Central Valley Real Estate

What will it take to get you to buy a house?

Seriously, what more do you need? Low prices? Try great first-time homes for around $100,000. Lower interest rates? Rates are varying these days between 4.5-5.75% for well-qualified borrowers. That puts a home within your reach for as little as $600-$850 a month--almost guaranteed to be less than your rent.

Nationally syndicated columnist Kenneth Harney had a great article that appeared in the San Francisco Chronicle recently on just this topic that you should check out. And that was before Congress extended and increased the size of their first-time homebuyer tax credit (read: free money) to further stimulate home purchases across the country.

The only half-credible excuse I've heard is, "yea, but what if prices go down even more after my purchase?" While that may have been true before, prices over the last 4 months or so have not decreased among the $70,000-$170,000 price range for smaller first-timer-type homes, and in many cases have begun to increase in value.

Case in point: we have a very nice home overall that went up for sale recently at 2404 Dana Lane, Modesto, CA (see it on my website here). The comparable homes suggested a value of around $95,000. This was the conclusion that my team came to about the home's value based on what similar homes had been selling for in the same neighborhood within the last few months. We even confirmed that the second opinion Broker Price Opinion and the Appraisal concurred with that general finding. But what happened? A few dozen offers within the first week, with most offers well above that list price.

What does that show? It shows that the market is making a comeback. Today's buyers are starting to get more aggressive with the prices we know have. They are willing to pay more than they would have 6-9 months ago. And that means that some homes may be starting to appreciate once again. So don't make the mistake of waiting another year or so before you decide to take the plunge and buy, because you'll likely be paying more for that house than if you bought it this year.

Mortgage Companies, go away! Come again some other day!

Let the collapse of the mortgage market continue...

The big national news was for American Home Mortgage Investment Corp., which was recently reported to be the country's 10th largest mortgage lender, filed for bankruptcy protection on Monday, August 6. Ninety percent of the company's 7,000 employees found out all at once that their jobs had vanished.

The closure happened as American Home Mortgage's lenders no longer trusted its existing loan portfolio as sufficient collateral for credit lines to make new loans.

That was the national news. That doesn't affect you or I though, right?

Wrong. I have a home seller whose home is pending sale, and we are (were) scheduled to close escrow tomorrow, Aug. 8. The buyer's loan was being funded by Aegis Wholesale Mortgage, another large lender out of Houston with a local office in Modesto. The buyer's loan documents were scheduled to arrive from Aegis on Friday of last week. They didn't. On Monday morning, her loan officer called Aegis to follow up, and he found out that Aegis was not doing any new loans, nor funding loans currently in its pipeline.

When I called Aegis' local Modesto office branch this morning to verify, I was told that the entire company had folded, and that today is their last day. The company had 1,500 employees, with 14 in the local Modesto branch. An article at MarketWatch.com reported that Aegis was the 13th largest subprime lender nationwide.

The MarketWatch.com article also reported that National City Mortgage, which is the 13th largest mortgage originator nationwide of all types, also made the decision yesterday that "in response to market conditions, NHE has suspended approvals of new home equity loans and lines of credit" and that "the company continues to closely monitor the market and take the appropriate steps to respond to changing conditions."

That's what Aegis said on Monday, before they decided this morning that their "appropriate steps" included closing the entire company all at once.

If you know someone that worked at the Aegis office here in Modesto, please offer them your condolences. And hopefully the buyer in my transaction can get a new loan from a company that won't fold right in the middle of her loan processing.