Median Homes for the Bay Under $300K (San Francisco, Sacramento: sales, rent)

[gobruins]

I am very sorry to hear people are foreclosing. For some, I feel they are victims of terrible circumstances and for others-- I don't feel sympathy b/c they were asking for it. I do feel though there are people out there with plenty of money saved and high incomes who can afford these homes. Like I said before, this is not a large population of buyers. But there ARE people out there who can do it. I agree prices need to correct, but I don't think they are going to correct as much as people would hope for in some of the affluent areas simply because there ARE buyers out there who are able to keep some of these comps alive. Not attacking here at all....

[City Boy]

Originally Posted by Tallysmom

If your credit is STELLAR, and your job is secure and long standing and (if you are buying) you have a downpayment of at least 10% to 20% -- or if refi'ing you aren't taking cash out -- you stand a very good chance of getting a loan.

Self employed people have harder time to get a loan anyway. Often they do their taxes to not show a profit, even though they make money, in order to mitigate paying lots in taxes. That was the intent of the NINJA loans at first -- to help self employed people that might not look good on paper but that could easily make the payments get a loan. At this point I would probably have to give them three to four years of tax returns (we're self employed, but we show a profit yearly) to refi.

But if your credit isn't primo, forget it. If you just started a new job, forget it.

Me and my wife both have very good credit scores. But we have bills and student loans to pay back. So it is virtually impossible to save for a down payment with how expensive the prices still are.

[clongirl]

Originally Posted by gobruins

I am very sorry to hear people are foreclosing. For some, I feel they are victims of terrible circumstances and for others-- I don't feel sympathy b/c they were asking for it. I do feel though there are people out there with plenty of money saved and high incomes who can afford these homes. Like I said before, this is not a large population of buyers. But there ARE people out there who can do it. I agree prices need to correct, but I don't think they are going to correct as much as people would hope for in some of the affluent areas simply because there ARE buyers out there who are able to keep some of these comps alive. Not attacking here at all....

You also need to understand that many of the "alt-A" loans will also be resetting this year. The last wave of forclosures were the subprime loans.

Also, not everyone is in foreclosure because they can't keep up with the payments, but are "upside down"...they are continuing to pay far more than the house is now worth.. I'll give you an example of someone I know.. paid 1.7million for their home during peak and now this house is only worth 1.2mill. I dunno, I might be inclined to stop making payments even if I could afford it!

[gobruins]

I understand that Clongirl, thank you It's the re-setting of these loans that has me worried too and is keeping me glued to any news reports about the Bay Area real estate market. I am also keenly aware that some are walking away from their homes if they are "upside down." I'm not sure I personally would walk away if I was having no problem making payments though. That damages your credit terribly (can you even get another loan for 5-7 years?) and then what happens to the money you put down for your "1.7 million dollar home"? Do you lose that too? Money & your credit? I understand people walking away who cannot afford payments, but why walk away if you can? I guess I don't understand.

Anyways, my point from the start was that there ARE people who can afford these homes. That's all.

[PeixeGato]

Originally Posted by gobruins

I understand that Clongirl, thank you It's the re-setting of these loans that has me worried too and is keeping me glued to any news reports about the Bay Area real estate market. I am also keenly aware that some are walking away from their homes if they are "upside down." I'm not sure I personally would walk away if I was having no problem making payments though. That damages your credit terribly (can you even get another loan for 5-7 years?) and then what happens to the money you put down for your "1.7 million dollar home"? Do you lose that too? Money & your credit? I understand people walking away who cannot afford payments, but why walk away if you can? I guess I don't understand.

Anyways, my point from the start was that there ARE people who can afford these homes. That's all.

Many times, these people have approached their banks to renegotiate the terms only to be told "tough". So if they can't change the arrangements, their payments are putting them deeper into a hole, and on top of that, their homes that they are paying such outrageous payments on are worth 40% less than what they paid for them, they begin to wonder if walking away isn't the best route to go. These people usually don't have much in liquid savings (i.e. outside of 401K) and are using credit cards to buy groceries.

