solve the nation’s fiscal woes.

Ah, some actual proposals to balance the nation’s budget!  Cut Social Security!  Chop Federal Spending!  Raise taxes for everyone, including big business!  Eliminate loopholes and special-interest giveaways!  Bye-bye, child tax credit!  No more mortgage interest deduc– HEY WAIT A MINUTE!

We are far better off building 1 or 2 fewer Predator Drones a year than eliminating the mortgage interest deduction!  The mortgage interest deduction is untouchable.  It is a sacred trust between our government, the construction industry and NAR that no matter how many jobs are shipped overseas, our economy will always be kept running by selling houses to each other.  Eliminate the mortgage interest deduction?  What a stupid, short-sighted, un-American idea!

Cut the break to half a million instead of a one million dollar mortgage? Unacceptable.  Try finding a house in the Real Bay Area for half a million.  That’s locale discrimination.  RBA residents already pay for that when trying to apply for college financial aid.

Calvin Johnson, a tax professor at the University of Texas, said that only those in the top third of wage earners even itemized their deductions, meaning that two-thirds of taxpayers weren’t eligible for the break.

“No one can make a serious intellectual argument in favor of the mortgage interest deduction,” he said. “Why should the government subsidize homeowners rather than renters? The only thing it’s good for is middle-class votes.”

Oh no.  It’s good for RBA property values, which means it’s good for college tuition.  Isn’t everybody in the RBA itemizing their tax deductions, anyway?

Please share your thoughts on other ways to address the deficit but leave the mortgage interest deduction out of it!  And the capital gains tax break on home sales is off the table, too!

Comments (22) -- Posted by: madhaus @ 5:09 am

September 4, 2010

Did this really exist?

Low mortgage rates go lower. Better days ahead for housing market?

Low mortgage rates fell still more this week – to the lowest level ever in four decades of tracking. Also, the number of pending home sales posted a rise for the month of July.
A home for sale is posted at a reduced price in Palo Alto, California, in this June 24 file photo. Low mortgage rates fell still lower this week, and the number of pending home sales posted a rise for the month of July.
Paul Sakuma/AP/File

Now, granted, this photo was from June 24 – which is like 2 years ago in Palo Alto/Silicon Valley time.

But seriously? Aren’t “Price Reduced” signs banned within the city limits of Palo Alto? Did this really ever exist?

OR is this the work on the clueless “Main Street Media” (MSM), based out of NY, that is intent on destroying the famed Real Bay Area?

You have this long weekend to figure it out.

Comments (21) -- Posted by: burbed @ 5:05 am

August 22, 2010

Nobody Move! Bay Area Home Sales Seize Up (July Insider Report)

Nobody Move! Bay Area Home Sales Seize Up (July Insider Report)

Redfin’s monthly Bay Area real estate insider report draws from our proprietary database of information on homes for sale and that just sold, along with insight from our agents to get a sense of what’s going on in the market right now. If you’d like to receive the report via email, just sign up.

Howdy Bay Area Redfinnians!

Even though we’ve been busy adding school ratings to our website’s map, Redfin just cranked out our latest analysis of the Bay Area housing market, based on proprietary data and local broker insights.

The news is not good, at least for real estate agents: as federal and then California home-buying credits expired, the overheated Bay Area market began to cool in July, except where technology-driven employment continues to be strong.

From June to July, the mix of buyers has likely shifted away from the first-timers responding to the tax credit. In these situations, you expect to see median prices increase, but even so median home prices were down or flat from June to July in five of six counties.

While inventory declined slightly except in the beleaguered East Bay market, across all six counties sales volume fell through the floor. We think demand is going to continue to ease for the rest of the year, as buyers now take their time, unhurried by either interest rates or tax credits.

Whoops, this is a bit dated as I should’ve posted this earlier, but do click on the link to read more about the situation from Redfin!

Obviously, as we head into Fall bounce, and then Winter bounce, everything will change for the better!

Comments (16) -- Posted by: burbed @ 5:34 am

November 14, 2009

The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment (9780071422208): John R. Talbott

It’s Saturday! That means it’s time for Burbed’s book of the week.

Amazon.com: The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment (9780071422208): John R. Talbott: Books
The Coming Crash in the Housing Market : 10 Things You Can Do Now to Protect Your Most Valuable Investment (Paperback)

Today’s real estate market is a house of cards–learn what homeowners can do to prepare for its pending collapse

Soaring home prices and 50-year low interest rates have lulled homebuyers into a false sense of security. But plummeting consumer confidence and record-high personal debt threaten to blindside overextended homeowners and real estate investors.

The Coming Crash in the Housing Marketshows homeowners how to avoid owing more to lenders than their houses are worth–known as an “underwater” mortgage–and reveals commonsense steps for protecting one’s assets when the bottom falls out.

In this compelling, well-documented book, renowned economic consultant John Talbot tells current and potential homeowners how to survive and thrive in tomorrow’s world of slashed home values. He presents:

* Convincing reasons why the housing market will likely crash within two years
* Startling similarities between this and previous economic disasters

Why this book, you may wonder? Is it because there’s a crash coming soon?

No! Of course not. And definitely not in the Real Bay Area which has already been hammered with its lack of appreciation.

Know, the reason this is the book of the week was to highlight how wrong people can be. This book was published in 2003. Yep. Right before everyone became rich from real estate (and then not so rich.)

Again, I encourage you to ignore bubble-heads. They’ll just keep saying that it’s a bubble, it’s a bubble, it’s a bubble. And like a broken clock, eventually they’ll be right – the economy operates on cycles. But until then, there’s plenty of amazing riches that you’ll be missing out on.

Remember, don’t trust those who say no. Don’t trust your brain. Trust your gut. And deep in there, you just know that housing will never let you down.

Regardless of who you trust though, you can help this site out! Click this link to learn more!

Comments (1) -- Posted by: burbed @ 5:33 am