Entries Tagged 'Housing' ↓

I am sure that most Americans are quite excited about the tax rebates that may be coming soon this year due to a major economical stimulus package. What is lesser known about this package is that it will also raise the “conforming” mortgage loan limit from $417,000 to $729,750 in high priced regions until the end of this year. This means that government sponsored enterprises such as Freddie Mac and Fannie Mae will be able to purchase loans as large as $729,750, and any loan under this limit will not be a jumbo loan. Basically, people will be able to borrow more money and pay less interest. Who is cheering for this change and why? More importantly, how will you be affected?

Opposing Views on the Issue

What I found interesting is that the National Association of Realtors put out an extremely positive review about this move stating that “NAR’s research found that simply increasing the loan limits for Fannie Mae and Freddie Mac to $625,000 would permit as many as 300,000 families to enter the housing market, reduce foreclosures by as many as 210,000 and allow as many as 500,000 jumbo loan borrowers to refinance to lower cost loans, saving these people $274 to $411 a month.” On the other hand, this article states that “the director of the Office of Federal Housing Enterprise Oversight (OFHEO), which is the governing body over America’s government-sponsored enterprises (GSEs), warned the Senate Banking, Housing and Urban Affairs Committee this week about expanding the GSEs’ ability to take on jumbo loans without first having the appropriate stipulations and regulatory structures in place.”

Who should we believe? The glowing report of an association of realtors who have lobbied for the change or the director of a branch of the government that has been tracking housing prices and demographics for more than three decades? I personally believe that the director of OFHEO’s opinion is prudent and logical. With bigger loans, the government sponsored enterprises will be taking on more risk, and if these agencies are destablized by more risky debt then the entire economy could collapse even further.

Best Case Scenario for the Average American

The best case senario I see is that nothing really happens and very few loans get funded under the new limit. These few homeowners will benefit from the lower rate and keep on paying their bills. Hopefully, the paltry number of these homeowners will not affect the housing market in any significant way. The prices of houses continue to decline for a while making homes more affordable and lowering the need for jumbo loans. Basically, the best we can hope for is that nothing changes.

Worst Case Scenario for the Average American

Unfortunately, I think it is possible that this footnote to the stimulus package could have a devastating effect on the current mortgage crisis. First, it may prolong the bubblicious prices in California and the Northeast. Right now I am reading many stories where offers on homes fell through because of the lack of financing. Considering the fact that the average price of shacks in my neighborhood is $700k to $800k, most of these buyers are trying to secure jumbo loans. Once this package goes through, financing will be possible, and the prices on the shacks will not come down as quickly. Even though this higher limit is only in effect for one year, it is possible that more speculators and fraudsters will get into the market and drive prices up even higher. After all, it only took about two years (2004 to 2006) for home prices to double in many parts of California. You may say that this is not a problem for the rest of America, but if Freddie Mac and Fannie Mae become insolvent because of more risky debt, then all Americans will have to pay dearly with mandatory bailouts. Then we can kiss that tax rebate and even more money goodbye.

What I Think Should Happen

I am not an expert, but I firmly believe that what we need is more affordable homes, and not larger loans. So it is probalby best if the limit was left alone and the ridiculous prices fell back down to earth. I think it is ludicrous that the “conforming” loan limit is being lifted more than $300,000 in this package in the blink of an eye considering that it took a span of 23 years for the loan limit to go up from $115k to $417k. Is more debt really good for Americans? What do you think should happen?

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This is a continuation of my family’s immigration story. If you have missed the first two posts they are here:
Fifteen Years in America — An Introduction
Fifteen Years in America - Chapter 1: The Struggle Before the Reunion by Jian (Part 1)
Enjoy!

The church is located just across the street from the University of Hawaii’s business school. Because of its proximity to the University, this church has many programs that aid international students, and thus they have a good relationship with the Internation Student Services. When they received Jennie’s call for help, they sent someone to bring Helen to the church.

Later, Helen told us that the first three nights she was in Hawaii she slept on the ping pong table of the church’s library. In those three nights there were no one present in the church, and it is hard to imagine how she survived those nights in the pitch darkness of the church surrounded by cockroaches and mosquitoes. In order to save money, she only ate one hamburger in those three days.

