Ask Pete, Chapter Two

Back by popular demand: Monday afternoon ask-the-blogger Q & A. You ask the questions, I pick the easy ones and answer them on the blog later today.

So bring 'em on: Questions about the L.A. housing market, the economy, the news media, etc.

Ground rules: Submit your questions in the comment section by 3 p.m., I'll answer 10 or 12 of them by 5 p.m. today.

Photo credit: Los Angeles Times

Comments

[mike]

why do you sometimes post in 5 minutes and sometimes in 3 hours??????

p.s. this is always the most interesting blog you have!!!

[Uncle Billy]

Did you have an inkling of how different our real estate market would become when you started this blog?

[mark g]

Pete,

Are lender Short Sales impossible to bid for at this point? I saw a property that I was interested in and would like to make an offer, but the offer would be tailored to descend in value with the lengthy time frame that it would take to approve by their loss mitigation... in essence, they would have to agree to absorb the market depreciation ocurring until the stamp comes down. They are already taking a hit, but why not throw a hail mary, nuthin' to lose on my part... right?

[Cal]

How do appearances like your appearance on CNN on Saturday happen? Producer calls up and says we need someone to talk about foreclosures?

[Chuck W]

Pete,
Great blog. What would have to happen to the LA housing market to convince you to pull the trigger and buy?

Do you think it will happen?

Also, do you miss Dell's lemonade?

[Neilson]

Do you believe the bank-owned resale condo/townhouse market is leading, not lagging, the current downturn and is this condo/townhouse market in general going to bottom in the next 6-12 months?
I am looking to begin building a RE investing portfolio and the most depressed market I see right now is the condo/townhouse market.

Thank you.

[xtine]

Hey Peter-

What do you think is the best web resource to find out about foreclosed houses?

[CP]

Hey Pete, with all the real estate commotion, what do you see happening to land/lot prices zoned for single family development?

[carter]

Pete,
what chances do you give for the Frank-Dodd plan to go thru and if so when would it take affect. I am one of those people underwater on their mortgage but I do understand that it's not fair to have my mortgage written down and enjoy lower payments than my neighbor who will pay the higher payment. I think that anybody that participates in this plan should have a lien attached to the house for whatever the writedown principal amount is. Therefore the owner can never refi/cashout or sell the house for a profit.

[MyLessThanPrimeBeef]

Pete, is it possible to invite a flipper or two here?

[TakeFive]

What do you look for in a story to consider posting it on this blog?

[AJ]

Do you think the effect of high oil prices on the housing downturn will result in the passing of the proposed bills closing the "enron loophole" in energy tradings forcing more acountablility and regulation? Peter Welch from Vermont has been very instrumental in trying to get this passed in Washington.
Looking forward to your answer.
Thanks!

[Mike G]

Often, the discussion in this blog trends worryingly toward racism, in my personal opinion. Do you feel that some of the more colorful comments on the blog are, in fact, racist? Or is it just people being pragmatic with what is a very serious economic commitment?

[arroyogrande]

A question on "the media" in general:

In quite a few (ok, a lot) of the recent stories featuring victims of the current foreclosure wave, the people being foreclosed on had a hand in creating the hardship for themselves in the first place. For example, owning the home for 10 years with a stable mortgage, but doing cash-out refinances or home equity lines of credit to "pay down credit card expenses, pay for a kids' college, finance a new business, etc. etc. etc." In these numerous cases, where the owner clearly pulled out money for things they couldn't afford, why do your fellow reporters insist in casting the borrowers as victims? Is it the sense that "but for the grace of God go I"?

- arroyogrande

[Chris in Sacramento]

So how big of a deal is the Credit Suisse chart showing all the Option ARM and other mortgage rate recasts that are coming due in 2009-12?

[John]

America has got to get over its willingness to participate in bubbles.

First it was tech stocks, then it was real estate, now it's gasoline and wheat/rice/corn.

These are all based on "perceived" shortages, as there's no shortage of tech stocks, housing, or gasoline, only a series of panicked news items and market manipulation that gets the fearful, the greedy, and the stupid to pay too much.

So my questions are:

A) When do we call BS and stop participating in this absurd bubble-mania?

B) If we're not going to stop, any ideas on what the next bubble will be?

C) How far is Santa Monica / Venice / West L.A. going to drop? (I'm guessing 40% before it's all over).

[Laker]

Peter,
Say you were maya's neighbor with similar house in Fontana paying $3000 because you took FIXED rate mortgage AND after putting 20% down to buy the house next to her.
Now maya get's loan modification and will only pay $1100 and keep "her" house.
How would you feel?
Would you stop paying the mortgage and demand to have your payment reduced too?
(Remember that you putt 20% down...and here you are the one that is losing big cash in addition to the bank...)

