We just bought a home in Temecula. The reason why we purchased was because of the following reasons:

1.) We could afford it on our income
2.) Our loan was a 30 year fixed at a low interest rate
3.) The neighborhood is nice
4.) the schools are exceptional
5.) Close family
6.) No plans to move for the next 12 years

Lenders are stricter about who can buy. You can't even get 100% financing anymore and unfortunately, for our country, people don't save so you have less buyers. Even CALHFA won't loan you 100% without the borrowers having a 680 FICO. Private Mortgage Insurance companies won't sign off on risky loans either.

There are some buyers like us who no way in hell were going to purchase a home that is 5-10 times more than our income, no matter how hot the market was. Until the market becomes more in line with incomes, you'll still have people holding out. Even if they wanted to, with the tighter restrictions, doesn't mean they will find a lender who will approve them over their income.

Sat Apr 19 2008, 09:16

Hey Guy!

Thanks for the comment and for joining the conversation. You are more than qualified to answer my original post and I'm sure the Trulia community would agree.

In response to your comment about "foolishly" believing the news, you are not foolish to believe what you read. However, I am very weary of the media's reporting because it is quite sensational. When the market is down, the media (generally) portrays the worst of "doom & gloom", and when the market is up, the media (again generally) hypes the increase in activity & values. I don't mean to suggest you (Buyers collectively) read and believe only what the NAR (National Association of Realtors), CAR (California Association of Realtors), or your local Realtor provide to you regarding market conditions, but that information may be a good diametric in order to find a truthful median.

Responding to your comment regarding Realtor credibility, take what "Joe Realtor" says with a grain of salt ( I know that's an oxymoron considering my status here on Trulia). My guess is you're friends with at least one Realtor in your area -- probably more than a few. If you trust that Realtor-friend, he/she should have no reason to lie to you. It is not tough to be optomistic as a Realtor because we can technically play with both teams. Personally, when experiencing a "Buyer's Market", I encourage my Buyers, and when experiencing a "Seller's Market", I encourage my Sellers. My goal is not to sell my Buyer a home with the intention of re-selling his/her property a year later as a short sale.

And regarding your previous $405,000 offer Guy, you are absolutely entitled to laugh. Even in an obvious down market, many Sellers are still too stubborn to realize their loss (virtual or actual). Obviously, that Seller has become more realistic, but for him/her it may already be too late.

All the best Guy and thanks again,
~ jordan elias

Fri Apr 18 2008, 10:57

Guy,
Can you give us the address of that home that you made the $405k offer on? Would love to track it's price reductions...
Thanks,
John

Fri Apr 18 2008, 10:21

While I know I am not looking in the same market as the poster (Looking in Sacramento), I wanted to offer a comment from my perspective. My wife and I have been looking for a home for a few years. By looking, I mean we are out a few times a month looking at open houses, reading every article available on the local market and searching MLS almost daily. I feel a little qualified to answer why buyers are dragging their feet at least from my point of view.

In general, we, as buyers, are hit almost daily with bad news on the housing market. This in turn does not provide the most stable confidence in making one of the biggest investments of our lives. We listen to the news and think, perhaps foolishly, that they are telling the truth.

In addition, I have seen so many homes over the past few years and talked with tons of agents at open houses who all say the same thing "this is the best time to buy!" The problem is that they (agents) have said this consistently throughout 2006,2007, etc. So, I feel as if there is a credibility issue with agents in general. I know it's their job to sell, but I have spoken to a few agents who almost refuse to admit the market is in trouble.

Lastly, I think some of us buyers are put off by seller's asking price and unwillingness to consider offers below asking. We offered $405k on a asking price of $410k and the seller counted with full price. We laughed and moved on. Last I saw, the house was still on the market for $389.5k.

Guy

Fri Apr 18 2008, 08:21

Jordan,

It's about time.! .. consumers needed that info 2 years ago, but at least it's here now..

The problem is, it will take another 2 years for it to circle the planet .. ; ^)

You have every blogger and internet site from Calcutta to California giving everyone affirmation on this issue .. plus all of the idiot writers and newscasters that give it as the nightly news .. "it's okay to be a "walk-away" Borrower.."

