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Thread summary:

Sacramento: affordable, buy a house, real estate, subprime loans, housing.

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Old 09-22-2008, 10:16 PM
 
4 posts, read 2,738 times
Reputation: 10

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Hi,

I've been an avid reader of the forum for last six months, first time poster
since I actually bought a home. Finally!

I looked everywhere, Davis, LP, East-Sac, Pocket, Roseville etc.
Must have seen 100 homes and spent 200 hours on-line!

I love Davis, LP, East-Sac, Mid-town but the prices are just over-priced. If I was
confident they would stay that high I'd tighten my belt and buy there.

I lived in Midtown for over a year and really wanted to live here, but
the cost $600K for 2000 sq foot homes. Yikes! A quick look at zillow
shows similar homes going for $250K in 1999. Also your $7K in property
taxes buys you an elementary school that ranks in the bottom 20% of
all CA schools.

When I worked my way through it, all fingers pointed to West Elk Grove
(i.e. Laguna West area). Why?

a) Three elementary schools rated as 9 or 10 for last five years
(StoneLake, Elliot Ranch and Joseph Sims) all are grand-father
schools for each other.

b) Nice micro-area. I bought in Stonelake which for $80 a month
gives you two pools, sauna, spa, gym, tennis courts for the family,
nice family area.

c) Elk grove (west part) is kind of nice in a chain sort of way.
No funky restaurants here, but lots of decent chain restaurants.

d) Affordable and nice homes. For under $300K I got a 2400 sq ft
home in Stonelake, granite counters, tile bathrooms, quality fixtures
well constructed home that is six years old.

e) I'm fairly sure I can off-load the home when prices fall in the most
desirable areas as I'm sure they will. In the end we had the following
choice:

a) 400K for a 1000 sq ft home in LP - 10 rated school. Wait in line
overnight to get kid into school and if they miss out your out of luck.
b) 600K for 2000 sq ft home in Midtown - 2 school
c) 500K for 1500 sq ft home in East Sac - 3 school
d) 300K for a 2400 sq ft home in Stonelake - 10 school kid will
get in to neighorhood or equally good school

To me it was a nobrainer since I can control my commute hours.
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Old 09-23-2008, 12:00 AM
 
8,416 posts, read 15,393,424 times
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If prices fall that much more in desirable areas, expect to have to eat a loss on your home in Elk Grove. New-growth areas will drop first; desirable areas are desirable for a reason. You don't just buy a house, you buy a neighborhood, and there are much more important features of a house than just its number of square feet.
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Old 09-23-2008, 02:38 AM
 
406 posts, read 1,470,267 times
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If you look at pgs 11 through 28 here, what you will notice is that over the course of the real estate cycle, not all areas of a community fall at the same time, but eventually all areas get hit.

http://www.facorelogic.com/uploadedF...eBurn_1104.pdf

In this most recent real estate correction, the areas where there were subprime borrowers got hit first as subprime loans reset. Whereas places that didn't have subprime exposure like Granite Bay, Davis and East Sac mostly escaped the problem. But in the higher income neighborhoods people relied in alt-a loans. Those are just now starting to reset and I expect those neighborhoods will now probably see correction that hit the entry level neighborhoods over the past 3 years.

http://blog.potterzot.com/wp-content...gage_reset.jpg

In parts of Oak Park we have probably hit bottom already. If you were willing to be a slumlord, those properties throw off positive cashflows. The low end properties and entry level properties are probably pretty close to bottom already.

But overall housing prices in Sacramento are still too high based on historical past patterns. It the high end homes that haven't yet corrected that need to adjust.

Sacramento, California metropolitan area inflation-adjusted housing prices, 1976-Present (http://mysite.verizon.net/vodkajim/housingbubble/sacramento.html - broken link)

Central California OFHEO Home Price Appreciation Tracker

In the city of Sacramento median family incomes went from 50,046 in 2000 to 58,526 in 2006.

United States - Fact Sheet - American FactFinder

An 8500k gain in income doesn't explain that prices almost tripled during that time (130k to 371k). The high end in Sacramento is next to adjust.

http://www.capitalvalleyrealty.com/d...ket_trends.pdf
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Old 09-23-2008, 11:13 AM
 
Location: Happiness is found inside your smile :)
3,178 posts, read 13,810,194 times
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I'd rather be paying out the nose for a house in Midtown and send my child to a Montessori than live in Elk Grove

And I have lived in Elk Grove before.
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Old 09-23-2008, 12:31 PM
 
406 posts, read 1,470,267 times
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But I think we have seen the majority of the price drop in Elk Grove, where as in midtown, I think the other shoe is just about ready to drop.
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Old 09-23-2008, 01:05 PM
 
Location: Happiness is found inside your smile :)
3,178 posts, read 13,810,194 times
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Drop Midtown DROP!

Mama needs a Craftsman for 350K!
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Old 09-23-2008, 01:21 PM
 
8,416 posts, read 15,393,424 times
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I think the new construction will continue to drop (it has already dropped quite a bit, as it isn't selling worth a darn) but the historic homes won't plummet in that fashion.

Here's your bungalow--albeit a Colonial Revival rather than a Craftsman, and with screwed-up windows:

MetroList MLS Services - sacbee.com&
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Old 09-23-2008, 01:46 PM
 
Location: Happiness is found inside your smile :)
3,178 posts, read 13,810,194 times
Reputation: 1285
Already saw it - actually drove by it - when we went to Fro Yo a couple weeks ago...

Roof's pitch looks like it's going to crumble!

And Hubby didn't like it so close to the Check into Cash store :P

Why do all the cheap ones are short sale? I want a beauty - straight sale...one of those 700K now houses for half price
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Old 09-23-2008, 02:12 PM
 
8,416 posts, read 15,393,424 times
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I noticed that the "Check into Cash" store over there off J Street is being turned into something else now...not much demand in East Sac?

The cheap ones are short sale because the wannabe-investors picked them up and spent the bare minimum ruining the interiors (tearing out wood double-hung windows for cheap vinyl, tearing out tile countertops and wood cabinets for cheap Home Depot specials, etc) and then the prices failed to continue to skyrocket when it came time to sell. I can only hope that over the next few years more residents who care about rehabbing a house right come in and fix these places correctly!
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Old 09-23-2008, 04:12 PM
 
4 posts, read 2,738 times
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"If prices fall that much more in desirable areas, expect to have to eat a loss on your home in Elk Grove."

The question is: What's the cause and what's the effect?

I lived in midtown for a year and loved it. At the peak (2005) the
homes in Stone Lake (Laguna West area of Elk grove) cost
$550K and in midtown a similar sized home cost $650K.
No brainer, pay the extra $100K and live in midtown.

Now the same homes in Stone Lake cost $300K and the midtown
homes cost $600K. A no-brainer now, but in the other direction
since the StoneLake area has a 862 API school and midtown
a horrible school so the cost is $600K + yearly tuition fees.

I think/hope/pray that this will lower midtown prices. Also, who
can afford a $500K mortgage given the banks now require
your payments to be no more than 33% of your *disposable*
gross monthly income. Believe you me, they checked up on me big-time.
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