In America the grants given to students in humanities majors like theatre arts is much less than those given to science majors. Thus Helen did not get much money from her department. When she just arrived she only received a tuition waiver, and had to work for her living expenses. This is a very common occurence. Hawaii’s main economy is tourism and is also one of the highest cost of living areas in the United States. Because of these reasons, Helen desperately needed to save money.

God always opens a path for those who tries to find it. Three days later, the people at the church managed to use their connections and found a place for Helen to stay. They found a single mother named Lory. She is a hapa (half Japanese, half Caucasian) in her mid thirties and she is quite beautiful. She has a four year old boy named Dane, and she wanted to find a student who could babysit her son on Friday nights when she went out on dates. When she saw that Helen was about her age and has experience in raising a child she was very satisfied. She offered Helen a room in her house for $150 per month and asked for free babysitting on Friday nights. With this deal, Helen was able to have an affordable roof over her head.

After she settled down in Lory’s home, Helen really wanted me and Xin to come to America. However, she did not have enough economic capacity to bring us to America so she had to work. She found a job at the Kennedy Theatre at the University of Hawaii making sets and costumes. It is not easy to make costumes. When she just started she was not familiar with sewing and often stabbed herself with the needle. When she was making sets she often had to do heavy labor and lift things to high places. Even though it is hardwork, she silently endured it to realize her goal of reunion. In addition to working at school she also did some part time jobs on the side.

Helen worked hard at earning money in order to bring us to America, but she also had the difficult task of exceling at school. Getting a PhD in America is not a simple feat.  With each lecture there are tons of reading materials and research to go through and papers to write.  Everyday Helen worked 16 to 18 hours to finish work and school. After a few months Helen was able to save a bit of money and went to Jennie at the international student service  to obtain an I-20 form for us to come to America.  Because she did not have enough money she asked for the help of a few classmates.  She borrowed some money and put it into her account and then obtained a certificate from the bank stating that she has enough money.

At that time there was a student from Shanghai named Hu Leping who helped Helen greatly.  This man majored in library sciences and loved to help other students from China.  In UH, he had a great reputation of “Hu Leping, loves to help others”. He found two to three classmates who were willing to help and collected a bit over $8000 for Helen’s account.  With this help Helen’s assets qualified for an I-20.

Helen took her bank’s certificate to the international student service to Jennie for an I-20.  Jennie is a very experienced officer and is very sympathetic and understanding to the situation of international students.  She was very responsible and tried to talk Helen out of bringing us to America because the living expenses are high and it would be very hard for Helen to support us on her wage of $6.50 per hour.  She asked Helen to wait a while before making the decision, but Helen was adamant, and Jennie had no choice but to issue the I-20.  When Helen left the office Jennie told her that even if she had an I-20 there was no guarantee that the Consulate would give us a visa because Helen did not have enough money to support us.

Jennie turned out to be right.   I took Xin and the I-20 Helen sent us  and went to the U.S. Consulate in Shanghai for a visa. An officer looked at our documents and did not say much.  He wrote a date for six months later on my and my daughter’s passports, which meant that the visa is denied and we may reapply in six months.

To be continued…

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Since I was on vacation during the last week of December I decided to combine the two reports into a report of the last four weeks. Not that many new listings came up in the last two weeks of December because a lot of realtors and sellers are on vacation also. So here is a summary of the last four weeks:

Total Count of San Mateo Home Sellers in Trouble for 12/17/2007 to 1/13/2007: 82

Average Time from Last Sale Date: 1.30 Years

Average Annualized Loss: 18.0%

Average Size of Home: 1198

Average Price Per Square Foot: $494

Biggest Loser: 2529 Fordham St, East Palo Alto with an annualized loss of 89%

What is interesting is that 37 out of these 82 troubled properties were listed within the past seven days! Some more properties of interest are below:

15 Kittie Ln, Belmont — This is a good sized Belmont ranch that was last sold for 1.2 million in October, 2006, and is now listed for just under 1 million. Personally I still think it’s overpriced, but in Belmont

701 6th Ave, Redwood City — It smells a little fishy that this tiny and unattractive home last sold for 715k and is now listed for 488.5k. I don’t think it’s a great bargain, but it is the home with the largest absolute percentage loss on the list.

512 Stanford Ave, Redwood City – The Redfin listing says that the home’s square footage is 2500, but the description says it’s great for a first time buyer. That made me kind of suspicious and I looked it up on real-estate.nextag.com, and there it stated the home is actually only 820 square feet. Now a 820 square foot starter home is more believable.

