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Are seller-assisted down payments really that common, so that this new regulation will make a noticeable impact on FHA sales volume?

The fight twixt "get it off the books by the end of the quarter" and prices necessary to do that will be epic. Is this the last stair step or will buyers become used to serial declines? We haven't even seen the fallout from I/O loans yet.

Kwaping,

They sure seemed popular lately, once the subprime loans ran out. I haven't done any FHA business for years, and doubt many others have either - until this year.

I've also noticed higher "foreclosure" notices vs. "pre-foreclosure" notices over the past month. With the backlog of shadow inventory, plus new foreclosures that will hit the market soon, I only see more inventory coming our way in Southern California. With the decrease in demand caused by increased mortgage oversight and the increased supply from REOs and other motivated sellers, I bet, as you mentioned Jim, we will hit another new, lower price level. It just takes time. Has anyone else noticed the increase in "foreclosure" notices reported by foreclosure.com and SDlookup? In addition, I still see a healthy amount of"pre-foreclosure" notices too. It's ECON 101. Increased supply, decreased demand, equals new, lower price point in an elastic market like real estate! As a notice to all sellers, you need to be flexible and understand this downward trend. Don't follow the trend downward. Beat the trend, price appropriately, and sell fast. It will probably be a few years before things turn around. Especially, if the feds start to fight inflation and increase the fed funds rate, prices will have to move downward as mortgage rates go up. Housing prices are inversely correlated with interest rates. In simple terms, as mortgage interest rates go up, housing prices come down. So, if they are low now, then, when they start to go up, prices will have to come down because it is all about the "monthly payment" for most buyers. Especially with the recent report on salaries being flat/decreasing on average and increasing unemployment, you don't have a favorable market to keep pushing prices up. We have a ways to go...

I used to be happy that the price of houses were coming down to more sensible / affordable levels. Now considering the state of the economy, the level of our countries debt (we still have to pay for invading two countries), and the fact that there's still $96,000,000,000 in option ARM to recast between now and end of 2010... this is down right frightening. I am terrified!

Forget buying houses for penny's on the dollar in 2012. I'm afraid of complete dollar collapse.

It looks like things could get really pretty.

I was going to say "really ugly," but then I realized the ugly part was back when people were gambling their financial future on enormously expensive assets in a highly speculative market. It's going to be a lot prettier when people are able to buy houses they can afford, and that provide them with a place to build a family and sense of community.

bearing01, In my opinion, the $ is the strongest currency in the World. Don't fear, unless everyone in the USA stops paying taxes. The government will eventually increase the fed funds rate to offset inflation and devaluation of the dollar. They have other means to curtail this too. That's one reason why oil is already coming down because of the strengthening of the dollar. Unless we go to war with Iran, the price of oil will keep coming down. Also, the feds will keep the banks going where needed. Some will fail, others will survive. What I would fear most is an increase in taxes for businesses and the individual to offset the growing gov't debt. The money has to come from somewhere, but as long as everyone agrees to upholding their tax payments to the gov't, we are good to go. Other countries know this and are willing to invest in this and buy gov't securities because of our solid tax payer base. Just consider it the extra "cost" of Freedom, a cost that will probably continue to grow over the years, based on history.

The 2 countries we "invaded", depending on how you see it, helped secure our future. 1, from a standpoint of international military strength and reach, to 2, the ability of our gov't / country to recover from 9/11, to 3, the ability of our financial markets to hold strong.

Someone needed to go into the Middle East to straighten things out. This is a long term strategy to stabilize the world from militant extremists. Look at the history of militant attacks. This is nothing new to the world, but 9/11 made us say, this is enough. When you have rogue countries that are very wealthy off of oil trying to play chess with the rest of the world, things start to get dangerous. The move into Iraq, while also having an oil play, was a strategic move to stabilize the Middle East. Now, Iran, if they try anything, will face a 2 fronted war from the East and West as we sandwich them in-between Afhganistan and Iraq. 10, 20, maybe 50 years from now, the move, though not popular today, will be applauded. Yet, we need to move away from oil and filling the militants' and rogue countries' pockets with our hard-earned money to come and attack us with. Electric cars, hybrids, Hydrogen Fuel Cells, etc. will move the money away from the Middle East and other oil producing, power hungry countries like Russia and Venezuela. We will get there, just hang on. It may be a bumpy ride.

(Sorry to digress from the RE topics...)

This has become a seriously flawed and uncritical echo chamber. Fairly absurd between the writings of a guy from Ventura commenting on our local market to another guy rambling about geo-politics.

seriously flawed...

