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April 2, 2011 at 1:02 AM #683772April 2, 2011 at 1:52 PM #682697
bearishgurl
Participant[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
April 2, 2011 at 1:52 PM #682751Participant[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
April 2, 2011 at 1:52 PM #683375Participant[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
April 2, 2011 at 1:52 PM #683517Participant[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
April 2, 2011 at 1:52 PM #683872Participant[quote=CA renter]I see these long-time, unencumbered sellers in a different light. Since most of them don’t need a certain amount in order to clear their debt, they can sell for market price (that’s what a buyer is willing and able to pay), rather than wishing for that “special” buyer to happen along.
Heirs, especially when there are multiple heirs, usually want to sell and divide up their inheritance. They, too, do not need that “special number” in order to sell. They can sell for whatever the property is worth (non-bubble price). I was one of those heirs, and we were able to undercut everyone else in the neighborhood by tens of thousands of dollars, and sold rather quickly, even when there was essentially no mortgage market in mid-late 2007 — this was the worst time to sell during the downturn, as the inventory was at the highest levels, and the govt hadn’t yet intervened. We had no problem selling multiple properties in hard-hit areas because of the fact that everything was paid off.
IMHO, the focus on “distressed” inventory and foreclosures is overblown. What’s more important is the financial condition and wherewithal of future buyers. During the bubble, they had access to tons of EZ credit, so they pushed prices up, well beyond fundamental values, during the 2001-2006 period. Once that EZ credit is gone, prices have to come back down to where they would have been if the bubble had never existed. All those transactions — and the ones that were comped based on those transactions — need to be unwound. That’s why we’re seeing price drops. It has nothing to do with organic “distress,” and everything to do with unwinding transactions that should never have existed in the first place.[/quote]
Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=]
April 2, 2011 at 11:49 PM #682782CA renter
Participant[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
April 2, 2011 at 11:49 PM #682836Participant[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
April 2, 2011 at 11:49 PM #683461Participant[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
April 2, 2011 at 11:49 PM #683602Participant[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
April 2, 2011 at 11:49 PM #683957Participant[quote=sdrealtor]CAR
Let’s just say the days of EZ credit are long gone. You have not gone through the mortgage process in many years and do not have any idea how difficult it is for the self employed among others. I have been working on a refi for a few years and it has been excruciatingly difficult because I am self employed. My refi literally funded on Thursday.Let me throw out some numbers to give you an idea of how tough it really is. The Loan to Value was under 40%. I have ZERO debt other than mortgage debt, not one penny. My FICO scores are 862. My mortgage payment was under 20% of my gross income. I have more than a years reserves in cash. The refi dropped the payment I had no problem making for 9 years by more than $500/month. If I rented my home it would be cash flow positive by well over $1,000/month. As far as I could tell, this was about as risk free a loan as could exist.
I had to provide 2 years tax returns and bank statements for the last 24 months. Every single deposit over $5,000 into my account the last 2 years had to be documented with cancelled checks. The requests for documentation of anything and everything were non-stop. I provided everything they ever asked for within 24 hours and in most cases had it to them electronically within minutes of their requests. It’s finally over.
San Diego is a small business economy. There are very few large employers here and I would venture to guess that the number of self-employed/small business owners here is well above the norm for large metro areas in the US.
What do you think would happen if there was even a hint of sanity in the lending market for non W-2 income earners?[/quote]
sdr,
Even as a W-2 earner, I had to provide all these same documents when I borrowed back in 1997/1998. I think those requirements ARE sane, and would have the same requirements if I were to lend large amounts of money to people I don’t know.
I agree that lending is much tighter now than it has been for most of this past decade, but we still have too many loans with too little down (3.5% FHA loans that are underwater the moment they’re made), and even 10% down loans. The FHA loans are guaranteed to fail in large numbers if those sellers have to/want to sell in the future. I don’t mind govt subsidies where the number of loans is very limited to the extent that they don’t affect asset prices; but today, these loans make up a large portion of mortgages, and that is a big problem, IMHO.
