While mortgage rates remain at historic lows (with plugged-in readers securing 4.375% 30-year rates), mortgage application volume for purchases in the U.S. remains down 38.8% on a year-over-year basis (up 4% week-over-week) according to the latest MBA survey.
∙ Mortgage Bankers Association Applications Survey: 9/03/10 [mortgagebankers.org]
∙ Rates Hit 20-Year Low Yet Purchase Activity Is Down 38.8% YOY [SocketSite]
FHA changed the seller cash back from 6 percent to 3 percent. And with the tax credits gone, the government no longer subsidizes the first three years mortgage payments.
With 3.5 percent down and only 3 percent back, you actually need one half of one percent for a down payment, and after that, you actually have to pay your mortgage.
Who can afford to do that at these prices? Apparently, not as many people as when the government made your down payment and paid a big chunk of the first three years of your mortgage.
There are 2 types of buyers:
– Those who only look at how much they pay per month
– Those who look at how much liability they are getting
Those who fall into the first category have mostly been slaughtered in 2006-2010. What’s left are value buyers, and they are not idiots. They know a debt trap where they see it.
The issue is prices, not rates…
tipster, thats only if the seller agrees to offer that 3% back. ours is not. we got 4.25, no points on an FHA w 7% down and even got a credit from the lender b/c we balked at some closing costs. yes, we are looking at liability, but also investment potential in the only place in SF you can still buy low and someday sell high: bayside brand-new construction.
abigrrrl – I see 57 Megan Dr at Bayside Village is asking $519k for a 3/2.5 with 1596 SqFt. Meanwhile 29 Jennings a 1/4 mile away is only asking $285k. It appears to be a 12 year old version of Bayside – built in 1998 it is a 3/2 with almost 2,000 SqFt and appears to have a deck and yard access.
So care to share how yours won’t suffer the same fate as 29 Jennings? Or why you wouldn’t buy the larger 12 year old version for almost 50% less?
“yes, we are looking at liability, but also investment potential in the only place in SF you can still buy low and someday sell high: bayside brand-new construction.”
This is exactly what casual buyers shouldn’t be doing — treating housing as an investment. You are not investing, but rather speculating.
Also, for buying new construction, you will lose some money off the bat, just like you do for a new car. Better to buy 29 Jennings, as hangemhi mentioned, so that you make someone else take the new house smell hit (of noxious chemicals) and get a more accurate market value.
Abigrrl,
Sounds like your job at the sales office is going well. Do try to discourage people from demanding the 3 percent, because that comes right off of your bottom line.
Nice touch about buy low sell high. They aren’t making any more land, etc.
this is fun! ok, here, nay-sayers:
hangemhi: have you driven around in bayview? 29 Jennings is not, NOT the same as BSV. i looked at it and had no interest in the neighborhood. while on a map, there may not be discernible differences; in reality there very much are. not to mention the interior doesn’t compare, but im sure you could upgrade at that price, yada yada.
also, 12 yrs ago this was not on the docket, https://socketsite.com/archives/2009/11/candlestick_pointhunters_point_shipyard_phase_ii_develo.html
nor was this; http://www.vmwp.com/projects/schlage-lock-area-plan.php
and although im not fully convinced of the entirety of these plans coming through, i am that enough of them will. where else does SF have to expand? pretty much nowhere, or enlighten me?
sfrenegade: i am not a casual buyer. i plan on living there and hoping that there will be some return on the investment (over inflation) 5-10 yrs down the line. and lets face it, this is california; no one buys in CA without the consideration of resale value. im not talking vallejo. and yes, i understand depreciation and stand by my argument about the difference in neighborhood. bayview does not equal bayside (or little hollywood, or whatever you want to call it)
tipster: im in IT, not sales. besides, they wouldnt go for the 3% due to our price.
such doom & gloom? honestly… but i guess i put myself out there. gotta love SS…
“i am not a casual buyer. i plan on living there and hoping that there will be some return on the investment (over inflation) 5-10 yrs down the line. and lets face it, this is california; no one buys in CA without the consideration of resale value. im not talking vallejo.”
This is exactly why you’re a casual buyer: you’re looking at your primary residence as a short-term investment. Casual buyers often think they’ll get appreciation above inflation on their primary residence with a less than 10 year hold, such that they will overcome the full cost of ownership, including transaction costs.
Btw, my favorite street in SF is in your neighborhood: Lois Lane.
SF has plenty of space to expand if the NIMBYs would allow it. And I didn’t realize Vallejo wasn’t in California.
sfrenegade wrote:
What she was probably getting at is that real estate equity in Solano County has been sharply negative relative to San Francisco, most likely due to falling home values. The ‘money ‘graph’ from the Vallejo Times-Herald on the 28th of last month:
Although negative equity has been increasing in most places, at least in The City it hasn’t been increasing as fast, if it has at all, as in some other California cities.
I know, Brahma. It’s just that I couldn’t resist.
I must say, however, that we’ve seen some amazing negative equity properties on SS lately, including 3271 Baker, the place on Clay, and the naked capitalist’s place (which I assume is negative now).