[powayseller]

Boston_OC, glad that you’re back.

[powayseller]

Thanks, North County Jim, I forgot to do the math on it. justme, great topic and worthy of a thread of its own. Too many people thought the Bay Area prices could never go down. Hahahaha! It will be a wonderful thing when prices drop, so that people can afford to buy homes one day with 30 year fixed rate mortgages, using only 28% of their income.

[powayseller]

This is one of the slowest websites I’ve ever encoutered; maybe because it’s free? I’m sure if we all made a donation to piggington, he would have a reason to upgrade to a better server. Anyway vrudny, your posts are *not* worthless; I love your posts. They add value to my life.

My neighbor just listed her 3/2.5 townhouse, giving us 3 listings of 3/2.5 1875 sq ft townhouses next to each other! She was smart and undercut the older listings in price. So we’ve got $530K, $499K, $495K. This is going to be very interesting.

[powayseller]

KingKong, I’m so glad you’re back, and it’s fun reading our threads from last year. Are you coming to our meet-up? I was wrong on the timing of this; the price drops in housing and stocks are taking longer than I thought.

[powayseller]

Precisely why it is not too late to short the homebuilders. They have a good chance of ending up much lower. I remember buying Lucent at $5, and it went to $2.50. If someone had shorted LU at $5, wouldn’t they have doubled their money in just a few months? Shorting the homebuilders now could yield 2x – 6x return.

[powayseller]

A very gross measure would be a combination of 3 factors for that particular area: tracking inflation, return to historic rent/price and price/household income. You’ll have to pay Dataquick $250 for the price data. Those 3 methods will give you an idea of the true fundamental value. As vrudny said, it’s probably going to take 5-7 years for prices to return to fundamental values. The reason it takes so long is because the resale market is very sticky on the way down. It usually takes a year longer for prices to go down, than for the bubble to go up. Are you hoping to buy at the bottom, or maybe you are happy with a 30% discount and don’t mind if prices continue falling for 2 years? I expect San Diego to keep losing 50,000 people/year and unemployment to rise to over 8%.

[powayseller]

MH, are enlisted personnel having families at younger ages? I’ve been told that military wives usually don’t work, because someone has to be home to raise the kids and dad is gone so much, and second because of frequent moves. What kind of pay can they expect, and what is BAH for San Diego?

[powayseller]

I saved $12,000 in commission by listing with Pam McCormick at the Poway Help-U-Sell office. Realtor Adam Rappoport (aka SD Realtor) charges 1% too.

I think most people here don’t have a problem with realtors, but are opposed to the high fees. Realtor fees are high because there is a glut of them, so they have to spend way too much time competing for the few clients out there. They expect the 1 or 2 clients they do get, to pay for the time they spend chasing after clients that get away, LOL.

Realtors should charge an hourly rate or by the service, and that would put an end to people taking advantage of realtors with all kinds of free questions and driving around for months looking at hundreds of houses just to end up buying a house from a different agent. People who take advantage of the free time of realtors raise the price for everybody else, but the system permits it. You can string a realtor along for an entire year, going to Open Houses, being driven around to look at homes, and then decide to not buy or to buy from another agent. That realtor put 10-50 hours into servicing you, and gets nothing from you, but he’s going to stick it to Joe Six-pack for a 5% listing fee. Realtor fees can come down if Jane Six-pack stops stringing along the realtors, dumping her realtor after all the work he’s done for her, and about 2/3 of the realtors get out of the business and do something more productive. Heck, why do we need 1 realtor for every 75 people anyway?

[powayseller]

The regulatory lending guidelines just went in effect for depository institutions (CitiBank, Wells Fargo…), and will soon apply to state regulated lenders (New Century Fiancial, Option One…). This is a nationwide effort, begun 2 years ago, to make sure that borrowers can stay in their homes, not just qualify for the loan. I have yet to read the document, but from what I’ve skimmed, it’s going to eliminate the sub-prime I/O and Option ARM market, bringing home transactions in San Diego to a screeching halt, *after* the state regulated lending guidelines is effective. What do you all think? If buyers now have to prove income and are qualified based on their ability to pay the fully indexed rate, the median home price must come down to 3.5 x the median income, so homes must make a very quick plunge to a median price of $250K. That’s my interpretation, but I need to read the document and interview some loan officers. Stay tuned….

[powayseller]

The guy working on my website is on vacation for 2 weeks, as his wife is having a baby, but I will have all that on there, as well as plenty of graphs.

