Nathan

Yes, Michelle I do believe real market will continue to drop over the next 12-18 months especially considering the fact the unemployment rate is going higher and the economy continues to weaken across the board. Interest rates are holding steady for the most part on conforming loans; however jumbo loan rates are out of sight so this should cause considerable pain at the top end of market going forward.

Incomes by and large still do not support home prices at these levels today especially when you consider medium household incomes in Fresno County have climbed only 50% since first quarter of 1991. The medium home price in Fresno County will eventually fall back to around $150K and right now I believe the medium home price in Fresno County is $189K so we have a ways to go.

We need to start with creating more jobs in all sectors of our economy here in Fresno that pay higher wages otherwise we are going to have a real difficult time supporting higher home prices going forward.

The Alt-A resets are going to start spiking considerably higher starting in second half of 2009 all the way until 2011 so this could be a huge factor in the next wave of foreclosures that floods the market place going forward.

If interest rates climb too much we could be in for a bigger downturn going forward because more and more potential home buyers will not qualify for home loans unless prices continue to fall.

The link below will take you to the Credit Suisse chart regarding the upcoming resets. Michelle, whatever you do be careful this will be wild ride that will take years to play out especially now that the government is knee deep in trying to solve the problem.

The problems we face today are years in the making so there is no quick fix that will turn things around now on a dime. I have a hard time believing no one saw this crisis years ago as I did back in the spring of 2005 when I would tell people the market was over valued and way over extended. People were flipping homes just like they were buying and selling internet stocks in the late 1990's before the tech bubble burst.

We continued to underwrite these adjustable rate loans, no money down loans and all of these teaser rate loans in 2005 thinking home prices would defy the odds and continue to go up year after year. Whoever thinks 10, 15 or 20% home price appreciation is normal year end and year out is out of their mind and does not understand the dynamics of real estate and the economics.

Greed played a huge role in this bubble and now the house of cards is tumbling like no tomorrow.

In some ways you could say we are addicted to credit like a drug addict is addicted to a needle and we finally overdosed on credit and the hangover is severe.

Good Luck! - Fri Oct 17 2008, 09:28

The housing bubble is taking it's toll on the California economy because Schwarzenger now is asking the treasury for another bailout. (see article below)

When are all these bailouts going to stop!!! People need to start living within there means for a change.

They should then stop buying all this overpriced real estate that they know full well they will never pay back in terms of the loan they have signed up for.

The real estate market in Fresno was in a bubble starting in the early days of 2002. Then the prices just exploded by going straight up for three consective years with the eventual top in late 2005 or early 2006.

Gov. Schwarzenegger asks Treasury for $7B loan

California may need a $7 billion emergency loan from the Federal government for day-to-day operations and to pay teachers' salaries, nursing homes, law enforcement and every other State-funded service this month, Gov. Arnold Schwarzenegger warned in a letter sent Thursday to the U.S. Treasury secretary.
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The California governor's letter, published in Friday's Los Angeles Times, was written on the eve of an expected vote in the U.S. House on the Federal bailout of the financial system.

"The federal rescue package is not a bailout of Wall Street tycoons - it is a lifeboat for millions of Americans whose life savings, businesses, retirement plans and jobs are at stake," Schwarzenegger said.

California State Treasurer Bill Lockyer issued a statement a day earlier saying because of the national financial crisis, California "has been locked out of credit markets for the past 10 days."

"Absent a clear resolution to this financial crisis that restores confidence and liquidity to the credit markets, California and other states may be unable to obtain the necessary level of financing to maintain government operations and may be forced to turn to the Federal Treasury for short-term financing," Schwarzenegger wrote.

California's governor warned that a number of states are facing the same cash flow crunch this month, but his state is "so large that our short-term cash flow needs exceed the entire budget of some states."

Schwarzenegger said his state would attempt to sell "$7 billion in Revenue Anticipation Notes for short term cash flow purposes in a matter of days."

