San Francisco Bay Area Housing Crash Continues

[Roland99]

http://www.patrick.net/housing/crash.html

Charlie Munger of Berkshire Hathaway: "There are some very extreme housing price bubbles going on."

Foreclosure listings nationwide went up 50% from February to March 2005.

PMI mortgage insurance now refuses to insure more than $350,000 of risk in speculative markets like San Jose/San Francisco.

A large majority of Bay Area houses are now bought with interest-only adjustible rate mortgages, exposing owners to bankruptcy.

Scroll down for a compendium of links related to the housing bubble.

[displacedtexan]

1. Truly scary.

And interest rates were just lowered again, which means more people will risk their entire financial futures on modest homes at ridiculously high prices... thinking they're getting good deals.

[spanone]

7. I believe interest rates were RAISED 1/4 of a percent recently.

not lowered.

[Roland99]

9. Probably referring to 30-year mortgages

Mortgage rates are remaining curiously low.

[Lex]

11. Short term interest rates were raised by the Feds, that's different

than long-term mortgage rates, which are remaining relatively low.

[damntexdem]

2. It was the first to bubble way up, starting in the late 1970s.

It was followed by much of the rest of the nation. Now will the Bay Area be followed again?

[Walt Starr]

3. There's part of the reason for the bankruptcy bill

They don't want people who were suckered into interest only mortgages getting out of paying off the difference between what they bought the thing for and what it sales for at foreclosure!

[Lydia Leftcoast]

5. I'm sorry--what's an "interest only mortgage"?

:shrug:

[Walt Starr]

8. Designed for five years on only paying interest payments

Not a cent goes to the principal. The idea is hold onto the house for five years, sell at an appreciated value, pocket the equity.

After five years, it's usually an ARM with ballooned principal payments.

[Lydia Leftcoast]

12. So people are outsmarting themselves if they have taken on

those kinds of mortgages hoping to make a quick profit.

Gotcha.

[Walt Starr]

15. Right, and with the new Bankruptcy Bill

the lenders are insured by the federal government as it will be highly unlikely they will get to have the difference between what's recuperated in a foreclosure sale written off, thus they will owe potentially hundreds of thousands of dollars with nothing to show for it AND can't get rid of the debt.

[ananda]

4. confused

I rent an apartment. I was going to buy a house last year, but I didn't want to sink a lot of cash into it. Now I'm glad.

I'm hoping house prices will fall into reasonable limits. We'll see.

[joefree1]

6. Reason #6 for Housing Crash in San Francisco

"Population loss. San Francisco continues to lose population at the fastest rate of any city in the US and most of those are professional jobs. The problem is not only the dot-com crash, but also the outsourcing technical jobs to India, which continues at a frantic pace as corporations realize they can pay an Indian only 20% of what they must pay a similarly qualified employee in the Bay Area. Fewer people in the Bay Area means less demand for housin"

I hope the Republican Yuppies are thanking Bush for this.


Seating now available in the Smoking Section:
Politics, humor, death and the Devil - http://www.eDiablo.com

[Warpy]

10. The New Mexico Fishwrap reported that California speculators

are now showing up in droves in minivans to snap up housing in this market, accounting for about a quarter of all the new construction in this city.

The total housing being grabbed by investors here is 1/3.

This is scary. There hasn't been much of a bubble here, so far, until the beginning of this year, largely due to overbuilding by developers on the edge of the city. Now that Californians have discovered it, housing prices have risen about 8% since the beginning of the year.

In the meantime, nobody quite knows what's going on with the houses purchased by investors. Either they will remain empty and targets for gangs, or they'll be rental housing and turn neighborhoods into instant slums.

Whatever is going on, it's not healthy for us here.

[Lydia Leftcoast]

14. And here in my neighborhood in Minneapolis

within the last few months, a new real estate company has been buying up ordinary apartment buildings, making a few cosmetic changes, and turning them into condos.

I've seen four buildings within three blocks of me go condo in the past three months. I'm hoping my building can hold out, since it's still owned by the family that built it and a family member lives on the premises and manages it. :scared:

There was a write-up about it in the neighborhood newspaper. Apparently the terms allowed to current tenants are not very generous and equal much more than their current rent payments.

[caligirl]

13. I'm not too concerned yet, owned ours for ten years now.

http://sfgate.com/cgi-bin/article.cgi?file=/c/a/2005/05/20/MNG5CCS82U1.DTL


http://sfgate.com/cgi-bin/article.cgi?file=/n/a/2005/05/20/financial/f120956D53.DTL

These are a couple of goood articles here. If you have beeen in your house beyond the time of the recent 19-20% increase you probably don't have to worry about a down turn. We have been in ours for ten years, even if it drops to last kyears appraisal amount, we are still looking at the best investment, the one the stiock market isnt't thanks to *co.

edit: the demand in the bay area is still high, with little new building, land locked, so I think this bubble is not likely to hurt this area. But if you look at other Cal areas the same is not likely true.

In our area of the bay, housing is in high demand. Despite the 300,000 jobs lost over the past four years, people are still moving here and don't mind paying 700,000 for a 1500 sq foot house, even without upgrades. Asian families are paying high amounts, caucasians who have lived here 20 - 30 years are taking the profits and moving to cheaper areas of the region.