Searching for the Elusive Bottom: Kinda Sorta Good News

Considering how badly things are going on the economic front, the latest forecasts for Contra Costa County and the East Bay seem downright cheerful: a “shallow but long downturn” lasting into 2009, according to the Stockton-based Business Forecasting Center at University of the Pacific.

Given the meltdown some two weeks ago, hey, a “shallow” downturn sounds just peachy to me. The reason for the long tail? The housing-related ailments that plague the economy here are spreading to other sectors, Jeffrey Michael, director of the center, told the Contra Costa Times.

I’ve been thinking there’s gonna be another Great Depression and it’s not like I’m alone. Frequent commenters and very smart guys david and Adam Schwartz didn’t seem to quarrel with my conclusion in an earlier post. (Am I right, guys? Hope I didn’t mischaracterize.)

Compared to my fears, these predictions seem downright upbeat. Could we be approaching the bottom? Considering the jaw-droppingly low prices of homes in many parts of Contra Costa, it seems likely. I just found a house for sale in Richmond for $178,000 and a house for rent in that same area for $1450. At 5 percent interest on the mortgage, couldn’t you buy this and rent it for a positive cash flow?

Bargains in Richmond:

2501 Gaynor Avenue, Richmond: 3 bedrooms/1 bath, 1,138 sq ft, $179,000. Hardwood floor, fireplace, listing says the place gets a lot of light. The outside looks lovely, but there’s only one dark photo of the bathroom (the bathroom? Eh?), so considering the low price, this might require a healthy dose of caveat emptor.

2121 Gaynor Avenue, Richmond: 3 bedroms/1.5 baths, 1,431 sq ft, $299,000. While the shockingly low-priced house above could turn out to be low-priced for unfortunate reasons, this place looks really good in the photos. It’s a white split-level home with, the listing tells us, a balcony off one bedroom. Couple of things to keep in mind: It’s about a half-block on the wrong side of 23rd Avenue, which is a sort of dividing line between relatively safe streets and unsafe ones; and the listing agent is related to the seller.

2546 Clinton Avenue, Richmond: 4 bedrooms/2 baths, square footage not available, $299,000. This is a two-story pale blue house that looks charming from the outside. The interior photos, which could be used as examples in a “How Not To Stage a House” lesson, at least seem to indicate that it’s not falling apart inside, or at least not visibly. The kitchen *seems* to have one o’ those vertical door stainless steel fridges I personally lovelovelove, though hard to be sure thanks to the pieces of paper taped to it; kitchen also has what appear to be natural wood cabinets and the canonical granite countertops under the clutter.

533 28th Street, Richmond: 2 bedrooms/1 bath, 999 sq ft, $280,000. This is quite the Mystery House. It’s in the best location of all four of these properties, and looks lovely in the exterior photos. The listing tells us there’s a “great studio in back of home, non-conforming yet-perfect for guests or inlaw.” Wow! However, the mystery: No interior shots and “other disclosures” (call-see agent). Uh oh. Intriguing: is there a meth lab inside? Squatter with pitbulls? (Photo of the bottom by macsurak on flickr.)

Moral Hazard Redux: Why Bail Out the Banks?

Back in May, Redfin readers said loud and clear that they opposed Congress’ bailing out homeowners struggling to pay their mortgages.

“If I can’t pay my rent I don’t get to keep my apartment and nobody is going to bail me out. Why should I be forced to pay their mortgage?” asked Greg.

Well, now it appears that Congress is going to bail out the financial institutions that made these dire mistakes in the first place. Or rather, we, the taxpayers, are going to do so. The country’s financial survival is at stake, we are told, so in this case, is it necessary? Folks on angryrenter.com don’t think so; they say it’s welfare for Wall Street.

Readers (among them David, dg, morgan and sb) have argued in the past that if buyers facing foreclosure aren’t punished, they might feel they can do it again with impunity (”moral hazard.”) Does this apply to the financial institutions? Or is there no choice in order to keep world financial markets alive? (Photo: digitalshay on flickr.)

The Second Great Depression and How to Survive It

Last week’s meltdown of the financial markets is going to change the world as we know it. As fellow blogger Brenda Keener said in a post yesterday, some are speculating that global markets are in a state of collapse that rivals that of the Great Depression of 1929.