There has been an ongoing debate between me and some others about the affordability of ARMs. Some say that ARMs are used by plenty of folks just to manage their cash flow, while I am guessing that the great majority of ARMs are affordability solutions, and when they reset, those borrowers will face foreclosure.

I came across this yesterday from the FDIC website:
“Why is 30 percent of the mortgage market still booking into adjustable-rate mortgages? Because we believe they couldn’t otherwise afford to squeeze themselves into a home or they’re squeezing themselves into a more expensive home for affordability factors.”

This is a very good point: at historic low interest rates, why wouldn’t every borrower secure a fixed rate mortgage at 5%? Why get an adjustable at 3% or 4%, knowing it will keep going up, and could well end up over 7%,8%, 9%? Because they can’t afford the darn house at 5%, that’s why!

Fannie Mae reported that 88% of refis last year were at a higher interest rates. Americans are so desperate to get the cash from their homes, that they are willing to refinance at a *higher interest rate*. The only time my husband and I ever refinanced, was to get a lower interest rate on a 15 year or 30 year fixed rate mortgage. Refinancing into a higher interest rate, to me, shows the borrower is seriously strapped. 88% of conventional loan refis in this country were at a higher interest rate. That is a shocking statement.

I also prefer that we change the name “housing ATM” into “housing credit card” or “housing line of credit”. Mortgage equity withdrawal is debt. ATM is a term for money that is saved, not for a line of credit.

[powayseller]

kev374, your comment is astute. If you look at sales, there was a strong indicator of reversal in 2001. Then suddenly, a new burst of energy hit the market in the form of exotic loans. Had this not occured, our down cycle would be 2002 – 2009.

This “fluff” that you mention will evaporate in the next 2 quarters as subprime lending comes to a screeching halt with the introduction of the new lending regulations. Since 70% of buyers use ARMs, and over half are sub-prime, I think we’ll lose half 35% of our buyers until prices come down to 3.5x per capital income.

[powayseller]

I have promoted Chris Johnston here and on Roubini’s blog for several months now. I still hold his trading ability in high esteem. However, I need to make others aware of potential problems with the way he sets up his billing with PayPal. He told me that our quarterly fee of $225 will *not* auto-renew, but it does. PayPal verified that my second quarterly payment was made to him, without my knowledge, because he sets up his system to auto-renew. According to the PayPal representative, I was about to have another quarterly payment withdrawn from my PayPal account on November 15. She said, “He’s got you set up to have another $225 taken from your account on November 15.” Chris says I am the only customer to have had this happen, and that he does not auto-renew. However, his website does state, “Note: Your subscription will automatically renew at the rates stated above unless you cancel prior to the end of the billing period.” PayPal’s manager said the biller has to set it up as one-time or auto-renew. PayPal does not on their own initiate a charge. So my quarterly auto-renew was set up this way by his company. I wanted so badly to believe Chris over PayPal, that I argued with the higher level manager over 5 minutes. He told me to read the biller’s website, and that’s when I went back to Chris’ site and found that he does state there that the payment will auot-renew. I had told him in August I didn’t want to renew, so the charge made to me was an unpleasant surprise. He said he would issue me a refund, and I believe he will.

The good news is that his trading account in his bond futures, the service for which I subscribed, is doing very well. I think you will have good returns with him if you sign up, but just beware of the way the billing works. If you ever want to cancel, you’ve got to call PayPal to stop the automatic withdrawal that occurs every 3 months.

[powayseller]

My friend is a civil engineer, and I’ve been told there are only a few around who can do the structural calculations on buildings. He is still very busy, although the phone is not ringing off the hook as it used to. He is very busy with calcs and grading plans.

[powayseller]

too bad this guy will get less and less for each day he postpones his sale. While he waits it out, the motivated and NOD sellers all around him are going to drag the value of his house down even further.

Anybody with half a brain is going to sell before the new regulations take effect for the state regulated lenders. By next year, our gradual 1% price drop could be a sudden 30% drop. What will happen when the subprime market is almost eliminated?

[powayseller]

HTML code:

Thanks for asking. It makes the threads easier to read, and prevents those wide pages when posters use links.

At the bottom of each Comment box,to the left of “preview comment” is a link titled, More information about formatting options

Experiment, and use the Preview Comment option to make sure it came out correctly. That is how I learned to do it.

Please use the option where you put the name of the link after the URL, because posting only the URL results in those wide pages, where you have to scroll the page sideways.

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