REAL ESTATE

Interesting Article Today:

Half of Sacramento families can afford homes in region

http://www.bizjournals.com/sacramento/stories/2008/05/19/dai...

"The Sacramento region, one of the hardest-hit housing markets nationwide, has become the most affordable housing market in the state, with almost 50 percent of families able to buy a home during the first quarter, according to a California Building Industry Association report released Tuesday. The figure -- based on the median annual income of $71,000 and a median sales price of $262,000 -- is a dramatic increase from the 27 percent affordability rate in the fourth quarter."

Not sure if this is big news as my understanding was that Sacramento has been the most affordable area of the state for a long while. (Cheapest housing anyway).

But out of curiosity I pulled 2000 census #s. 2000 - median income $42k and median house price $152k.

That makes median home price divided by median income 3.6 today AND 3.6 in 2000 (before any housing bubble). Then again, the $71k median income looks rather inflated from what I have seen. I think that ratio still remains a little higher, in actuality, for now.

Anyway, made me want to look up stuff back home.

http://www.bizjournals.com/sanjose/stories/2008/05/19/daily34.html

"In Santa Clara County 1,440 homes were sold, compared to 2,009 in April 2007 and 1,105 in March. The median price was $615,000, down from $709,000 in the same period last year."

IT says, home prices have gone down 13% from last year, but they are still INSANE. About what I heard. We fled in 2001 when the median house price was closer to $500k (I would have estimated anyway). Insane enough for us.

Median income around $90k there. Makes the housing to income ratio about 6.8. Eeks! Though it has been much worse for a time.

Of course I notice the median house price of $262k in Sacramento compared to $615k in santa Clara is about a 2.5 ratio (housing there costs 2.5 times as much). That is also about the same as it was when we moved in 2001.

I think things are settling down, though I have the feeling things will get worse before they level out.

But I guess everyone is excited there was an uptick of sales in April. Of course there is. Buyers and investors are forthing at the mouth at these prices. I read the term on another blog: "dead count bounce." Lovely name, isn't it? A lot of people will swoop in now, but probably not enough to make a long-term difference. So hey, look at that dead cat bounce - LOL. Around here I think there are a lot of eager investors who did not learn anything the last go round. (The ones who sat out and think now is there chance. They scare the hell out of me. Though I guess thank goodness for them, for keeping prices somewhat afloat).

I had a mortgage broker trying to get us to invest. I actually liked/respected the guy until his fanatacism with investment real estate emerged. It may be a good time for him, but I think he was insane to look at our finances and push us to get into investment real estate as well. I can assure you we can not afford it, for one, and that for two, we don't need any more eggs in that basket. His assumption is rent will cover costs. If he could gurantee that 100% he may have me sold. But I don't buy that for a second.

Oh this was just an interesting story I saw too (if you want to see a suburban pot house - egads).

http://www.sacbee.com/static/weblogs/real_estate/Aspen_befor...

"Pot house chic in suburban Sacramento
Sacramento real estate agent Gary Lee said he had no idea what he was getting into when he took the two Elk Grove listings from a bank that had repossessed them.

They were pot houses.

If anything defines the excesses of Sacramento's housing boom, it's probably those numerous pot houses, where investors got 100 percent financing on new homes and converted them to growing operations. The idea was that who in the suburbs, where people don't readily know their neighbors or ask too many questions, would know the house was occupied by marijuana plants?

Most of those growers have been busted and their homes repossessed.

"As soon as I got access to the properties I was as shocked walking through the front door as anyone else would have been," Lee said.

He had the houses cleaned and sent all the before and after photos to the bank so it knew what it owned. Lee's two homes in Elk Grove "should be hitting the market in about a month," he said.

In the meantime, here are some before pictures he shot after arriving at one of his new listings."

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INVESTMENT CONCENTRATIONS

In other news I Was surprised (lord knows why) to find out dh's entire family is invested with this bozo from a big investment house.

My parents actually were diversified a lot more, but had some substantial assets with another big brokerage. My dad got fed up with them and left about the time I joined pfadvice a couple of years back. With what I learned here I quickly concluded these big outfits were rip-offs. PArticularly the investment broker we had (dh's family's bozo). So I chatted with my dad about it and he was just reaching the same conclusion, though 25 years my senior. So I felt lucky to figure this out quite young.

So dh and I moved our money. Mostly to Vanguard...

We were at a family function a while back though and my dad comes over and tells me he was just talking to dh's aunt and she has her money with this big place as well. HE actually starts to bad mouth the place infront of his grandma and I kind of shhhed him and said the whole family was over there.

I don't know why the thought hadn't occured to me that they all were (knew his granmda invested with the guy) and the whole thing made me a little uneasy. Likewise, I just saw an article that this brokerage is in real hot water with subprime loan investments and such. For their sake, I hope their nest eggs are insured and/or safe.

But it got me thinking how dangerous it was to have so many generations of one family all invested in one place. I really have no idea about his sister and cousins, but would not be surprised if we were the only ones to walk away. As I joined these boards and started to understand fees more I saw we were just being charged fees left and right. Likewise, our mutual funds were WAY under-performing. So all we paid for was crap. & lots of cushy commissions for our broker. We left pretty quickly once I got more educated.

So yeah, I worry about his family. That they have their entire nest eggs invested with this guy.

Likewise, my dad and I have a few mutual funds the same but I am pleased our investment styles are mostly different. We both have some same mutual funds and probably tend to hold too much cash. BUT he likes to dabble in stocks and has many mutual funds in companies I don't use. I have a lot of index funds and also invest in some different fund companies as well. In the end I like that we are well diversified. The reason is twofold. IF for any reason we need their help or they need ours, then at least we are spread out in different baskets. Likewise, I am glad our entire family does not have all of their money in one place. I know my grandma is in ENTIRELY different investments as well.

I don't know if people really think about this kind of stuff much, or if I over-think it. But yeah, I worry about dh's family. There really is no reasoning with them though - just set in their ways.