Mr Mortgage

I have found another "doom & gloom" real estate blog worthy to add to my collection -> Mr Mortgage's Guide to the TRUTH! In a nutshell, this guy has anecdotal evidence that says the recent legislation to temporarily raise the conforming limits is a bust. He says the darn rates are still too high for people to want to re-fi or buy new. What is also scary (or encouraging - depending on which side of the fence you are on) is the Alt-A loans situation he describes for California. He has empirical data and it is pretty alarming just how many people have used their homes as ATMs. But now that many home values have tanked, a person living in those homes and who has these types of loans could very well have his/her LTV ratio all f-d up making it enormously challenging to re-fi and he/she could risk defaulting. And of course more defaults leads to more foreclosures which leads to more downward pressure to home prices. *cue the violin music* (I don't think the author is saying people should never take the cash out option. I'm sure there are circumstances where it's appropriate. I'm pretty sure the comment was toward people taking the cash out option for luxury items.)

This is going to sound really mean spirited of me since my own family and many of my friends have homes in the Bay Area. But I have to be brutally honest here. Part of me is still actually hoping for a major correction in Bay Area housing. And by no means is it because I want financial harm to come to those I care deeply about. Not true. We want to move back but like everyone else, we want the most for our hard earned money. Even today the Bay Area housing market fundamentals still don't make a whole lot of sense to me. I compare it to the year 2000 where you had ridiculous dot com valuations. I don't really buy the "Bay Area is unique" or "Bay Area is out of land" arguments either. A small premium for the aforementioned I can live with. But charge a premium such that a couple with an average six figure double income can only (or barely in some parts) afford a fixer upper? That just seems out-of-whack to me. At the end of the day, it doesn't matter what I think or feel. More and more the numbers that I can see are saying that at least in the short term a fair number of us are going to feel a pinch or a major pain.

Let's not forget that Viks and myself are also in the line of fire here with regards to our own home value. Not too long ago, we were barely able to re-fi without putting more money down. We were fortunate to close the re-fi with minimal out of pocket. And we were the folks who even put down the traditional 20%. Talk about adding insult to injury. So to put my previous paragraph in context, "Fool me once, shame on you. Fool me twice, shame on me!"