I'm working on the change-over to the new blog host - hang in there with me, it shouldn't be more than a week!

Part of the struggle having a blog is trying to come up with entertaining stories/videos on a regular basis. Sometimes I get lucky, other times it's seriously flawed and uncritical.

Lately I've had my hands full with having to make five offers for every one I used to make, due to these nutty short sales. If the listing agents would accept one and push the bank to take it, it would be empowering, and more likely cause the buyers to stick around.

But instead we're sending offer after offer into the black hole, not hearing any response for weeks or months. Literally there are offers I've made months ago that I never heard an answer, and the property still hasn't sold.

Mozart, you've been a great contributor, suggest a topic and go with it!

Here's some topics...

1. What is a seller thinking when their price is crazy high and the listing has gone on for over 150 days?

2. I'd like more understanding of what realtors are thinking. Do they ever reference numbers or are prices based on what they "feel like" that day.

3. Using the comps model what happens to a houses appraisal if one/some of the comps used do determine price turns out to be mortgage fraud?

4. How do realtors feel about the 6% commission structure. Do they deserve it? Is it earned? Do they honestly feel they're helping a seller by jacking up the price of the transaction?

5. Many people on this blog seem to "get it" regarding pricing and what's going on in the current economy. How do you deal/work with people that aren't even in the same ball park?

6. With loan requirements tightening what kinds of numbers are needed to qualify for a non jumbo loan? What kinds of down payments?

I'd like to see more information about the tax pros/cons of owning a house.

Maybe a guest blogger every now and again. As long as it's not that numbnut from the bloodhound blog.

What about showing what 400k buys you in other parts of the country? Although I'd never move it's fun to see what money can buy.

Real estate is LOCAL. How dare Rob chime in on matters below Ventura. Go back to the valley, man.

I wouldn't worry about a complete dollar collapse for now, bearing01. If you start seeing commodities skyrocket then there is reason for worry.

Blue Streak,
I have a different opinion on the issues you raised, but I'm not going to go into it on this board. Just note that the dollar hasn't recently gained strength... it's the foreign currencies that have weakened due to their own inflation that resulted from their attempts to prop up the dollar, their attempt to keep the US importing from them and the large number of US dollars in their (foreign) central due to the US trade deficit. Comparing the US deficit to the US GDP it's 5 to 6 times higher, whereas historical averages are like 2.

http://www.cedarcomm.com/~stevelm1/usdebt.htm

Lets not be so quick on making attacks on blue streak. As long as a post is rational and intelligent,a little drift of the subject matter is not lethal. His/Her manifesto was spot on, and the the falling/rising dollar does have massive ramifications on real estate pricing.

JTR, please do not cave to every poster preference of real estate subject matter.

I check in every week or so, and you are doing a fantastic job, the site is attracting a much more intellectual crowd as opposed to the normal "whats my house worth" HGTV type of crowd.

I read regularly too and really enjoy your posts. Please keep up the good work.

ECON7,
I hear you... I didn't mean to come off as to attack Blue Streak. What he/she said did make sense.

Also, like genus said, We're just seeing the down side of a commodities bubble. We have experienced inflation. Gasoline is double what it was before we went to Iraq. The CPI and GDP numbers mean little because the government has control on how to fudge them to make everything appear good. As for inflation, if 1% of the $96,000,000,000 defaults that means that $1,000,000,000 isn't getting paid back. That's $1T dollars left in the economy that will drive up inflation. Also, all those treasuries printed to borrow to pay for the war(s) will end up as new printed money. All those dollars will remain in the system to drive up inflation. War is super inflationary!

When the fed increases interest rates to shore up the sale of future treasuries and to stop inflation the economy will like slow to a crawl. All at a time when we need it the least. The housing market comeback is probably #2 or #3 or even further down on the list of problems.

There is nothing rational in BlueStreak's geo-strategical rant. It is total bull and signals not only lack of factual knowledge, but also the ability to infer.

Just want to correct something I said above.

"Comparing the US deficit to the US GDP it's 5 to 6 times higher, whereas historical averages are like 2." <- not true..

*I meant $1B, not $1T
*The total DEBT ($53T) to GDP ($13.8T) is more like 3.8:1, an all time high
*Government liabilities ($59.1T = social security, medicare, deficit) to GPD is like 4.3:1, an all time high
*Bush budget forecasts at least $407B more debt for fiscal year 2009 starting Oct 01.

All the thing Blue Streak talks about could have been accomplished at a fraction of the cost both in dollars and lives (both US and Iraqi) by a more sane and US focused foreign policy. Iraq posed no threat to the US and they knew that. They had planned to go into Iraq well before 9/11. Paul O'Niel stated as much along with many others.

