Just a 46-year-old mom of 2 in Northern California. My kids are Monkey Monkey(MM) and Drama Llama (DL). I am married to Monkey Hubby (MH). Real estate bargain hunting
Three lessons from a one-day tour of Foreclosureville:
Anyway, I found this article interesting. I already mentioned, but some of the real estate activity I See around me is very reminiscent of bubble behavior.
I keep hearing about bidding wars on foreclosed homes.
Well, yeah, $300k for 3000 square feet. Haven't seen these prices, here, since 2001.
So the people who have been bitter and priced out of the market for years are swooping in for their chance. They seem to be quite convinced that now is a good time to buy. Better jump before it gets too expensive.
Overall, I Don't disagree with this assessment. That it is a good time to buy. But, wow. I don't exactly see the hurry either.
I think it raises the point that there is still a very strong demand for home ownership in the area. There is a huge pool of people who can afford $300k homes who could not fathom home ownership for the last 7 years.
Likewise, the part I think I mentioned before was the people I know frothing at the investment properties. The scary thing is they are talking about buying properties they can not afford in any, way, shape or form, without rental income coming in.
You wonder if these people have been paying ANY attention the last few years.
Overall, both groups have great optimism that high prices are here to stay, and it's time to jump on the discount wagon. BEcause it has nowhere to go but up.
Where is all this optimism coming from?
I did read somewhere that prices will yo-yo for a while. I guess, that, I can agree with. It is yo-yo-ing.
IT's certainly interesting to watch from the sidelines.
What next??
I've just always found real estate fascinating. So I rather enjoy watching it all unfold.
I keep reading the locals saying they won't buy until prices settle around $100k again. I personally think they are dreaming. PEople were moving here in droves because it was much more affordable than places like the Bay Area and So Cal. But then with all the equity, the people with no ties here moved on. Cashed out and moved on.
I can almost see it happening all over again...
Anyway, what the locals don't understand is that if the average house here is $250k or so, and the average house in the Bay is $750k. Regardless of jobs, people will move here. They will retire with their Bay Area riches, or they will super commute or telecommute. For this very reason, they are absolutely dreaming if they think prices will ever hit $100k again.
OF course, I think you had to be dreaming to think the $500k prices could be sustained here. I actually would buy that more because there isn't a lot of logic, historically (& I mean long term history) to housing prices in California. They have always been something like 10 times average income. I really thought Sacramento was just becoming an arm of the Bay Area. Problem is all that fast equity run up, and people fled. So, I Don't know. If it builds gradually and slowly, I think a lot of the higher prices may be here to stay. But, then again, as the price differential narrows, the less attractive Sacramento is. IT's a pretty big catch 22. We'll never be Bay Area. But I think things have changed and I would be shocked if $100k houses return.
I could be wrong, who knows. We'll see... I haven't ruled out a significant price collapse in the Bay Area. They seem to be on REALLY shaky ground. I have menioned our relatives who do own homes - with ARMs and TWO incomes. The shaky economy has me worried for them, how they would fare if they lost their jobs, etc. Or if they could not sell before ARM resets, etc. They look strong for now, but looks like pretty shaky ground to me.
I think significant price drops there wouldn't bode well for us. IT really is the bubble that drove so many people here. When prices were high (for many many years), they didn't move here in droves. They moved here in droves when it turned into a bubble though.
But what do I know? I am just watching it all unfold.
I think the bidding wars around here are absolutely fascinating. That is for sure. Not sure I would have guessed that. Seems like PLENTY of foreclosures sitting empty. Why all the rush for a few houses? You got me there...
March 28th, 2008 at 12:08 am 1206662907
March 28th, 2008 at 04:34 am 1206678877
I have to agree that decently located houses in CA are going to go down to 100K. And since real estate prices are so sticky, it turns out the prices drop fairly slowly, it takes a long time to hit bottom, and they rarely just bounce back - no "V", more like "U" or even an "L" - so there really isn't a need to pounce. Buying sight unseen isn't my idea of fun...
March 28th, 2008 at 02:09 pm 1206713342
Which I guess I kind of understand the psychology of jumping in because you just don't know. But, all that being said, I think we have a ways to go down, personally. If I Was a first-time homebuyer I would take my time. Clearly, prices won't be back up to $500k tomorrow. & clearly there is more houses than demand. That is for sure. IT's a rare thing for Cali, so take your time. Why get into a bidding war? Lincoln is in the middle of nowhere. You can find houses (nice) for that price in Sacramento proper if you just look a little harder. I read that article - huh? what are those people thinking? Unless they really look forward to that ugly commute.
Gruntina - it depends where though - much of the Bay Area has not fallen at all. OF course, that some areas are is certainly an inevitable sign that more of the BA will be affected.
March 28th, 2008 at 04:04 pm 1206720271
March 29th, 2008 at 06:03 pm 1206813819