Lockyer said that unless the national economic crisis subsides and California can secure private short-term loans "the State's cash reserves would be exhausted near the end of October." - Fri Oct 3 2008, 12:47

There are some huge homes at Harlan Range selling for $399K that are REO's built by Wathen that are over 3700 square feet. The Harlan Range development is tanking in terms of the prices in a huge way. The homes at Harlan Range were way overpriced that is why the area is just getting smashed right now. My brother purchased Wathen home at Shepherd and Fowler in January of 2003 and he paid $280K and then another $30K for the pool for a 2200 sq. ft. home. Before long prices will be right back to those levels the way this market is going. The bailout bill is going make things worse and it's disaster we have let things get this bad in terms of our financial markets. In fact I believe it's an embarrasment to the entire country to be proposing such a massive bailout.

The party on Wall Street may be over; however the hang over is going to last for a number of years to come especially when you consider the damage we have done to the broader economy and financial markets.
. - Wed Oct 1 2008, 21:11

Please do yourself a favor and millions of taxpayers by continuing to rent. If you buy now you will be underwater by the time you sell in 2 or 3 years. The smart choice for your circumstance will be renting no doubt about it. - Mon Sep 15 2008, 15:18

The inventory in around the Shaver Lake area is overwhelming when it comes to cabins and vacant lots. The inventory for homes is around 85 right now; however only 20 properties have sold in the last 6 months as of today 7/31/2008.

The inventory of vacant lots is continues to break all-time records and right now there are around 100 lots for sale on the MLS. This does not include a large number of lots at Quartz Mountain that are not listed on the MLS currently, but are being sold directly by the developer. Lot sales are a disaster given the fact only 3 have closed escrow in the first 7 months of this year.

The majority of the lots for sale are 25-30% overpriced in my opinion and sellers are being unrealistic and unreasonable because buyers are just not going to pay those inflated prices anymore. The majority of the lots for sale have been on the market for 2 years or more so this downturn may take another 3 years to play out because the number of transactions has declined sharply.

Foreclosures are happening in and around the Shaver Lake area so that may be your best bet right now. There are a few on the open market right now and 6 or 7 that will soon be reposed by the banks that may offer them for big discounts to move them off their books.

When looking out to 2009 I see a market with a large inventory overhang from 2008 at Shaver Lake for both homes and lots. This could change if something huge happens in the market place; but it would need to take place quickly because summer will be over in 30 days and that will finish off the busy season at Shaver. The market will face downward pressure on prices for some time to come mainly because prices were going straight up from the late 1990's to about 2006 when the market peaked at Shaver.

The high end demand for homes of $1 million and more is dead in fact in the last six months not one sale has occurred in this price range.

High gas prices are no friend to the Shaver Lake real estate market so if the gas prices plunge that might improve sales going forward to some degree. Too many speculators who purchased at the beginning of this decade are running for the exits and this has caused a tremendous amount of inventory. I was just up in the Shaver area last weekend and I did not see too many people looking at property in general. One thing is for certain if you can find a property way below market value it might be worth it because you do not have much competition from other buyers right now.

Time is on your side when it comes to the Shaver Lake real estate market without a doubt.

This may be the best buyers market today in the 29 years I have gone to Huntington and Shaver areas; however this buyers market will continue for a few more years because this is not the bottom of the market. - Thu Jul 31 2008, 16:30

FRANKFURT (Reuters) - JPMorgan Chase & Co does not expect the U.S. financial crisis to end soon and will remain very cautious, its top executive said in comments published by a German weekly on Saturday.

"We can only speculate how deep and how long the recession in the United States will really be and how that in turn will impact banks," James Dimon told "Welt am Sonntag."

"But we are not done with the crisis for a long time," Dimon said, adding that it was not the company's job to make bets on the future.

"Imagine we would need to walk up to our shareholders one day and say, sorry but the recession in the USA is so bad, we're broke. We need to be able to rule out at all times that it will not come to that," Dimon said. - Sat May 3 2008, 21:31