Dead Cat Bounce

My obsession weakens, but I still diligently follow the housing bubble news. Indications are that we have a lot of room to fall before we hit bottom.

Remember this listing I highlighted a while back? It's fallen 50K from the wishing price and would seem an indication that the market is crumbling. On the other hand, a few months ago a 1700 ft model Stonybrook home by KB listed at $254K. Inexplicably, the prices ticked upward by a couple thousand this month. An industry reaction to the increased buyer activity spurred by lower interest rates? We'll see if this is a dead cat bounce. I hope not. I'm still banking on lower housing prices and increased affordability for singletons like me.

7191 Havenside Drive Update: Reduced to $284K!

MLS #: 70099271

Asking Price: $317,500

Previous Asking price: $335,000 (July 2007)

Price Cut: $17,500 (-5.22%)

This was a halfplex I visted with a friend during an open house and I ranted on this blog about the overwhelming scent candles the agent used to drive us out the door. Well, it seems like it worked. An article in the Sacramento Bee featured its owner who, based on Money Magazine's designating Holland, Michigan as one of thebest places to live, decided to sell her home and leave Sacatomato. Looks like she ain't leaving anytime soon.

On My Own

As I mentioned before, I am living at home at the age of 28. That's expected in a traditional Chinese family. I didn't realize just how traditional my parents were until I brought up my goal of saving money to buy a house for myself which engendered no words of encouragement. Instead, they said, "You're stupid. Don't expect us to help you. Even if we had the money, we wouldn't because buying a house is reserved for when you find a husband and want to get married."

I was shocked to say the least. I never expected my parents to help me financially. They are of modest means with my youngest sister still in college at a UC. However, the least I expected was emotional support. What about feeling pride that their daughter is taking responsibility for her own future? That she's making an adult decision?

This illustrates one again the chasm that exists between traditional Chinese culture and the American way. When I moved out at the age of 25 into my own apartment, my parents were upset. My dad did not speak to me for 6 months. When I told my boss, who's Caucasian, he thought their reaction was quite odd. He flipped cartwheels when his children moved out.

In some ways, my parents are surprisingly modern. They know their way around BitComet and want personalized ringtones on their cell phones, unlike many of their peers. In other ways, they are still "stuck in the mud". Like paying for a $18, 353 new car, embarrassingly, all in cash. They are not the stereotypical Chinese parents, never pushing us kids to become doctors, lawyers or play piano, only to do well in school and become an upstanding member of the workforce. On the other hand, they adhere to the old ways, especially concerning gender roles.

When it comes down to it, they object to me buying a house by myself because I'm female. In their way of thinking, a man should provide for me and it's silly for me to provide for myself. This is incomprehensible to me and, frankly, unacceptable. This is just another piece of the yoke I'm slaving off on my personal journey of independence. Sigh, it's tough to be the eldest daughter of first generation immigrants. I'm paving the road for my younger sisters and breaking my parents in for them. Lucky dogs. If and when my sisters decide to buy on their own, I bet my parents will barely bat an eye.

In light of my parents' revelation, I'm cutting up my credit cards and resolve to be less generous with my spending. I can't count on anyone but myself to achieve the dream of a house all my own.

I love reading the Wall Street Journal. Their articles are well researched and present more in-depth analysis than any other paper. The Sacramento Bee lately has run almost daily articles on the real estate meltdown, but really is a rehash of the various news bits out there with a few sob stories thrown in. This WSJ story is something different. (I found a reprint on ajc.com to circumvent the subscription wall.)

On the front lines of the great American mortgage workout, tens of thousands of borrowers are in trouble and looking for relief. Washington has offered advice about what lenders should do, and influential groups that counsel low-income borrowers are ratcheting up pressure on Citigroup and others to offer struggling homeowners more favorable terms on their existing loans — even borrowers whose finances seem hopeless.

In many ways, the pressures Citigroup faces mirror those on other mortgage servicers, whose job it is to collect monthly payments and pass them on to mortgage investors. Servicers are responsible for protecting the financial interests of those investors. But they also have become targets for criticism that the mortgage industry isn't doing enough to clean up problems arising from years of careless lending to subprime borrowers with shaky credit.

Citigroup, however, may have a bigger mess on its hands than many. In September, as the U.S. housing crisis deepened, it bought servicing rights to a problematic $45 billion mortgage portfolio. It announced a commitment to "help distressed borrowers remain in their homes," working with Acorn Housing Corp., a nonprofit group that counsels low- and moderate-income home buyers. But with 46,000 borrowers already in default, Citigroup is struggling with the magnitude of the portfolio's problems, and its relations with Acorn are fraying.

Taking Stock

It's time to take stock as the housing market tanks. Here are some updates on houses I've been watching.

7191 Havenside Drive

MLS #: 70099271

Asking Price: $317,500

Previous Asking price: $335,000 (July 2007)

Price Cut: $17,500 (-5.22%)

This was a halfplex I visted with a friend during an open house and I ranted on this blog about the overwhelming scent candles the agent used to drive us out the door. Well, it seems like it worked. An article in the Sacramento Bee featured its owner who, based on Money Magazine's designating Holland, Michigan as one of thebest places to live, decided to sell her home and leave Sacatomato. Looks like she ain't leaving anytime soon.