Lets not forget all of infomercials and trailers behind the American Idol show:
"perfect credit in 30 days." .. "foreclosures forgotten in 5 easy steps.." ... "short steps to short sales, speedy and safe by spring" etc, etc ....

I knew it had embedded itself into society when smart, successful and educated people were discussing what they should cut from the herd before they bought their next $250,000 cruiser at the Miami Boat show in 2007 ..

When you start hearing it from very noted people at the Masters .. then you know people haven't visited a library in a long long time .l.o.l..

;^)

-

Thu Apr 17 2008, 19:12

Jordan, thanks for posting this, I hadn't seen it. This should be a great kick in the pants and a good first step towards avoiding yet another moral hazard. It also means the housing market sure ain't going to get any better from this, but at least we housing bears are finally getting a little respect for our prudent approach to the market.

Thu Apr 17 2008, 18:21

I hope everyone is having a nice week! Below I am including an article regarding tightening guidelines with "walk-away" Borrowers:

"Fannie warns homeowners who walk away
Kenneth Harney
Sunday, April 13, 2008

(04-13) 04:00 PDT Washington -- The country's two largest sources of mortgage money have a blunt warning for anyone thinking about joining the growing "walkaway" trend, where homeowners stop making payments and months later send the house keys back to their lender: You will feel the pain.

On March 31, Fannie Mae sent out new guidelines to lenders intended for walkaways and other foreclosure situations. Fannie will now prohibit foreclosed borrowers from getting another mortgage through the giant investor for five years, unless there are "documented extenuating circumstances." In those cases, the mortgage prohibition is for three years.

Even after five years, borrowers with foreclosures in their files will be required to make at least a 10 percent down payment, and will need minimum FICO credit scores of 680.

Freddie Mac, Fannie's rival, counts foreclosures as major credit blots for seven years, and a senior official said the company is now aggressively pursuing some walkaway borrowers "to preserve our deficiency rights" where permitted under state law.

The walkaway trend is particularly noteworthy in former housing boom markets - including California, Florida and Nevada - where many homeowners find themselves upside down on their loans, owing tens of thousands more than the current market value of their houses. If they invested little or nothing in down payments, some owners reason, continuing to make payments - even if they can afford to - may be throwing good money after bad.

A number of Web sites have popped up claiming to cut the hassles of bailing out of a mortgage. One company promises that clients "will be able to live in (the) home for up to eight months with no mortgage payments," after paying $895 for a customized plan. The same site says it will provide clients with "legal credit repair" to "improve your FICO scores."

Another Web site claims that "your credit can be repaired and (you will) be able to purchase a house in as few as two years" - after paying a $495 fee. Still another company says walkaways can expect "up to one year living payment free" as the lender goes about filing for foreclosure. That company charges $995 for its how-to-do-it kit.

Fair Isaac Corp. of Minneapolis, developer of the FICO scores used in most mortgage transactions, is unhappy at any suggestion that a foreclosure could be minimized or wiped away in a short period of time. Its scoring model counts foreclosure as a long-standing and severe event, nearly comparable with bankruptcy, with negative consequences for all forms of credit that walkaways might seek to obtain. That includes credit card applications, auto loans, student loans - and even insurance and employment.

FICO spokesman Craig Watts said that the impact of a foreclosure on an individual's score depends heavily on the payment history, length and number of credit trade lines in a consumer's file, but "it is always significant."

Robin Stout Migala, consumer outreach manager for Freddie Mac, said in an interview that "there are so many bad reasons for walking away" from a home loan. Not only are borrowers' credit standings wrecked - forcing them into excessively high interest rates on any credit they can manage to obtain. But they also face other potential problems, including federal income tax liabilities.

Federal legislation enacted last year allows homeowners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven. Walkaway borrowers, by contrast, have nothing forgiven, and the IRS may demand income taxes on the balance they never paid, according to Migala.

Many borrowers facing foreclosure today have endured serious financial crises, said Migala - loss of employment, loss of an income-earning spouse, medical issues, predatory loan terms - that led to their inability to make their mortgage payments.