What we did in Iraq was an unprovoked act of aggression and a war crime. And it was completely contrary to US interests, mading the lives of average Americans more painful that they had to be over the last five years. It ballooned the cost of oil and basically killed the already ailing US auto industry, among many other negative economic effects.

All for absolutely nothing.

And the Republican party will get crushed this fall as well, as they should (although my wallet will regret it). They will be crushed certainly in the house and senate and quite possibly at the presidential level as Obama just hit 50+% in the polls.

How people like Blue Streak can still cling to the bizarre notion that the Iraq war was a productive endeavor after so much evidence to the contrary is really beyond me.

I would strongly prefer people keep the discussion about real estate as Blue Streaks comments brought intelligence level on the blog way down. Just regurgitation of neocon talking points with a little "FOX News" thrown in. I can get that at plenty of brain dead blogs all over the web.

Hmmm...

I'm surprised at some of the responses. I thought most bloggers would try and keep it professional and provide an open forum for disucssion. I guess I was wrong.

Let's get back to housing here. I too am curious about seller rationale in general - what I've seen is it's very diverse and circumstantial.

Anecdotally, I've seen a lot of reasons why a seller holds out for 100+ days. One guy had to move to SF for a job and just bought his townhouse - he got greedy and when no one took him up on the offer he put up a "for rent" sign instead - $3000 a month for a 1250 sqft townhouse in Carmel Valley (Townhouse value between $450K and $500K). Months later, he puts his house back on the market at $25K less. I think this guy may just feel stuck - it's human nature to try everything to avoid a loss before you can accept it.

I know I used to do it with stocks - there was a psychological barrier to selling for a loss even when I felt the stock was about to drop even further. So I'd watch it keep dropping further until I came to my senses and cut my losses. These days I'm doing much better cutting my losses - often buying the stock back when it becomes a real bargain.

Blue Streak, some of your lecture about economics and war is just wishful speculation preached as reality, and you speak of it like you only half believe it yourself. There's nothing wrong with testing out theories, but aren't there more relevant forums for that kind of discussion? I wouldn't mind anything you said if it were on-topic in the right forum.

This site does SD housing bubble really well, and almost everyone would like it to stay that way.

Right after I posted I was reading this article that mentions "shadow inventory":
http://www.signonsandiego.com/news/business/20080819-1145-allbusiness.html

I.e. REOs that don't show up on MLS. The article says in some areas only half the REOs show up..any numbers on San Diego? On Calculated Risk I was surprised to see San Diego had 1/3 as many foreclosures total as Los Angeles, which is alarming considering how much bigger their housing market is..

"I'm surprised at some of the responses. I thought most bloggers would try and keep it professional"

You blew that out of the water when you went off-topic. The responders merely followed your lead.

I'm not surprised that some sellers will set a price and just not sell if they don't get it. Even in the worst market there are those who don't have to sell unless they get what they want. What surprises me is that they can get realtors to expend time, effort and expense on their behalf.

Interesting posts. As for real estate, we all know things are difficult to put it mildly, and as to war, I'm not a pacifist- protecting our way of life, I believe, is a responsability we all share.

I thought most bloggers would try and keep it professional and provide an open forum for disucssion.

YOU are the one who took the blog off topic!

That is like McCain saying to Russia "countries just don't invade other countries in the 21st century."

You can't get much less self-reflection or much more ironic than that statement, but you have certainly tried BS.

What surprises me is that they can get realtors to expend time, effort and expense on their behalf.

Some realtors have zero business because a small number of realtors do the majority of the business. It is no wonder that a struggling realtor would take the customer on, just for the hope of a luck pay day.

I think we are all becoming a little bored watching the SD RE market in the dog days of summer.

Hopefully, the next leg down will be coming on strong as Sept/Oct arrive and give us real estate related topics to focus on again.

No turning the knives on each other while we are waiting, folks.

Regarding keeping the price too high for too long: isn't it true that in order to be approved for a short sale you have to try to sell the home at a price that could get the lenders out whole, to justify lowering the price later? Plus, with how much time it takes for lenders to approve short sales, it may be that the homeowner is waiting for short sale approval, but ultimately going down a bad sales strategy too.

plugra, the bank does have to show they tried to get the best offer. But I don't think it would be called a short sale if the bank gets out whole.

I've seen plenty of listings where they confidently told me what the bank would accept, even though it was priced at a decent discount. If they were going to make profit, they wouldn't short sale.