I'm not a lawyer, so this shouldn't be taken as advice, but it seems to me that in that situation, looking into Bankruptcy would be better than just walking away. Though I'm not sure if the impact on your credit rating wouldn't be any different.

Also, not being able to buy a home for 5 years isn't necessarily a bad thing, especially if you need time to save up that 20% down payment. Renting is not inherently bad. On the contrary, it gives you a chance to get your financial situation in order, build up some savings, and repair your credit slowly and carefully.

[Ultrarunner]

Originally Posted by City Boy

Because people like me and my wife make over 200k per year and still have a hard time finding affordable housing that's why. The average person in the Bay Area does not make what we make. So who is buying all these homes now?? Millionaires? People who have 300k saved? People like me who bought places before all this happened making what we make are foreclosing. Do you know how hard it is to save 40- 100k for a down payment?

I do know several that have bought million plus homes in Peidmont within the last 6 months... one was even a fixer that sold for 1.1m after receiving several overbids...

I think you're right on target... these people are putting down substantial cash or paying cash outright for the fixer... All had money in accounts that are paying next to nothing in interest.

Mostly, they are either self employed or CEO or CFO type people...

The 3 top reasons they all wanted to get into Peidmont are:

Top Rated public schools as in 99th percentile for some. This means the kids will attend public school instead of private... saving the parents at least 35k each year.

Almost zero crime... Peidmont PD is very responsive and supported by the community. Peidmont is one of the few cities I know that actually has some areas with 15 mph speed limits... A Peidmont officer told me he can put someone in jail for doing 31 in a 15 zone because it's double the speed limit

If you have money right now, the prospect of having it invested or in the bank is not that bright... so why not invest it in a forever home for your family? Historically, Peidmont Real Estate has been a very safe bet.

[Tallysmom]

Originally Posted by Ultrarunner

I do know several that have bought million plus homes in Peidmont within the last 6 months... one was even a fixer that sold for 1.1m after receiving several overbids...

I think you're right on target... these people are putting down substantial cash or paying cash outright for the fixer... All had money in accounts that are paying next to nothing in interest.

Mostly, they are either self employed or CEO or CFO type people...

The 3 top reasons they all wanted to get into Peidmont are:

Top Rated public schools as in 99th percentile for some. This means the kids will attend public school instead of private... saving the parents at least 35k each year.

Almost zero crime... Peidmont PD is very responsive and supported by the community. Peidmont is one of the few cities I know that actually has some areas with 15 mph speed limits... A Peidmont officer told me he can put someone in jail for doing 31 in a 15 zone because it's double the speed limit

If you have money right now, the prospect of having it invested or in the bank is not that bright... so why not invest it in a forever home for your family? Historically, Peidmont Real Estate has been a very safe bet.

I think also that people are no longer thinking about their homes as gambling money makers. They are homes. To be lived in.

It's so nice to watch some of these HGTV shows and see homes with Formica counter tops and white appliances. Maybe people are getting over the stainless/granite mindset that have people who don't even like that look feeling that it's their only option or they'll never be able to sell their homes -- even if selling is years away...

[clongirl]

Originally Posted by Ultrarunner

I do know several that have bought million plus homes in Peidmont within the last 6 months... one was even a fixer that sold for 1.1m after receiving several overbids...

I think you're right on target... these people are putting down substantial cash or paying cash outright for the fixer... All had money in accounts that are paying next to nothing in interest.

Mostly, they are either self employed or CEO or CFO type people...

The 3 top reasons they all wanted to get into Peidmont are:

Top Rated public schools as in 99th percentile for some. This means the kids will attend public school instead of private... saving the parents at least 35k each year.

Almost zero crime... Peidmont PD is very responsive and supported by the community. Peidmont is one of the few cities I know that actually has some areas with 15 mph speed limits... A Peidmont officer told me he can put someone in jail for doing 31 in a 15 zone because it's double the speed limit

If you have money right now, the prospect of having it invested or in the bank is not that bright... so why not invest it in a forever home for your family? Historically, Peidmont Real Estate has been a very safe bet.

