Understanding the Financial and Mortgage Crisis

Understanding the Financial Crisis

The Mortgage Banking Meltdown Explained.

Tracy Housing

Tracy is pretty much the same as Mt. House. Sales is up and supply is down. During the housing boom in 2005, all you heard from the media was the the tight supply of housing, and not the bubble. Now price is affordable, and the media only talk about the bad news.

Let's look at the numbers, you could rent a decent four bedroom house in Tracy for about $1500/month. You could buy the same house for about $200K now. For a 200K mortgage, your monthly housing expense is about the same as rent.

200k FHA loan @ 6%, $1523 PITII
principle & interest(pi) $1181
tax(t) $209
Home insurance(HI) $50
Mortgage insurance(MI) $83

I don't think anyone can predict which way the Real Estate market will go, but home price is much more reasonable now.

Mt House in CBS News

Mt House in CBS News

Mountain House in the news.

I just read an article in NYT about Mountain House where 90% of the home owners are up side down. Is the Real Estate market really that bad here? Let's look at some facts.

• We had eighty months of inventory last year and now is down to three. Nobody was buying last year because prices were too high. Now you can buy a really nice 2000+ sqft home for under 300K. For what they are paying for mortgage in Mt. House, they can only rent a 2 bedroom apartment in the Bay Area.
  
• Also, prices are stabilizing at around $130/sqft in the last three months. Look at the chart and draw your own conclusion.
• The number of homes sold & pending in Sep 07 was 2. There were 61 homes sold & pending in Sep 08.

What do you think? Is it really that bad here?

I came across this video. If you think we have it bad in the central valley, take a look at the inland empire down in SoCal.