Crystal Ball Gazer of the Week goes to REO Chronicle, which published “The California Real Estate Market in Perspective: 2008-2012.” Amongst prediction are: Lenders will become more conservative. Well, that’s pretty much a given, since everyone is watching, the government is implementing regulations, and mortgage lenders are failing left and right. Coastal home prices will drop. The article makes a good point that many coastal homes (read: oceanview) are up to 7 times available local income, but remember that many of these homeowners are not typical residents. Malibu, La Jolla, Monterey/Carmel, are all affluent areas, and many of the coastal homes are megamoney mansions or second homes that really are not in danger of being sold and bringing down values. More remote areas, such as upper Highway 101 around Eurkea, may indeed experience a downturn, but I think it an oversimplification that coastal properties in all areas will tank, like the inland/valley areas they compare it to. In total, they list 15 points dramatizing why prices will continue to fall.
I think it was back in middle school when a teacher told us that the results of studies, and statistics in general, can be manipulated to read in favor of whoever is writing. In the PR world, this is called “spin.” And in perusing various articles this week, I see that the media cannot agree on how things are going right now. We have “Slump Persists: House Sales Tumble Across the US” by Yahoo News, then there is “U.S. Housing Market Freezes in June” on Forbes.com, and then “Existing Home Sales Fall 2.6%” on Marketwatch.com. Who to believe?
CNNMoney reports this week that amidst the government’s hurry to enact legislation to regulate the mortgage industry, that elected officials neglected to include anything in the bill that forbids or regulates loan kickbacks to mortgage brokers. “New Fed rules miss one key lending abuse” by Les Christie points out the flaws in the bill and why this should have been an included component.
And then there is the gossip about the Extreme Makeover family who has squandered their good fortune and are losing their home. Three years ago, an Atlanta family was the recipient of one of the largest homes ever built on the popular TV show. Once completed, the family owned the home free and clear, had an account to pay taxes for a decade or more, and their children had a scholarship fund. Subsequently, the homeowners took out a whopping $450,000 loan and that money has vanished. Considering dad works and there was no mortgage payment, where did all that money go? An average of $150,000 a year? What do you think? Shame on them?