[Pasadena91106]

Two weeks ago I saw a $739K asking price for a fixer upper in Pasadena's 91106, which ultimately sold for just $479K--about half the previous median sales price for single family dwellings in the zip. I keep hearing that prices in high-end neighborhoods won't fall much, yet the limited number of homes for sale in 91106 suggests that homeowners are refusing to sell rather than sell at what they perceive to be today's low market prices. Doesn't it seem that at some point, somebody is going to have to sell something and at that moment the prices could come way down? And doesn't the example above illustrate the point?

[peter C]

In all of this forclosure craziness, I have not heard 1 mention of the ridiculous PMI fees that lenders impose, and where that $$ is going. I had to pay PMI on the first property I owned, and it was not tax-deductible at the time

[Matt]

Do you think there is any validity to the argument that it is better to buy now because even though house prices will most likely be down in a year, interest rates will be up, so the mortgage payments will be essentially the same (if not less now)?

Thanks!

[Wilson]

With a letter grade of A-F, how do you grade the credibility of real estate agents? Month after month, they say, "It's a great time to buy." But prices have fallen like a rock and they've been saying that for the past year!

[Miguel Collins]

Peter,

What is the incentive for your real estate agent have to find you the best house for the least money, if their own paycheck is dependent on you buying the most expensive house? Since they work off of commission.

Thank you very much sir.

[Paul H]

Pete, can you invite some recent homebuyers on the blog to give their opinions? The details of their financing? Where they purchased, etc? Would like to get some comments from people who are going against the naysayers and buying anyway. Thanks! Keep up the good work!!

[Perdido en el Ecuador]

Peter,

I presume several others will ask the same question, the ultimate question, which is how far do you think prices will go and when will prices reach the bottom?

I am also interested in hearing what you think about the contrast in price declines and foreclosure rates between the the Antelope Valley/Inland Empire parts of the region and the more settled neighborhoods. Is this a matter of time for the declines and foreclosures to "migrate" towards the coast or will prices just not decline in these more settled, affluent areas?

Gracias -
El Perdido

[tarbubble]

John, my investment guy thinks commodities are already bubbling. just FYI.

[greg]

Peter,

Any word on what will happen to Countrywide's operations in Simi Valley after the BofA merger? I am looking to buy in Simi, but waiting/hoping that BofA will move much of Countrywide back to North Carolina, thereby flooding the Simi Valley market with inventory.

Keep Up The Great Work!

[Arti]

Peter,

I think the biggest unanswered question Angelenos have, is what about all the neighborhoods in LA that saw enormous appreciation since 2000 but have given up absolutely none of it to date?

There is a chasm, ever-widening, between all the doom and gloom predictions and the historical data, always showing devastating losses and depreciation in all kinds of neighborhoods--but never in LA proper in the desirable places (you name it, starting with west LA, Santa Monica, etc.). We need to start talking about why this is and whether it's just a lagging indicator--i.e., it's still going to happen just later because the foreclosures in the marginal areas accelerated the process there. Personally I think West LA will get hit just as hard, only it more gradually.

[LivGonzales]

http://www.laalmanac.com/population/po03.htm
The census says there's more around 700,000 people in LA County. We should put this in consideration when we compute for the number of houses "available" . Say you can put 5 people in a house we should at least have 140,000 more houses than we have in 1990. Do we? Of course the number of illegal immigrants are still not included in the number.

My question is : a 180k 3/2 fixer on a 3000 lot in Norwalk good enough buy for today if I wait 2 more years?

How many investors with cash are waiting?

[Drew]

So.... we're ready to buy a house with about $150K down and can afford about $4K a month in payments.

Are we crazy to buy later this summer/early fall? Should we wait it out another year or more? Or is now a good time to jump on a good property at a reasonable price?

We're looking in areas that have so far resisted large price drops and don't intend to move for at least 10 years once we buy, FYI.

[keith]

Pete -

Why does the chicken cross the road, and what kind of bailout can he look forward to when he gets there?

[DF]

Despite the gloomy news for housing in LA Cty generally, quality housing stock in my area (Hollywood Hills/Los Feliz) still sells at a premium. Do you think higher-end homes (nicer condos and more modest SFRs in desirable areas, currently pricing out at $700k-1m) will be hit by the decline in the next few years, or will their owners invariably be wealthy enough to ride things out by not selling? Thx.

[LeftLA]

MyLess: You need to be more specific. There were the clueless flippers: "let's cash in our equity and do like them folks on TV!" Then there are legitimate, professional investors who buy, rehab and resell for a living using institutional or investor funds -- yet still get painted with the same brush.

Very different animals.