DavisRealEstateGuide.com

Many homes in foreclosure today were purchased with subprime financing around 2005 - promoted, in some cases, by home builders who were eager to sell their product and relied on new methods of financing to do so.

This is part of the reason so many subprime-related foreclosures are found in areas like Elk Grove and Natomas that saw a lot of building around 2005, and so few subprime-related foreclosures are in Davis, where there were no major new subdivisions at the time.

Some observers think the two-year tide of subprime-related foreclosures has peaked, and most of the faltering subprime loans will have cycled through the financial system by the end of this year.

But real estate experts are concerned that a second category of mortgages, called ‘Alternative-A’ or ‘Alt-A’ mortgages, could send a new wave of homes into foreclosure in coming months. The New York Times, in a front-page story on Aug. 4, reported that the percentage of Alt-A mortgages in arrears ‘quadrupled to 12 percent in April,’ compared to a year earlier.

Herb Cross, who manages the Lyon Real Estate offices in Davis, Woodland and West Sacramento, described the difference between subprime and Alt-A.

‘A subprime mortgage is one that’s risky,’ he says. ‘Those kinds of mortgages were made to people that didn’t really qualify for a conventional loan.’

In some cases, buyers put no money down, or didn’t have to prove their income.

‘The Alt-A mortgages are probably closer to a more reasonable guideline,’ Cross said. ‘These people have a better chance of making the payments on the initial terms of the loan.’ Other observers describe Alt-A as ‘one rung above subprime.’

The problem, Cross said, crops up when the terms of the Alt-A loan start to reset.

‘They may have had the ability to make payments when the payments covered interest only, and the payment was $2,000. But when the adjustment occurs, and the interest rate goes up, and you include principal (as well as interest), you may raise the payment to $3,000. And people may not have the ability or the will to make these payments.

‘We’re being told by the banks that we work with that there may be as many as 2,000 (more) foreclosures coming on the market in the next three months over the Sacramento region,’ Cross said. ‘And that’s going to have an impact on the market.

‘We think we’re going to start seeing some foreclosures occurring in higher price ranges, up to $400,000 or higher,’ he added. ‘It’s been mostly in the lower price ranges so far. We think it’s going to move up.

‘The unknown factor is how many people will have the ability to make the payments, but find themselves in a situation where the mortgage is greater than the value of the property,’ Cross said. ‘They may make a decision to walk away from the property, with the idea that they can escape the high payments, and rent a property for considerably less.

‘During the five-year period of time when their credit will be very limited, they can try to save the money they would have paid on the mortgage’ - and eventually re-enter the housing market.

A concentration of empty, foreclosed homes can have a negative effect on a community. According to reports by the BBC and other news agencies, many homeowners in the Stockton/Tracy area have ‘walked away’ from their mortgages, and moved to less-costly rented homes closer to their jobs in the Bay Area, saving on gas.

July 20th — August 8th 2008 / Posted on two week Intervals

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A signature Sacramento program that has helped almost 300,000 lower-income people nationally buy homes in the past decade – while stirring controversy for years – is likely to be shut down this week, Nehemiah Corp. of America officials acknowledged Monday.

The nonprofit giant believes Congress and President Bush will ban its decade-old down-payment assistance “gift” program within days as part of a larger housing bill, Nehemiah President and Chief Executive Officer Scott Syphax said Monday.

Syphax said he met Monday with the Nehemiah board and about 30 down-payment assistance employees in Sacramento to say it’s likely the “doors are closing” on the program.

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City staff members are still recommending that a residential project proposed for 233 B St., near Central Park and UC Davis, be rejected.

The project, which went before the Davis Planning Commission on June 25, is too modern in style and doesn’t fit into the character of the neighborhood, staff members said. Several members of the Planning Commission agreed, and asked local architect Maria Ogrydziak - who owns the property and submitted the proposal - to make some changes.

Specifically, the commission wanted Ogrydziak to incorporate traditional residential window patterns, front porches and more privacy for neighbors.

Tonight, the commission will look at changes to the plans, but staff members are maintaining that the changes are not enough to fit into the district’s design guidelines.

The design guidelines - the result of hours of research and work by community members, staff, several city commissions and the City Council - were written and approved about a year ago.

The City Council approved a zoning change along B Street that encourages development of townhouses, condominiums and businesses between downtown Davis and the UC Davis campus.