When they apply for a loan from either Freddie Mac or Fannie Mae, she said, the standard application form asks whether they have ever experienced a foreclosure or handed over their deed in lieu of foreclosure.

If applicants check "yes," the loan is immediately shifted to manual underwriting. Every piece of information is scrutinized by underwriters, who probe for the facts surrounding the loss of the house.

For borrowers who faced genuine financial hardships leading to foreclosure, underwriters are likely to be more sympathetic a few years down the road. But if you walk away, here's the deal: Don't expect to get a new home loan - certainly not one with favorable terms - for five to seven years.

That's no matter what some promoter promised you online."

Take care,
~ jordan elias

Thu Apr 17 2008, 18:10

Hey John,

Thanks for posting the video link!

I have attached a link as well for anyone interested. Many have probably already seen/read this report. The report was created by Gary Watts who is a Real Estate Economist. I caution those who are already weary because this report reads very "ra - ra - real estate", but the statistics are interesting.

Hope we're all having a great weekend & enjoying this Southern California heat!!
~ jordan elias

Sat Apr 12 2008, 13:57

Great ABC News video piece with Robert Shiller on home prices and how homes are historicaly a terrible investment...

http://tinyurl.com/4gmglh

Sat Apr 12 2008, 13:38

268 useless answers
thumbs down #4 for you
nothing personal
just the facts
none of the answers have anything to do with the question
in conclusion, the only thing i got out of reading 268 posts is
Sylvia and Dot like Jordan

Fri Apr 11 2008, 13:14

Hey Yev,

Thank you for the Street View link. I have used Google's Street View in the past, but only to match points of referrence since the photos are not often updated. Regarding the Kling house, I would guess your numbers on the remodel/rebuild are conservative. However, if one were to spend the money to remodel/rebuild that property, it would be difficult to realize the added value in this, or near future markets. In my opinion, there are too many issues with the location (ie: commercial use buildings directly accross the street, proximity to the 101, proximity to senior living dwellings, etc.). I'll be interested to watch what happens with this property.

Happy Thursday all!
~ jordan elias

Thu Apr 10 2008, 11:19

Jordan, THANK YOU for posting this - it truly has been an enlightening discussion and you've gotten all sides here.

Yev, I use the street view and love it - it is a great tool to use.

Wed Apr 9 2008, 21:46

www.msn.com has birds eye views, and you can rotate the view to see all sides.

Wed Apr 9 2008, 18:55

Ok, here is a little help for the realtors here. Ever want to see what a house looks like from outside without lifting your foot?

Go to maps.google.com, enter the address and choose Street View, some of it is accurate some of it is not, but you'll get an idea of a neighborhood without having to go out there.

Jordan, here is the link for the Kling house, click on the little yellow guy when the link opens, the green arrow is the wrong address.

http://maps.google.com/maps?f=q&hl=en&geocode=&q=+12824+KLIN…

Wed Apr 9 2008, 17:37

Love these two articles...tough to argue that it's a great time to buy when buying in LA costs more than double the rents...Even worse in West LA where I am looking to purchase...

http://www.azcentral.com/arizonarepublic/business/articles/0…

http://www.boston.com/realestate/news/blogs/renow/2008/04/le…

Wed Apr 9 2008, 16:20

Good suggestions, everyone. I do disagree with Sylvia a little, in that post-hoc editing of threads invariably breaks the flow. I'm a big fan of archiving everything as a snapshot.

About the thumbs: a lot of folks love 'em and try to get as many as possible as a sign of their expertise, by contributing thoughtful answers. taking them down seems unfair. And if we have TUs , it also seems fair and logical to have TDs.

We don't display TD counts on an individual basis, but we do use them (as well as TUs) in some of our algorithms, e.g. to determine rankings in member search. They only contribute a fraction of your ranking score, and we filter out anomalies (drive-by vendetta TDs, for example, and only one TD per user per answer counts, etc) so please don't be afraid of the thumbs.

We do value your feedback, though, and incorporate it into our product designs, so keep it coming!

Wed Apr 9 2008, 13:39

It is their market! The have tons and tons of choices. I think it is a great time to be working with buyers!

Wed Apr 9 2008, 13:33