I agree that this is just the beginning. With an overstock of inventory and consumer confidence at its lowest it seems we have a long road to recovery. Always keep in mind that with every bad situation something good comes out of it. If the Silicon Valey market was never effected it would not have given the opportunity to help those that wanted to buy but, never could when the market was booming with its climbing prices. Now there is first time buyers that actually have a chance of owning a home if prices continue downward.
I agree with Gretchen that we are likely not through the crisis yet, and to tell you the truth, the data suggests that we are just at the beginning. As you pointed out correctly, the crisis is only now reaching Silicon Valley. If you look at the chart the illustrates the total dollar amount of loans that will reset over the coming years, you can see that this is not a problem that is going to go away any time soon. Click the link below in the "Web Reference" box below for the chart.
When a loan resets to a higher interest rate, and therefore bigger payment, many homeowners try to make their increased mortgage payment the best they can for a while - they may get a second job, or borrow money from family members, or worse, chase good money with bad by using their credit cards. They become over extended and eventually they just can't make ends meet anymore, so they miss a payment... and then another... and by then, their past due balance is getting bigger and bigger, a problem compounded by interest and late fees and penalties. So you see, there is usually a delay between the time the rate resets and the problem presents itself.
When this happens, the problem is that a majority of people simply donâ€™t know that to do. The fact of the matter is that there actually ARE options for people facing foreclosure. There are options for the homeowner that wants to stay in their property, options for the homeowner that needs to sell their property and a couple of other â€œlast resortâ€ options as well. It is very important that people understand their options in order to save their credit, livelyhood, pride and self-esteem.
I am a Certified Pre-Foreclosure Specialist, Certified Short Sale Specialist and Real Estate Consultant. To try and help educate people about what they can do to avoid foreclosure, I recently wrote a report called, "11 Options for Homeowners Facing Foreclosure," which can be downloaded from my Website at http://www.BartForHomes.com and clicking on the "You Can Avoid Foreclosure" link in the menu on the left when you get there.
With my specialized knowledge, I am trying to help as many people as possible avoid the devastating effects of foreclosure. I've been writing about it on my blog, talking with homeowners, and telling as many people as I can that they can do something about it. Because you are right, Mo, I think it's going to get worse before it gets better... We just need to do something about it.
If you or anyone you know who might be facing that situation. Let me know, I'd like to help them.
prices fell back from 1989 to 1991 and 2000 to 2002.. once again we will see prices fall.
The high salaries are a primary driver for job migration out of the region and outsourcing to China/Inda.
Its far too expensive compare to othe regions. Not hard to see giants like Intel and HP have far more
operations outside of SV. Downturns happen and we do get layoffs all the time. More recently HP, AMD, Syntex, Intel, Symantec and many others. There are many reasons why prices have gone up over the past
10 years and none were based on fundemental reasons. But as several CEOs of local companies have
stated if prices stay inflated they will continue move jobs elsewhere and have the same future as manufacturing did back in 1990. Altogether not very good news.
However, the variable rate loans that people took out en masse in 2003 to 2006 are still going up. And gas prices have climbed. This double whammy for people who are on a very strict income -- that is, no wiggle room -- can cause an inability to pay the new mortgage when the variable rate goes up each year. Each time the variable rate goes up, a new group of homeowners is pushed out of being able to stay.
I am not seeing indications of the short sale and foreclosure business going down, if that is the question.
However, interest rates (a determiner for most people of how much you can afford) are still quite low in a historical perspective. so the combination of low price of homes and reasonable interest rates is very good right now for buyers. Will this change? Who knows. The only time you know the market hit bottom is when it is bouncing back up.
US government is predicting a bottom appreciation 3rd-4th quarter this year for West Coast and forcasting an upswing trend starting in 2009. Last week the mortgage interest drops 1% precipitating several clients on hold wanting to buy properties. People are cautiously buying and selling. Most buyers are focused on heavily discounted sales to take advantage of the price slick.
Are you hearing massive lay off in Silicon Valley? This is an area cushioned by very high income and highly educated residents. People wait for the price to drop will miss out the opportunities in this cycle.
If you want to read about history of "SOUTH SANTA CLARA COUNTY"-then and now, check out my new book available on line. Sam Shueh, realtor and author
I saw signs of the foreclosure crisis hitting our area (south Santa Clara County) last summer when many of the lower priced homes were short sales. Quite a few of these short sales never closed escrow and became bank-owned properties. The number of short sales and bank owned properties has risen since last summer and we have quite an inventory to work through before the numbers subside.
Within the last few weeks I've seen an increase in the sales of bank-owned properties with some of them receiving multiple offers. Anecdotally, banks seem to be willing lately to substantially negotiate their prices just to get some of these properties off of their books.
As far as whether it will get worse over the next year, I've heard that there are still many loans coming up that will be adjusting creating more distressed housing. Unless the home owners can get a loan modification, they will probably attempt a short sale or go into foreclosure. I've read that congress is working on a plan that will authorize FHA to help refinance loans where lenders agree to principal write-downs. This would help curb the foreclosure numbers.
I'd be interested in hearing others' opinions on whether they think we're through the worst of it yet....