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A list of 36 potential sites for housing went before the Davis City Council on Tuesday night, and the council weighed in on how the list should be used in future city planning.

Developed over more than a year by a group of Davis residents, the list values sites that are close to schools, parks, transportation and shopping, and recommends waiting to develop large tracts of land on the periphery of the city. The list is divided into three parts - green, yellow and red - indicating how soon each property should be considered for development.

Both the City Council and the Davis Planning Commission have looked at the list several times, but how it will be used in future policy isn’t yet clear. On Tuesday, the council held a workshop before its regular meeting to generate ideas and give staff members some guidance on how to write up an ordinance, which the council expects to consider in September.

Mayor Ruth Asmundson said growth in Davis is always a contentious issue, but likened the city to a baby whom everyone wishes would always stay the same. Many people attended the workshop, most of whom questioned why Davis needed to grow at all. ‘If this baby doesn’t grow, it will become retarded,’ she said. Many in the audience muttered at that comment, but Mayor Pro Tem Don Saylor said some growth is necessary.

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Levi Leipheimer of Santa Rosa, who finished third in the 2007 Tour de France, is a two-time winner of the Amgen Tour of California. The nine-day race will start its second stage in Davis on Sunday, Feb. 15, organizers confirmed today. AEG/Courtesy photo

On a cold, drizzly Tuesday in February, a peloton of professional bicyclists whizzed through Davis on their way to Sacramento, in hot competition to win the 2008 Amgen Tour of California.

The tour, billed as the most popular bicycle race in the United States, has twice passed through Davis, with the cyclists welcomed by cheering fans lining the streets. But fans have found it hard to participate, with many stuck at work as the riders pedaled through town.

That will change next February, when Davis will host the start of the second stage of the 2009 Amgen Tour of California. Mayor Ruth Asmundson made the official announcement this morning at Davis City Hall.

‘During the past two years, thousands of Davis citizens and school children have demonstrated their support of the Amgen Tour of California by lining our streets to cheer on the tour riders,’ she said. ‘With our recognition as the most bicycle-friendly community in the United States by the League of American Bicyclists, it’s an honor for the city to now be chosen as a host city for the 2009 tour.’

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Published 12:58 pm PST Friday, November 19, 2004

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Where to Start

One of the starting points of any FSBO transaction is to accurately determine the price of the property. The reason is simple: almost every real estate contract is contingent upon an appraisal. Appraisals are required either by the lender (if a new loan is required) or the buyer (on cash or owner-financed transactions). Regardless of the type of financing used, the property must appraise for its full sale price.

Since it typically takes between 2 to 4 weeks to obtain an appraisal (it takes longer in the summer or when the number of refinance loans is high), neither the buyer nor the seller may know the appraised value until shortly before the date of closing. If the appraisal comes in lower than the sales price, the standard California contract allows the buyer the following options:

- Terminate the contract without further negotiations.
- Negotiate with the seller to pay more cash for the home.
- Negotiate with the seller to reduce the sales price.

In short, the buyer will have the option of deciding whether to proceed with the purchase.

Despite the very real power of a buyer walking away from the deal due to a low appraisal, a bad appraisal is a tragedy for all parties, including the buyer. After all, the buyer may lose a home that was otherwise ideal for his/her family. Therefore, it behooves all parties to come up with an accurate price before a contract is signed.

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By Kathy Maynard - Special to The Bee

Published 12:00 am PDT Saturday, July 19, 2008
Story appeared in SCENE section, Page K8

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A series of unforeseen problems complicated this Orangevale kitchen remodel, but homeowners Steve and Sherri Noss say they are delighted with the results. Dave Adams

Click on photo to enlarge

Q: We want to remodel our kitchen and have collected estimates from remodeling contractors and a custom home builder who has turned from new home construction to remodeling. The builder was referred by friends who love the house he built for them a few years ago, but his bid is so much lower than all the remodeling specialists that we wonder if we should be concerned or just consider ourselves lucky for finding someone who happens to be more “hungry” than the others.

– Tom Piper, Rio Linda

A: There can be many reasons for differences in estimates, but if all the contractors bid on the same plans and specification list of materials and most are pretty close, there is good reason to wonder about a much lower bid. Ask yourself if it might be due to cutting corners or reducing quality, says Scott Nulton, president of Nulton Remodeling Services in Sacramento.

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AS OF JULY 20th, 2008

Don Guthrie

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