Great Deals In Sonoma County!

"I Found A Home That is 50% off its high from 3 years ago!"

If you have fallen for the fact that values 3-4 years ago were just and substantial.. forget it.

We have now learned that it is and never was the case. We thought it was then but have come to find out it was just oversold financed "kool-aid".

It makes for a great sales pitch to infuse perceived savings and value as we sort through the housing crisis wreckage but we all know now it is the elephant in the room we hate to admit.

I am often asked when and where price appreciation will come from and can not come up with a catalyst of new expendable revenue that will push prices up.

In fact since the banks have been slapped with free (or very low cost) tax payer money they are now in a hurry to pay it back before they get regulated to the point that greed just won't have the same lucrative appeal anymore. The waiving of the mark-to-market rule has helped the banks not have to classify junk assets as junk assets. We know they wouldn't do that just to appease their pockets or their share holders.. Right?

So.. where are prices going to end up now that the banks are lending based on affordability only (full doc loans) and a limiting 38% of debt to income level.. well all you have to do is look at what the median income levels are and work it backwards.

If median income in California is say 65,000 (2006 the good ole days) the math will show where prices will land.

65K /12 = 5416 a month x 38% = 2058 a month mortgage (payments, interest, taxes, insurance)

Lets assume absolutely no other debt and a loan of 5.5% = a price point of about 380K

If the consumer has debt all pricing is lowered. (and it assumes a borrower has about 70K down)

These are very liberal assumptions and should not be relied upon. (much like the lenders did when they had Mortgage Backed Securities rated AAA to sell sweetness)

We have faith that wall street will treat us to another round of "perceived value component" that may instill value and worth based on... well... time will tell...