A 'Little Panic' In Sacramento
The Sacramento Bee has this update on area defaults. "A new survey released Tuesday confirms what steadily has become more obvious to local real estate experts: More homeowners in the four-county Sacramento region are drifting toward foreclosure. That means the area ranked higher than every other California metro area except neighboring Stockton-Lodi.""'We're not seeing a lot of people at that foreclosure stage yet, but we're sure seeing a lot of people who are headed that way,' said Jeff Tarbell, president of Sacramento-based ATM Mortgage. Tarbell said that many people can't afford both rising mortgage payments and their cars, credit cards and other amenities. 'We're starting to see the beginning stages of a little panic about not controlling your spending,' he said."
"After a five-year boom that saw many homes double or more in value, the Sacramento-area housing market has cooled significantly. Sale prices of existing homes remain below their 2005 peaks in all four counties, while inventory of homes on the market climbed to 11,344 last month."
"Housing experts said some level of foreclosure activity at 2,514 homes in the four-county area during January, February and March likely stems from households struggling with adjustables. Last year, about three-fourths of Sacramento homebuyers used adjustables, and two-thirds of buyers were still using them in March."
"'The difference between a payment that's $1,700 a month and an adjustment that brings it up to $300 more is huge,' said Linda Bennett, a real estate agent in Sacramento. Agents are seeing more homes listed by people who are struggling with payments, she said."
"It's a similar story in the Stockton-Lodi metro area, which has swelled in recent years with Bay Area commuters priced out of their hometowns. 'It's not like it's some adverse turn in the economy,' said Sean Snaith, at the University of the Pacific. Snaith attributed the region's foreclosure activity to 'people getting caught in transition' as rising interest rates hike their monthly payments."
"'I'm not sure what else it could be at this point,' he said. 'It's not massive declines in jobs.'"
posted by Ben Jones @ 12:17 PM
1 Comments:
It's obvious that the lenders allowed buyers and refinancers to go into debt further than they can sustain.
With ARMs, it becomes a dangerous game. The lender makes the borrower think that something will change in their life so that they can afford the higher payment (if and) when it comes. This change is implied equity that will magically be given to them. The myth is that they can always dig in further and gather more cash.
This scheme only works for so long. We are past the breaking point.
Post a Comment
<< Home