406 Accacia St, Daly City — In a previous report I found the picture of 404 Accacia St extremely funny, and now it seems like its next door neighbor is up for sale. Here are the pictures of these two houses:

633 Hampshire Ave, Redwood City — Finally, this “house” wins the award for the ugliest home in the this report:

The detailed report will be on the statistics page and a new update of homes listed in late October to early November last year will also be included. Stay tuned!

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So a couple months ago Get Rich Slowly linked my story about my super cheap ex-boyfriend and thousands of people read it in a matter of hours. After that I received an email from a guy named Alan Corey and it said the following:

Hi Baglady,

I came across your blog today and have to say I loved reading about your ex-boyfriend. He reminds me a lot of myself. I went to extreme measures to achieve my financial goals and finally was rewarded for it. I would love to send him (and you) an advanced copy of my book ” A Million Bucks by 30.” It hopefully will keep you both motivated to also remind you that you two are doing things right.

Cheers,

Alan Corey

www.alancorey.com

So I went to the guy’s website and read a bit about him, and he seemed weird, but kind of funny, and mostly harmless. So I replied to him to send me the book, and a couple weeks later I received a package from the publisher Random House and it contained a shiny advanced copy of the book and on the title page it said, “Here’s to better boyfriends”. (Well, thanks Alan, but I don’t need anymore boyfriends. I got a super cool hubby now.) I read it on the way to Southern California while my hubby drove, and to be honest I rather enjoyed the book because it was quite funny and candid. After reading his story of eating only ramen noodles for three months I understood why he said my super cheap ex reminded him of himself. Though what is funnier to me is that another incident in his book reminded me of myself. The story was that one of his girlfriends was really into movies and spent hundreds of dollars a month on her passion, and he made a spreadsheet showing her how much money she could earn if she invested the money instead of spending it on movies. (A replica of the spreadsheet is in the book). After he presented the spreadsheet he was dumped. I laughed out loud at this because I made a similar spreadsheet for my hubby while we were dating because he spent a lot of money on games and gadgets. Fortunately my hubby didn’t dump me. I do understand where Alan is coming from and the spreadsheet is really his way of saying to the girl that he cares about her, but unfortunately the message was lost somewhere. The book is also sprinkled with sections named “Extreme Cheapskate Strategy”. Some of these tips are good, but some are a bit too extreme or even borderline unethical. I will not list them here, but some of these are pretty hilarious too.

The main vehicle Alan used to become a millionaire is real estate. But unlike the infamous Casey Serin he was very sensible about what he could handle. He almost always offered lower than the asking price and had partners and kept his full time job throughout all of his real estate ventures. I like that Alan acknowledged that he was lucky to catch one of the largest real estate booms in history, but I would like to emphasize that Alan really worked his butt off too. I really don’t know how he is able to have a full time job, handle six or seven crazy tenants, go to a bazillion open houses, renovate houses, host success seminars, and go on a bunch of reality TV shows. My main criticism of the book is that people might read it and think it’s easy to become a house flipper or landlord and suddenly become a young millionaire. Those easy money days are dying down and it really takes a lot of time and patience to be a successful real estate investor. I think Alan should have had a summary of his personality traits and actions that took him where he is, and I think a lot of financially successful people have similar paths to Alan’s. I will try to summarize the things that made Alan successful here for him:

1. Have a clear goal — Alan lists his goals from the beginning of the book to the end. His main goal has always been becoming a millionaire by 30, but he also had many smaller subgoals that brings him closer to the majority goal. Basically, knowing where you want to go is always important to your success.

2. Don’t Care About What Others Think of You and Live Below Your Means — Alan was really cheap and didn’t care to have a beautiful apartment or the best room in the house, and that’s how he saved and earned money. He also earned a lot of money and free goodies by being ridiculed on reality TV shows, but that’s really in another league of not caring what others think.

3. Work Your Butt Off (at least in the beginning) — As I mentioned before, Alan really worked pretty hard when he was young, and as his wealth increased it became easier to accumulate money. The rich do become richer, but sitting on your butt and not working towards your goals will not make you rich in the first place.

4. Take Risks but Also Research Everything Before You Jump In – For the most part I thought the risks Alan took in real estate were realistic and well thought out. He also emphasizes that he took a lot of time researching the investments he was about to make. I think the research part is overlooked by a lot of people who want to become rich quickly. It is usually not that easy to find a good investment and the cliche “it always goes up in the long run” isn’t always true for everything.

