“…. There are some $10 trillion of residential mortgages outstanding in America. Only 15 percent of those are subprime mortgages, and only some 12-13 percent of those mortgages are delinquent (payment overdue for more than 30 days), with even fewer, perhaps 5-6 percent in foreclosure. That is fewer than 1 percent of all residential mortgages….”
–Bernanke to the Rescue – A surgical strike by the Fed chairman [the daily Standard]
Theres ~300,000 housing units in SF.
1% = 3,000 units in foreclosure.
By contrast there are currently ~1,000 units for sale in SF.
Theres different ways to slice the pie and come up with absolute numbers, but it seems to me a 1% foreclosure rate will have an effect.
[Editor’s note: Your original comment had some html that wasn’t working. If you had a link you’d like put with your comment, please email it to us, [email protected]. Thanks.]
Can’t wait to pick up a foreclosure in Pac Heights! :)
There’s very, very little to select from in the foreclosure arena in San Francisco. However, I am currently in contract on a bank-owned property. It’s a single family home in a desirable neighborhood. We offered about 25% less than its selling price in 2005 and we got it. (Well, almost. We don’t close for another week…) I have been one of those “sideline guys” since I sold my house in 2006, and this was the opportunity that I’ve been waiting for. Financing is very tough right now, even with stellar credit. My rate is over 7%, despite having a very high income to debt ratio and 800+ FICO. That said, deals can be found now.
I suspect there will be more (better) opportunities in the future. I know a ton of friends and colleagues who are sitting on 5/1 interest-only ARMs right now who never conceived of 7-8% interest rates. Some of them are rolling over into new 5/1 (IO) ARMs; others are riding it out. I opted for a 30 year fixed so I can sleep at night.
Good luck to all.
Hey DAve – Sounds great! What neighborhood did you buy? Sounds like you got it at 2003 prices! I love taking advantage of desperate sellers.
Dave, inspiring to hear when patience and prudence are rewarded.
I’m curious – the bank unloading the property didn’t give you a good deal on financing or are they “once bitten twice shy” on the house?
And of course the big question – did you get a garage?
Congrats!
Inventory is always welcome in San Francisco. Traditionally, it is demand that keeps are market steady. The Mortgage Crisis is less about foreclosures and more about the number of people that are no longer qualified to buy property vs. the number of people who could say a couple months ago or a year ago.
Due to the demographic (International, Baby Boomer, Cash Rich, A Paper) of the buyers in the San Francisco market, the mortgage crunch is unlikely to impact the same number of buyers as other markets that cater to a more leveraged community.
I did get a “one car” garage but it’s actually 35 feet long. I think 40 feet long is technically a 2-car tandem? (Anyone know what is “legally” a 2-car tandem in San Fran?) I could be wrong on that… In any case, our longest car is only 15-ft, so it’s a two car tandem garage as far as I’m concerned.
I prefer not to disclose the precise location because it would probably be pretty easy for someone to figure out which property it is. Let’s just say that it’s in the Noe-Glen-Park-Eureka-Valley neighborhood. ;)
In my case, the bank was the seller but they were not local. They had never seen the property. In fact, I think it may have been some kind of third-party clearing house or something, because I had never heard of the company. (In other words, the original foreclosing bank probably transfered ownership to this entity who then put the house on the market.) In any case, we had to do our own financing. That part has been painful, but the “discount” on the property made it easier to swallow. If things calm down in the credit markets soon, we’ll definitely refinance right away…
[Editor’s note: Dave, when all is said and done, if you feel like sharing the whole story, with pics, you know where to send them. Now who has the answer to that garage question? I don’t.]
Dave, it would actually be very helpful and beneficial to hear your approach to finding and nailing a property. Congrat’s on the hopefully closing soon deal.
Best,
eddy
No magic here in finding it. It was on MLS. Didn’t use property shark or the (horrible) yahoo foreclosure service.
If (and when) it closes, I’d be happy to send in some negotiating tactics on buying a property from a bank. This is the second one that I’ve done. (First was a trust sale by an older person who had moved into a retirement home… This one was a foreclosure.)
I’ve been on the sidelines for nearly 3 years and thought I’d have to wait another couple years. Your post is very encouraging. I don’t _have_ to buy, so I have the ultimate luxury – time to wait. I just have too much of that other luxury – sporting goods! Hence my garage fixation.
I remember the feeling of “never being able to afford a place in SF”. I sympathize with those looking to get into their first place. Even if you like PB&J, enough is enough.
Agree totally on the litmus test. What allows _you_ to sleep at night. For me, fixed rate is it.
Good luck on the escrow home stretch!