I totally disagree with you Ultrarunner..A house IS NOT an investment.. It's a just a place to live, just like a car is something to drive. I hate to say it but you sound like a real estate agent or broker (are you?)! This is why people stretched (even when they didn't have the money/income). This is the same mantra that brainwashed the entire Bay Area..the entire country.."better buy now, or you'll be priced out forever", "real estate only goes up!" is what they said for well over ten years! It's the same line that was pumped up the whole housing bubble to begin with.

I don't care if it's Palo Alto or Orinda, San Francisco, or even Piedmont. The same fundamentals of economics still holds true. Median income=median home price. Are you aware that incomes haven't risen to keep up with the house prices? Those fundamentals were skewed because the banks (well we all know what they did by now!) The economy affects people that make 50k a year, the exact same way as it affects the guy that makes a million a year. If you overpaid, overspent, ran up the credit cards, and your job is on the chopping board, then the problem is the same for both.

Not that long ago, San Francisco was the place where prices would never go down..well, now they are. Then it was San Mateo or other areas in the South Bay/Peninsula..well prices are coming down there too. The problems are just beginning in these places..and I'll bet you that it'll happen in Piedmont as well. No place is immune.

Nobody is doubting that Piedmont is nice but that 3 million dollar house might only be worth 2 million in a year's time. Why would a "smart, wealthy" person with all this cash take such a ridiculous risk when perhaps the house might not be worth what they paid in a year's time? I know some VPs in the Palo Alto area that are very worried about the status of their jobs..what makes Piedmont immune to the same problems the rest of the country is facing?

[ImRandy]

Originally Posted by clongirl

Why would a "smart, wealthy" person with all this cash take such a ridiculous risk when perhaps the house might not be worth what they paid in a year's time?

Because...

Originally Posted by Ultrarunner

so why not invest it in a forever home for your family?

They are not treating it as an investment to be sold a couple or few years later. They want to live in the house, have the money, and the house is available. What the market does doesn't have a huge impact on the decision if you intend to stay in the house.

[clongirl]

Originally Posted by Ultrarunner

I do know several that have bought million plus homes in Peidmont within the last 6 months... one was even a fixer that sold for 1.1m after receiving several overbids...

I think you're right on target... these people are putting down substantial cash or paying cash outright for the fixer... All had money in accounts that are paying next to nothing in interest.

Mostly, they are either self employed or CEO or CFO type people...

The 3 top reasons they all wanted to get into Peidmont are:

Top Rated public schools as in 99th percentile for some. This means the kids will attend public school instead of private... saving the parents at least 35k each year.

Almost zero crime... Peidmont PD is very responsive and supported by the community. Peidmont is one of the few cities I know that actually has some areas with 15 mph speed limits... A Peidmont officer told me he can put someone in jail for doing 31 in a 15 zone because it's double the speed limit

If you have money right now, the prospect of having it invested or in the bank is not that bright... so why not invest it in a forever home for your family? Historically, Peidmont Real Estate has been a very safe bet.

Originally Posted by ImRandy

Because...



They are not treating it as an investment to be sold a couple or few years later. They want to live in the house, have the money, and the house is available. What the market does doesn't have a huge impact on the decision if you intend to stay in the house.

Yes, I understand what you're saying ImRandy...BUT, people that bought at peak prices are struggling..many thought they'd be living in THEIR houses forever too..but they overpaid. Whether you stretch for a 4 million dollar house or stretch for a 500k house..same problem of house losing value..not to mention that pesky property tax, insurance, maintenance costs. (I'm pretty positive that the property tax is also based on what you paid)

Take a look at zip realty (it's the one I like to peruse). Tell me how many short sales/foreclosures and price reductions you see in one of those ultra desirable areas like Lafayette (94549) ..good schools and all. I mentioned earlier that I know a person that bought a house during the peak for over 1.7 mill (wealthy people obviously). Now they are still overpaying for the same house which is now only worth about 1.2...do you honestly think that they feel great and relieved about overpaying by 500k even though it's their "forever" home?