Monday, April 13, 2009

Inland Empire real estate anecdote

Real estate in the Inland Empire market (west of Los Angeles) appears to bouncing, after taking a severe beating. Saturday night I spoke with my nephew who does mortgages there. He told me about the recent foreclosure sale of a 2700 sq. ft. house, on a huge lot with a swimming pool, in Rancho Cucamonga. It was last bought in 2007 for $750K, and the owner upgraded all sorts of things. The bank foreclosed on the house and put it up for auction a week ago with a minimum bid of $385K. In five days the bank received almost 20 bids. The high bid was $450K, just ahead of a bid of $445K bid that included a $200K cash down payment. (He says there are lots of Orientals who are flooding the area with big cash bids.) The winning bidder plans to finance the purchase with an FHA loan: 30 years fixed at 5%, with a 3.5% down payment. He says the vast majority of loans he's making are FHA loans like this. About the only catch is that you have to have a clean credit record and a job. The program allows borrowers to have monthly payment obligations (auto, car, insurance, etc.) of up to 52% of gross income.

6 comments:

Bernard said...

Here is another anecdotal. Oregon unemployment hits 12.1% and is now at the peak level of the '82 recession.

http://www.employment.oregon.gov/EMPLOY/COMM/news/march_2009_unemployment.shtml

The CRE market has only just begun to unwind across the country. In Southern California you cannot drive through a business/industrial area and not notice the plethora of floors empty.

I said to my wife this past weekend, I wonder what will eventually fill all of those vacant floors. It will not be real estate, retail, technology, or financial firms that is for sure.

Bill said...

"I wonder what will eventually fill all of those vacant floors. It will not be real estate, retail, technology, or financial firms that is for sure."

How can you possibly know this? This is nothing more than defeatist nonsense.

BTW, can I borrow your crystal ball?

Bernard said...

Let me calrify. Not for quite some time. My bets will be placed elsewhere...

Franco said...

yes, 4% interest rates are like live bait to a hungry bass.

wait till rates go up a smidge....no more. this is the dead cat bouince for RE.

Mezzoduomo said...

"Oriental" is not quite proper these days. It's ok for carpets, but people should be referred to a "Asian".

Scott Grannis said...

Noted, thanks.