All that being said, a big congratulations to you for getting such a nice reduction on your mortgage payment. That way, you’ll easily be able to afford our steak dinner at the end of next year. 😉
April 3, 2011 at 12:03 AM #682787Participant[quote=bearishgurl]Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=][/quote]
We agree about certain *truly special* properties commanding their own price. The problem is that every seller thinks they have one of these “truly special” properties, so they list at bubble prices (or higher!!!), and play the list/relist game, sometimes for years, as they chase the market down. If they had priced correctly in the first place, they’d end up with more money, but they refuse to acknowledge that the prices they cling to only existed because of a CREDIT/housing bubble, and are not going to be seen for a long, long, long, long time, unless we have a currency collapse (IMHO).
In the case of my parents’ homes/properties, the homes were their primary residences; they had sold off all their investment real estate as they aged. We also sold some land in the Sierra foothills and farmland in another state.
My mom’s house would have made a great rental, but my dad lived in a senior community, so it was best to sell that ASAP.
At the time we sold my mom’s house, there was a house across the street that was in escrow for about $60-70K more than what we were priced at (much to my realtor’s chagrin…she didn’t like that I insited on pricing so low). A year later, the next-door neighbor’s house (slightly smaller than mom’s) was listed for ~$160K less than we had sold my mom’s house for, as this was one of the neighborhoods that got slammed very hard and very fast before the PTB intervened. The house that was in escrow when we were selling mom’s was foreclosed on within a year or two, and sold for ~$60K less than what we sold for. Selling was the right move, except for the fact that the rental would have given us a much better return than our savings/investments, which I’ve been keeping liquid in case we find a house we want to buy. Can’t win them all, I suppose. 😉
April 3, 2011 at 12:03 AM #682841Participant[quote=bearishgurl]Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=][/quote]
We agree about certain *truly special* properties commanding their own price. The problem is that every seller thinks they have one of these “truly special” properties, so they list at bubble prices (or higher!!!), and play the list/relist game, sometimes for years, as they chase the market down. If they had priced correctly in the first place, they’d end up with more money, but they refuse to acknowledge that the prices they cling to only existed because of a CREDIT/housing bubble, and are not going to be seen for a long, long, long, long time, unless we have a currency collapse (IMHO).
In the case of my parents’ homes/properties, the homes were their primary residences; they had sold off all their investment real estate as they aged. We also sold some land in the Sierra foothills and farmland in another state.
My mom’s house would have made a great rental, but my dad lived in a senior community, so it was best to sell that ASAP.
At the time we sold my mom’s house, there was a house across the street that was in escrow for about $60-70K more than what we were priced at (much to my realtor’s chagrin…she didn’t like that I insited on pricing so low). A year later, the next-door neighbor’s house (slightly smaller than mom’s) was listed for ~$160K less than we had sold my mom’s house for, as this was one of the neighborhoods that got slammed very hard and very fast before the PTB intervened. The house that was in escrow when we were selling mom’s was foreclosed on within a year or two, and sold for ~$60K less than what we sold for. Selling was the right move, except for the fact that the rental would have given us a much better return than our savings/investments, which I’ve been keeping liquid in case we find a house we want to buy. Can’t win them all, I suppose. 😉
April 3, 2011 at 12:03 AM #683466Participant[quote=bearishgurl]Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=][/quote]
We agree about certain *truly special* properties commanding their own price. The problem is that every seller thinks they have one of these “truly special” properties, so they list at bubble prices (or higher!!!), and play the list/relist game, sometimes for years, as they chase the market down. If they had priced correctly in the first place, they’d end up with more money, but they refuse to acknowledge that the prices they cling to only existed because of a CREDIT/housing bubble, and are not going to be seen for a long, long, long, long time, unless we have a currency collapse (IMHO).
In the case of my parents’ homes/properties, the homes were their primary residences; they had sold off all their investment real estate as they aged. We also sold some land in the Sierra foothills and farmland in another state.
My mom’s house would have made a great rental, but my dad lived in a senior community, so it was best to sell that ASAP.