7030 Havenhurst Drive
MLS #: 70043176 (Pending)
Asking Price: $269,000
Previous Asking price: $299,000 (June 2007)
Price Cut: $30,000 (-10%)

I looked at this halfplex the same day as the one above. By July, the price had dropped to $285K, which seemed like a pretty good deal per square foot compared to what was on the market at the time. But, the home was dark and dank with a tiny, tiny backyard.

7444 Spicewood Dr. (Update)
MLS #: 70100557
Asking Price: $289,000
Previous Asking Price: $309,000
Price Cut: Still not enough

I've always thought that this house was cute. Seemed well-kept and in a good location near the Bel-Air shopping center where I used to live when I rented in the Pocket. When this house went into pending a few months ago, I thought, "Who's the crazy person paying over $300K for 982 square feet?" Looks like nobody was that crazy. The seller really isn't trying to sell his/her house now, are they?

799 Crestwater Lane
MLS: Sold 9/27/2007
Asking Price: $239,000
Old Asking Price: $275,000
Price Cut: $36,000 (-13%)

This is a nice 2/2 1201 sq/ft condo. It had high ceilings, nice detail and spacious rooms. The only bad thing was the separate kitchen. It finally sold, after a $36,000 reduction, selling for less than $200 a sq/ft. I think it might have been listed at a higher asking price at one time too but I'm not sure. It's been so long since it first went on the market. I definitely remember the $275,000 price tag though and the chase down to the bottom. At one time, I thought, "If it goes down to $250K, I'll take a look." Then the market soured, my interest waned. Next thing I know, it's sold at at what is not a bad price for the area. I'll take it as good tidings.

Another interesting sign of the times is dearth of applications for a recent job opening at my work place. I was screening the candidates and over half of them were loan officers, mortgage brokers and real estate agents. Good luck to all of them. Posting an opening for a stable job is like throwing a bone to a den of hungry lions.

Bailout Talk

I'm disenchanted right now with the whole housing scenario, thus the silence. As housing bloggers know well, President Bush announced a program to help homeowners last Friday. Ostentatiously called a "lending hand," it really is a soft bailout. Here are some interesting viewpoints on the plan:

Is America really pro-bailout? Los Angeles Times - According to a recent Fox News poll conducted by Opinion Dynamics, there's 70% opposition to a taxpayer sub-prime bailout

Major bailout is unlikely on sub-prime mortgages. The Hill - There doesn’t appear to be sufficient appetite in Congress for rescuing borrowers with taxpayer funds. (Damn right there shouldn't be!)

Will Congress bail out lenders? MarketPlace radio segment with Steve Tripoli - What I'm concerned about is that Congress is going to engage in a wholesale bailout, with taxpayers' money, of lenders and borrowers who've made very bad decisions.

Every Penny Counts

It's six months into my saving scheme for a down payment. In taking stock, I realize I've done pretty well. Except this month with the purchase of a new car and attendant costs that have wrecked my budget. I expect to get back into shape in the coming months. I've relinquished both my credit and debit card to my mother for safekeeping. I admit that I'm suffering a bit of fatigue, depressed by the still-high price of real estate in California and the reality of delayed gratification that goes with long-term planning. There was a discussion over at the Sacramento Landing blog about the XY generation and our general lack of wherewithal to save. So, when I read this NY Times article about people my age who worked to save enough for a house payment, in New York no less with little help from parents, it was a dose of encouragement.

When Janey Lee and Pablo Agüero were struggling freelance Web designers, buying an apartment in Manhattan seemed like a dream, one clouded by credit-card debt, student loans that had to be repaid and the bills for their wedding. Their combined salaries of just over $100,000 qualified them for a mortgage, but it took a lot more for them to come up with the down payment. In a city synonymous with luxury and spending, Ms. Lee, 30, and Mr. Agüero, 35, decided to do without. They gave up smoking to cut costs, they stopped meeting friends after work for beers, they didn’t buy new clothes, and they stashed away tax refunds and as much of their earnings as possible. Whenever they wanted to buy drinks, gadgets or cookware, they asked each other: “Do I want an iPod or a house? Do I want a latte or a house?”

Plankton Theory Revisted

Remember some time ago, I referenced Plankton Theory which likened first-time home buyers to plankton, the essential life force of the real estate food chain. Price them out of the market, and a chain reaction suffocates the rest of the market. This Press Enterprise article quote shows that force in action.

“Inland Southern California’s home sales last month were the worst in a decade in Riverside County...We have seen rising foreclosure activity through the year and no sign it is done climbing, and we are now seeing some real steep declines in prices. It is very difficult to say where bottom is,’ said Andrew LePage, analyst for DataQuick."

The news that Forbes ranks Sacramento as the third riskiest housing market in the country - and the riskiest investment in California-quickens my heart. Sacramento's share of adjustable-rate mortgages exceeds 50 percent. Which means that the market has nowhere to go but down.