Mortgage rates dip a bit

The average 30 year mortgage rate dipped this week from 6.30% to 6.22%. This is good news for everyone, particularly those among us who are looking to purchase. Owners with variable mortgages, however, are unlikely to see any immediate respite in their monthly payments. Indexed ARMs march to the tune of different drummers, but the news is good for them as well if this means that interest rates will either decline or at least stabilize. Personally I don't see rates going down much more and I still think that this is a great opportunity to switch to the stability of a fixed rate mortgage. Will interest rate decline this bring the buyers back? Not in great numbers I think.
Mortgage rate drop
When I was out on tour a few weeks ago I stopped at a typical Oakland bungalow that had been on the market for a while. It was nothing special, but nice enough and had just been reduced in price enought that it looked like an attractive buy. The listing agent and I chatted about price reductions and the dearth of buyers compared to a year ago. "How low do prices have to go to attract a higher level of buyers", she wondered aloud. As I walked off to the rest of the house I wondered myself. It certainly was a question that I had been holding somewhere in my own mind, but I had never articulated it as directly as my colleague had. I had my answer by the time I returned to the living room after seeing the rest of the house.

"We'll see a lot of buyers back in the market when prices go up."

Here's my logic. The buyers drove the prices up for several years because of a sense of scarcity and a belief that they might miss the opportunity to own a home. As long as interest rates stay low and prices seem to be stagnant, or declining, there is likely to be a general feeling that it might be better to wait. That's understandable, but wait until what? What triggering event will signal that it's time to buy? I think the buyers will be back if they perceive that prices and interest rates are rising. It takes a while for that message to get out and to be repeated enough to be beleived. By that time much of the appreciation could have already happened as others use the lull as an opportunity to acquire good properties as bargain prices. For more on this "value buying proposition" see my colleague's analysis at:
Value Buying by Liz Stevens

2276 MacArthur: 9 Vacant Units in the Dimond

This could be a fantastic opportunity for a group wanting to create a shared housing situation right in the heart of the Dimond on MacArthur just off Lincoln. There are 9 units, all vacant, some are remodeled. Probably it would be best to start out as a TIC (tenancy in common) and then convert to condos. Some conversion rights have already been secured. Sorting this all out will take some legal and administrative sweat equity. The future of this building, bringing 9 new households, will have a substantial effect on our Dimond shopping district.

See details of the listing 2276 MacArthur
Listing Detail

Help for bloggers.

With thanks to Peter Chen, I finally managed to get this blog off the ground by posting my picture. Peter offers free help to aspiring bloggers on his own blog.

Tricks for bloggers

It's a good opportunity to remember that much of what we have, perhaps even our lives, depends on the goodness and generosity of others.

Chat du jour: please slow down folks

This friendly feline in the Dimond was later the unfortunate victim of a speeding vehicle.

A short sale is not discounted beach wear

. . . it is no day at the beach at all. I recently completed one and it was more like riding the roller coaster on the boardwalk.

A "short sale" or a "short pay sale" occurs when the proceeds from the sale of the property are insufficient to pay the seller's related indebtedness (mortgage or secured note). Selling the property results in a shortage of funds to pay the seller's obligations and costs of sale.

As a result, one of three things usually happens:

1. the seller has to make up the difference by using depositing cash from other assets in to the escrow account, or
2. the sale fails to go through and foreclosure may follow, or
3. the lender agrees to take less than the full value of their note.

In my client's case the short sale aspect came as a surprise . . . to me. One day I drove up to check on the house (it was vacant and unsold at the time) where I found a foreclosure notice taped to the front door. I knew that my clients were in some considerable financial distress due to huge medical bills, but I did not know how far they had fallen behind or that their adjustable loan was structured with negative amortization. Although their payment stayed the same, the principal amount due on their interest only loan increased each month as interest rates increased. The rising principal, delinquent payments, a variety of late fees and penalties, and decreasing values in the neighborhood made it impossible to sell the home at a profit. There will be more about this situation and similar problems in another post.

Don't get caught in a spiral of increasing debt if you are unable to make your mortgage payment. Sell the house while you can still either get something out of it or at least leave without the burden of a foreclosure, bad credit, and a legal judgment against you for the balance.

Cat du jour

I first caught sight of this little critter out the corner of my eye sitting in a driveway as I was on my way to a listing appointment. At first I thought it was just a crumpled plastic bag, but I had to turn around and check. She could not open her eyes or mouth due to dehydration and dried mucus. Fortunately my client was amenable to postponing our meeting and my next door neighbor stopped to give me a blanket she had in the car. The kitten weighed only a pound, but the vet said that it was more than 2 months old. During the next 10 days this little critter was locked in my bathroom, made a big mess, and turned out to be the most rambunctious little runt I have ever encountered. Her penchant for jumping out of the shadows at the least expected moment earned her the name "Ninja" at my house. Out of deference to the resident cat, who would not tolerate her, we sent her on to a new home where her bouncy antics earned her a new name, and apt one: Pinball. The picture is of one of her early forays out into the world beyond my bathroom.

House cat du jour

Here's a couple of cool cats in their open air garden condo on Whittle Ave. in Oakland's Dimond neighborhood.