At the time we sold my mom’s house, there was a house across the street that was in escrow for about $60-70K more than what we were priced at (much to my realtor’s chagrin…she didn’t like that I insited on pricing so low). A year later, the next-door neighbor’s house (slightly smaller than mom’s) was listed for ~$160K less than we had sold my mom’s house for, as this was one of the neighborhoods that got slammed very hard and very fast before the PTB intervened. The house that was in escrow when we were selling mom’s was foreclosed on within a year or two, and sold for ~$60K less than what we sold for. Selling was the right move, except for the fact that the rental would have given us a much better return than our savings/investments, which I’ve been keeping liquid in case we find a house we want to buy. Can’t win them all, I suppose. 😉
April 3, 2011 at 12:03 AM #683607Participant[quote=bearishgurl]Yes, I agree that in the case of multiple heirs, usually one or more of them needs the cash right away. However, I know an “only-child heir” and group-of-two heirs here in SD whose last parent died within the last 3 years. Both immediately cleaned out and leased their parents’ home after their deaths due to all the bottomfishing buyers out there. All had decent pensions they were happy with and were residing in paid-off homes themselves. The only-child heir lives less than a mile from mom’s old house and manages it himself.
CAR, in your 2007 sales of your parents properties, were they long-time rentals in underserved areas? I won’t mind if you don’t want to answer. Even though you sold under market, it was still smart of you to sell when you did, IMO.
I DO think properties in PL that were overmortgaged in past years which are now unaffordable to their owners are now being “unwound.” And I do believe the degree of distress in a micro-area DOES matter. What I’m inferring here (anecdotally) is that very desirable micro-areas of 92106 (i.e. Roseville, Fleetridge, La Playa) didn’t have the distress to begin with. By that I mean, the vast majority of persons who purchased these properties (even during bubble era) did not overmortgage them. Did some overpay?? Maybe. Depending on the exact property and whether they need to sell now, overpaying may or may not have been a mistake. I believe a the majority of PL properties in desirable micro-areas have been and are currently purchased with a mortgage of 60% LTV or less, or all cash.
Of course, you know that a current appraisal only includes comparable sales within the last six months. “Bubble-era” comps would not be part of these. So, buyers today aren’t paying “bubble-era” pricing.
Due to the rarity of exact views, lot sizes and configurations, house design and possible noted architect, how the lot is situated and what it faces, etc., there are many properties in PL where value is completely subjective and in the eye of the (often well-heeled) beholder. I’m not saying PL buyers are stupid and will pay anything. I’m saying that certain properties there offer amenities that can’t be found anywhere else. They are one of a kind and today’s fully-developed SD city skyline is truly “one of a kind.” You can’t buy this view for any price in LJ or DM or anywhere else, for that matter :=][/quote]
We agree about certain *truly special* properties commanding their own price. The problem is that every seller thinks they have one of these “truly special” properties, so they list at bubble prices (or higher!!!), and play the list/relist game, sometimes for years, as they chase the market down. If they had priced correctly in the first place, they’d end up with more money, but they refuse to acknowledge that the prices they cling to only existed because of a CREDIT/housing bubble, and are not going to be seen for a long, long, long, long time, unless we have a currency collapse (IMHO).
In the case of my parents’ homes/properties, the homes were their primary residences; they had sold off all their investment real estate as they aged. We also sold some land in the Sierra foothills and farmland in another state.
My mom’s house would have made a great rental, but my dad lived in a senior community, so it was best to sell that ASAP.
At the time we sold my mom’s house, there was a house across the street that was in escrow for about $60-70K more than what we were priced at (much to my realtor’s chagrin…she didn’t like that I insited on pricing so low). A year later, the next-door neighbor’s house (slightly smaller than mom’s) was listed for ~$160K less than we had sold my mom’s house for, as this was one of the neighborhoods that got slammed very hard and very fast before the PTB intervened. The house that was in escrow when we were selling mom’s was foreclosed on within a year or two, and sold for ~$60K less than what we sold for. Selling was the right move, except for the fact that the rental would have given us a much better return than our savings/investments, which I’ve been keeping liquid in case we find a house we want to buy. Can’t win them all, I suppose. 😉
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