A friend of mine went to her bank (Washington Mutual) Friday and discovered a line of people waiting to withdraw their money going out the door and snaking around the block. Talk about your Great Depression. Is it time to show the film clip from “It’s a Wonderful Life” when Jimmy Stewart, playing a banker, explains to a mob trying to withdraw their money, “I don’t have your money in a safe. It’s in Joe’s house, and Bob’s house….”

I agree with Brenda that the U.S. economy is not going to collapse, and with MDAccount, who doesn’t think unemployment will be anywhere near the 25 percent it was in the first depression. (It’s around 7 percent in California now.) That said, things are going to be less than comfortable for a while. What can we do to ride it out as best we can?

Some excellent tips: Frequent commenter Brendan said in response to an earlier post, ” Read the rest of this entry »

**UPDATE**Lipstick on a Pig, or: Can this REO be Sold?

Update: Redfin readers nail it again! This property *has* been sold, as poster anon suggested, pointing out that a new fence is an unusual REO sales strategy. Thanks for the insight! Here’s the original post:

The story of the housing market slump is reflected in the dowdy property for sale across the street and three houses down from my home in Richmond’s North and East neighborhood.

It went up for sale in 2006, an ugly shade of blue, one-story, two-bedroom, 900-square-foot box with a long, unbroken expanse of dying crabgrass stretching from the front door to the street. Surprise, no sale. Then it was offered for rent. No dice; back up for sale. At some point it became a foreclosure.

Then, the Neighbors From Hell moved in next door. These people have parties, I mean, P*A*R*T*I*E*S, Read the rest of this entry »

Swap Higher Interest Rate for Lower Loan Amount?

Redfin readers Red, Brandon and David recently suggested that as this crazy market worsens, it might become possible to get your mortgage lender to write off part of your loan amount in exchange for a higher interest rate. At first, this seemed nonsensical to me. What, boost my interest rate, when I’m going to have to pay on this loan for more than 20 years?

But Red explained that ”nobody actually holds onto a loan for 30 years anymore. People either move, or improve and refinance.” As always, Red is correct; the average California mortgage turns over after seven years, either because of sale or refi, according to the California Association of Realtors.

“If the bank discounted my mortgage to yield a high rate, I’d jump at it, then pay it off. It’s not like money in the stock market has been a great idea lately,” Red said. There are times when cash is king, and I think we are about to experience that again. Banks may be willing to write down existing balances to get the money back.”

I’m still not sure I understand this. Is the idea that since you’re likely going to pay the whole thing off sooner than later, it’s better to get the loan balance reduced? (Photo: jenn_jenn on flickr.)

$68,000 in Pittsburg – Yes, Readers, You Were Right

In June, readers red, colin and dg jokingly called me a knifecatcher. Well, now I see what they were talking about. Looking at recent price reductions, and even newly offered homes, in Pittsburg makes me shiver. $79,900 is not an unusual price. Back in June, $149,900 seemed cheap. (A knifecatcher is someone who buys in a declining market.)

As colin said in a comment last week, a lot of people who bought in Antioch and Pittsburg just a few months back must be kicking themselves for thinking they were getting a bargain.

The median price for vacant Pittsburg houses and condos in 2000 was $139,200, according to City-Data.com. In the Bay Area, I’m guessing the last time there were $79.9K houses was, what, the 1980s?

The $68K home isn’t really fair to mention, because it is quite the fixer. The real estate agent describes it as a “fixer/handyman special,” which is tactful but truthful. Bettah yet is 350 9th Street East at $79.9K, which looks like one good sneeze would bring the whole place down in a pile of shingles.

Pretty soon it’s going to cost more to buy a new car than one of these houses. Considering that house values are bound to rise in, let’s say, 15 years for sure, how low would they have to go before it would be to practically anyone’s benefit to buy? If a house costs, say, $25,000, how could you go wrong? Here’s some details:

1137 Cedar Street, Pittsburg: 2 bedrooms/1 bath, 1,159 sq ft, $79,900. The place looks clean in the photos and is freshly painted – not going to knock your eye out, but certainly nice enough for this jaw-droppingly low price. It’s a foreclosure, of course. Close to freeway and BART.

1030 Cutter Street, Pittsburg: 2 bedrooms/1 bath, 917 sq ft, $79,900. Like the one above, this house doesn’t look bad at all; in fact, it’s a Craftsman bungalow, judging by the photo of the outside. The listing is enthusiastic, and as we’ve seen, it appears that Pittsburg real estate agents are firmly in touch with reality and not trying to gild any lilies. It’s described as a lovely, bright and clean downtown bungalow. REO (meaning foreclosure).