5. Don’t Be Too Greedy – One thing I really liked about Alan’s story is that he quit and got out of the rat race. If he kept on flipping houses he might have lost his fortunes, but he did what he wanted to do and decided that he is done. Sometimes people can become wildly successful but never learn to quit and become a slave to earning money once again. I admire the people that value living their life over having the biggest bank account and the fanciest cars. Another example of this is Millionaire Mommy Next Door and I highly recommend her blog.

Anyway, I definitely recommend Alan’s book if you want a light hearted read about a Southern boy making it big in the Big Apple. I was laughing a lot when I read it, but that is because I can really relate to what he went through.  Though I am hoping that his book doesn’t create any new Casey Serins and his readers would realize that it isn’t easy to become a millionaire, but anyone could do it.

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For the past week I have been vacationing down in the Inland Empire with my hubby’s family. We spent Christmas cooking and eating and then we did various things like shopping, gaming, and more eating. My hubby was extremely excited over purchasing a double down puffy jacket at the Steve and Barry’s at Puente Hills Mall for $8.98! Actually everything in the store was $8.98 because it was a grand opening sale and the entire time we were in the store the hubby was saying, “HOW IS THIS POSSIBLE!” I thought it was extremely cute that he got excited over cheap stuff. Apparently there will be a Steve and Barry’s opening in San Jose sometime in the future and maybe they will have such a sale too.

Besides being delighted by cheap jackets, we went to a couple of the Southern Californian restaurants that my hubby has been craving for. We managed to go to Thai BBQ and Chick-Fil-A. He also wanted to go to El Pollo Loco. (There is certainly a theme of chicken to these restaurants.) I have to say that Chick-Fil-A chicken nuggets are quite good, and unfortunately the closest one in Northern California is about two hours away from us in Sacramento.We only recently found out that there is a Thai BBQ in South San Francisco, but everything in the SoCal location was $1.00 cheaper. I guess the rent is just higher in South San Francisco. We also had a LOT of boba milktea everywhere we went. When we visited the hubby’s friend J Allan and he drove us to Pasadena to see their “old stomping grounds” (Caltech). The entire city was gearing up for the Rose Parade and there were bleachers erected all over the streets. We ate at a small hole in wall restaurant called The Pasadena Sandwich Company. This is a place that makes sandwiches that are bigger than newborns and they’re mostly under $8. We all ordered something called “Trust the Cook”, which is basically a random sandwich. Then we ended the day with a lot of Rock Band.

Other highlights of the trip included a visit to the San Diego Natural History Museum’s special exhibit of the Dead Sea Scrolls and a short tour of the U.S.S Nimitz. The Dead Sea Scrolls are absolutely amazing because the Biblical texts they contain actually validate a lot of our modern day Bible. Additionally, the exhibit emphasized that the ideas written by the Jews in turbulent times thousands of years ago still applies to us today. There are also a lot of texts not related to the Bible and one of them that caught a lot of people’s attention is a copper scroll that is basically a treasure map to vast amounts of gold and riches from the temple of Jerusalem. It is believed that the treasure was hidden before the temple was destroyed. On the same day my sister in law’s boyfriend took us on a tour on the U.S.S. Nimitz because he lives and serves on the ship. The seasoned aircraft carrier is literally a fort on the water. I think there were about twelve to thirteen floors and it took us a while to walk up to the landing strip and flight deck at the top. We did go after sundown so a lot of areas were closed off or were going under renovations. The U.S.S. Reagan was entirely decked out in red and green holiday lights along the right side of the Nimitz and it was pretty impressive looking also. Unfortunately I have no pictures of these because photography was not allowed in either place.

One thing that really stuck out to me is how much sprawling land there is down south and how much we had to drive to each location. Here in San Mateo everything seems so crowded and there is a lot of apartment buildings and tiny single family homes. Down south it seems that the standard home has four bedrooms (at least in Chino Hills). I picked up an issue of the Home and Land magazine down there and I was totally amazed that you could rent one of these giant houses for less than the cost of our condo. It is possible that one day the hubby and I would move down there, but it would be at least a few years from now.

Anyway, I hope all of you had a fun and safe holiday and that today was a wonderful beginning of the new year!

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