Archive for December, 2008

The “Alt-A” and “option-ARM” Storm… how bad will it be?

Wow, could it be true that we’re only half way through this?  Whitney Tilson, an investment fund manager who has recently been in the news says that “We had the greatest asset bubble in history and now that bubble is bursting. The single biggest piece of the bubble is the U.S. mortgage market and we’re probably about halfway through the unwinding and bursting of the bubble,” Just go here and  watch this…  

“Well, the sub-prime is, was approaching $1 trillion, the Alt-A is about $1 trillion. And then you have option ARMs on top of that. That’s probably another $500 billion to $600 billion on top of that,” Tilson says.

I got this screenshot form an article on Elliotwave … it came form the same 60 minutes program that Tilson was featured on. It shows the timing of the resets of both Sub-Prime vs. Alt-A and option ARM resets, and shows that we are actually in a “lul” right now, with the second wave just beginning…. Add that pressure to a local Sacramento economy that is already struggling… scary.

Now, I know that most of these option ARM’s that I had any experience with went to buyers who bought huge, massive TROPHY homes, not the smaller 3 bed two bath, but the massive 3 or 4,000 square foot new construction.

Big homes are going to get cheap, I’m afraid

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Sacramento’s Economic Recovery: Poised to take hold in 2009?

The experts say that  Sacramento’s Economic troubles may see an end in 2009 and we could see a recovery, actually spurred by the same housing economy that most say started the mess.

“One bright note is that the (housing) sector that led the economy into this morass is about to turn the corner, perhaps as soon as this summer, and will start to lead us out,” said Scott Anderson, senior economist at Wells Fargo & Co.

With Supply of homes on the market here in the Sacramento area down to just 30% of last years number, (3.9 months vs. 12.2 months of inventory) we may look back on 2008 as the beginning of the and of the Perfect Storm. With the median homes prices dropping as much as 5% per month, mortgage rates as low as they have ever been, it’s easy to see how this could be.

It will be fun to watch how the storm plays out this year…

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Top 10 Things To do Over Christmas Break in Sacramento

California State Capital Museum,Sacramento

 How great it would be to have ten days or so to just go do what I want… I can hardly imagine how that would feel, to be in Sacramento and not have a thing to do, not one appointment, one phone call to make, not one bill to pay or anybody to check up on.

The last time I felt like that was a long time ago when I would come home from college. If I had to find something to do for the next ten days, I would:

1. Visit Crocker Art Museum;

     -Founded in the 1870s, Crocker Art Museum is known as the first art museum in the West…

2. Go to Sutter’s Fort

     -Built in 1839, it is the original California gold rush symbol, and really fun employees/guides…

3. Meander through the California State Indian Museum

     -Right next to Sutter’s fort, a quick tour and very interesting. History from a Native American view…

4. Hang out at the Sacramento Zoo

     -Home to over 400 animals, educational amphitheater, and a train runs through the grounds…

5. Go check out the California State Capitol Museum

     -See the intricately detailed tile floors and craftsmanship of a bygone era… open since 1869

6. See The Governors Mansion State historic Park

     -Built in 1877, 14-feet ceilings, Persian carpets, ornate moldings, crystal chandeliers, Italian marble…

7. See a movie at downtown Sacramento’s IMAX Theatre

     -They say it’s the most powerful movie experience created!

8. Go through the Railroad Museum at Old Sacramento

     -Largest train museum in the country, Railroads; as revolutionary as  Space travel,  the Internet is today…

9. Visit the California Military Museum (old Sacramento again)

     -Chronological artifacts; Before Statehood, the Spanish/American War, Civil War, World War I and II….

10. Check out the old cars at Towe Auto Museum

     -More than 150 classics, if you like history, old cars and exploring our passion for speed…

It seems like my tastes have changed, since I last had ten days or so to just goof off in Sacramento. One of these days…

 


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Holy cow! Another $10,000 drop in Sacramento Median Home price!

Here in Sacramento county,  Data Quick numbers show that November’s median home price is a huge $10,000 lower than October…That is a nearly 5.5% drop in just a month! Prices have fallen $105,000, or 36 percent, in just a year!

According to the Sacramento Bee, 69 percent  of Sacramento Real Estate transactions last month involved discounted bank owned homes. Statewide, California’s home sales last month were 56 percent bank owned homes.

Add to that downward momentum the number of recent job losses, those still on the horizon and the number of recent Notice of defaults filed here in the Sacramento area, and things are not ‘not looking good for the home team’…

Yet buyers have been buying… and are still buying. In massive amounts. In Sacramento County, November was the eighth straight month where sales were higher than last 12 months prior. Mortgage rates have fallen to 5 percent or less for 30-year fixed… buyers are out in droves, even now during the holidays.  

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Upcoming Folsom Layoffs: How Big Will The Impact Be?

The new State law that requires companies to publish upcoming layoffs may give Folsom Buyers and Sellers some indication of upcoming real estate pressures and trends:

The Folsom real estate market has been such a pillar of strength  and predictability for so long, can it continue?

FOLSOM INTEL CORPORATION 112 1/1/2008
FOLSOM MARVELL SEMICONDUCTOR, INC 4 1/27/2008
FOLSOM INTEL CORPORATION 79 2/4/2008
FOLSOM INTUIT INC. 1 9/12/2008
FOLSOM JOHNSON CONTROLS 36 12/7/2008
FOLSOM MERVYN’S LLC 75 12/23/2008

 

Add this to the huge spurt in the Notice of Defaults already filed in December and it’s not too hare to imagine what might happen to Folsom Housing prices in the near future.

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Three Good Reasons to Keep Your Head During These Crazy Times in Sacramento Real Estate

Why is it that our market keeps chugging along, with  Sales in the Sacramento region making their 7th consecutive month of strong year-over-year gains with sales 68% higher than in October 2007 and only 4% below very strong September numbers.

It is almost as if they are blind to what is going on… Yet it is so understandable. Here’s three reason,s why:

1. Homes are affordable; Sacramento leads the state with 71 percent of the working population able to afford an entry level home. This is considerably higher than the 46 percent it recorded in the third quarter of 2007.

2. In Sacramento, that entry-level home was $180,170, with a monthly payment of $1,170, requiring a minimum qualifying income of $35,100.

3. Mortgage rates are near a 35 year low and may be headed lower!

Regular people; Policemen, Mechanics, Physical Therapists, Nurses, Teachers, County Workers can all buy houses now in Sacramento!

No matter how bad the news gets, how bad the job losses are, how deep the recession turns, people want to be homeowners! Our market is nearly as busy as the first quarter of 2006! People are still buying houses! 

 

 

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The Sacramento Fence-Jump… As Busy as a Hot June Market

…and a $45,00 jump in purchase price for the same payment!!

Buyers are coming out in swarms here in the Sacramento area, after a series of rate cuts and a sense that prices are “close enough” to a bottom.

The rate cuts are not over, either, with talk of them going to 4.5% sometime soon… The cut will allow buyers who have already been looking to buy a much higher priced home.

If the government follows through with their plans and the Treasury Department implements the actions they are talking about, rates could go as low as 4.5%, most analysts predict!

That means that a buyer who has the means to qualify for a $200,000 mortgage with a 6% rate and a principle and interest payment of $1,199.10 could now afford a $236,000 mortgage with essentially the same payment if rates were to drop to 4.5! In that price reange, that is a HUGE difference in the quality, size and ammenities in houses!

Now, none of this will help people find jobs, or help those who are already behind in payments. It won’t even have an effect on the amount of foreclosures in the short-term, but it certainly will help us to get houses off the market and help some home buyers who are qualified to buy much more home.

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