6 W Leland Road, Pittsburg: 3 bedrooms/1 bath, 789 sq ft, $99,900. Though the price is higher than the first two, it’s still shockingly low for the Bay Area, and this place looks nice in the photos. Vaulted/beamed ceilings. REO.

86 Nautilus Place, Pittsburg: 2 bedrooms/1 bath, 817 sq ft, $68,000. REO. It’s a mess. ‘Nuff said.

350 9th Street East, Pittsburg: (Unsure if it’s accurate to describe this place as having bedrooms.) 1,382 sq ft, $79,900, REO. (Photo: MinutesAlone on flickr.)

Granite Countertops Passe – Readers Choose the New Sexy Amenity

Yes indeed, we have a winner! In fact, several! Last week we ran a contest to see who could guess what the new sexy amenity is, replacing the now-ubiquitous if-not-tired granite countertop. After a number of excellent guesses (more on that latuh), Jackie nailed it, guessing that the answer is C*L*O*S*E*T*S.

“Giant closets have become the new granite countertop,” Carol Lloyd proclaimed in an SF Chronicle article last week, citing and once again proving that size does matter. Because these are not, as they say, your  mother’s closets. Oh no.

Readers of Apartment Therapy, the real estate blog with the juciest photos (at least in my eyes), surveyed its readers, who agreed that a larger closet is “very very sexy.” We’re talking six-foot closets, designer closets, his-and-her room-sized closets.

Meanwhile, reader Debbie suggested that the new sexy amenity is custom concrete countertops, and after checking these out, I can see why she (and Sweet Digs Fearless Leader Susan Brady) like ‘em. Alexandra V. voted for quartz countertops, which she saw on David Bromstad’s show. (Big thanks to Los Angeles Apartment Therapy blog for the juicy photos of celebrity closets.)

CoCo County Foreclosure Hell Hits Home Values Even Harder

Just how bad is the housing market hereabouts? Well, right now in Contra Costa County, some real estate agents are taking self-defense courses and bringing pepper spray when they show houses for fear of encountering belligerent squatters in foreclosed properties. ”It’s absolutely absurd. Theft and vandalism and squatters. It’s all over the place,” Kirsten Amodeo, a Coldwell Banker Realtor, told the Contra Costa Times.

I love love love frequent commenter San Mateo Home Sellers in Trouble, but oh baby, you ain’t seen trouble until you’ve seen Antioch, Pittsburg or Bay Point residences with holes smashed in the walls, boarded-up windows, empty liquor bottles and worse, the article recounts. Agents are scared of what will happen when they show homes; and what’s it like to actually live in the neighborhood 24/7?

What would it be like to walk home from the bus stop or drive your car past one bank-owned and vacant house after another? This has to be bringing down home values even further.

Awhile back, frequent commenters Adam Schwartz and Mark had some dire predictions about coming hard times in the U.S. News like this worries me that maybe those predictions are coming true. What do you think? (Photo: brandi666 on flickr, not a Contra Costa County home.)

The Art of Negotiation

Many of us are so used to the days of multiple bids and zooming prices, the idea of negotiating for a better price never crosses our minds. But these days, depending on the circumtances, you may be able to save a substantial amount by doing so.

It’s a buyer’s market these days, and 60 percent of the inventory out there is willing to negotiate, according to Brad Inman, one of the Bay Area’s foremost real estate mavens and founder and publisher of the Inman News real estate site.

One useful approach is to look at homes that have been on the market for some time, especially if the sellers haven’t lowered the price already, a San Francisco Chronicle story said, quoting John DiDomenico of Pacific Union GMAC Real Estate.

Another tip specific to you blog visitors: Read the rest of this entry »

Readers, You Vote: What’s the New Granite Countertop?

Doubtless we are all sick of seeing that cliche on nine out of every ten listings, the granite countertop. Well, while the dang things aren’t going away anytime soon (for one thing, they weigh a TON, so it’s hard to haul ‘em off), they are no longer the coolest amenity around, the Chronicle reports.  

So, Redfin readers, what IS the coolest amenity? It’s ”very very sexy,” according to 170 out of the 326 respondents to a Remodeling Magazine poll.

It’s not the backsplash, the Swarovski crystal chandelier or an ever-so-green sustainably harvested bamboo floor. Whoever guesses correctly gets featured in a blog post. C’mon, readers … hit me with your best shot! (Amazing granite photo: vittands on flickr.)