Nancy

What's strange is that the average price for a house in Bakersfield hasn't fallen that much.  The housing market  took a normal winter dip but the prices for resales seem to be staying strong.

Wait and watch Ladies, wait and watch.

As the number of defaults go up, Mortgage Companies won't have the big cash reserves for risky loans, and will begin to take less risk. This will make it harder for people to qualify for a Mortgage. This will effectively reduce the number pf qualified buyers in the marketplace, and make it even harder to sell a house. As a result, the inventory of houses for sale will continue to grow and prices will fall in an effort to compete in the market.

With fewer qualified buyers and more homes for sale, prices will fall. It just takes time to materialize. I've been watching the signs, and they're showing me that the process has begun.

One of the reasons that home prices have not come down much is because they can't. With the exception of new construction, the majority of these homes on the market are mortgaged to the hilt and the price cannot be lowered past a point.

Looks like there might be a lot of short sales in the future then.

Good point though.  Also..People who refinanced a 70K mortgage and took out huge sums of cash with the clever little interest games are really stuck now.  At least people who bought into it new don't have a lot of equity to lose when they walk away.

Have you been to my blog lately? There are now 23 lenders that have gone BYE BYE. Credit is tightening everyday.

Also, prices have come down and are at levels from early 2005.

murphy-

Prices have to come down to the affordability levels and they will eventually. I think it will take a few years, but it will happen

Thanks for posting this Nancy, I was going to stop posting here as I thought only a few were interested in this important topic.

We are only in the 1st inning of this real estate rout, the serious pain will come when 2.5 trillion of mortgages reset at much higher payments in the next two years.

Also, I receive the weekly NOD list from the local titles companies and were averaging 120-150 NOD's PER WEEK. That is not good. Two years ago we had just a few a month.

One last thing - we are averaging 120-150 NOD's per week and the newspaper does not even report this!

Please let the locals know the facts on a LOCAL LEVEL and not just the the national stories - thanks! Or you can just ignore them and cater to your advertisers!

I have a link at my blog : http://www.bakersfieldbubbl...

See the Lender Implode link at the left

Here is an intersting piece:

http://www.brokeruniverse.c...

What We're Hearing


By Paul Muolo

Merrill Lynch's actions in regard to margin calls on its mortgage banking clients had many executives talking this past week. Merrill's latest victim of buyback requests is California wholesaler ResMAE, a company founded six years ago by former Long Beach Mortgage chief Jack Mayesh. Does Merrill have the right to ask mortgage bankers to repurchase loans if they go bad in the first 90 days? Of course it does. But in its bankruptcy filing ResMAE claims that $308 million in buybacks that Merrill forced upon the company were not even delinquent! That's what the document says. ResMAE charges the loans "were current despite" being what it calls "technical" early payment defaults. ResMAE also says that Merrill thinks it has the right to put loans back to the company for an "unlimited" period of time. Merrill would not comment. For the full story read Monday's National Mortgage News. Don't subscribe? Call: (800) 221-1809...

The Merrill-ResMAE dispute raises another issue. For months we've been hearing about what a poor job some Wall Street firms do as "interim" servicers. Nonprime mortgage executives say that after the loan is funded and delivered certain Street firms screw up the paperwork. Is this just excusing making? Merrill, by the way, owns a "scratch and dent" servicer called Wilshire. How large is Wilshire's portfolio? No one knows because Merrill, after it bought Wilshire, stopped disclosing those figures to NMN and its data-collecting competitors. Merrill also owns a mortgage banking unit in Florida. How much does that operation fund? We don't know because Merrill doesn't disclose those numbers. Meanwhile, talk is continuing that Merrill's very own subprime arm, First Franklin, will only benefit from all its competition going out of business...

As the subprime carnage continued last week another concern was raised. One non-depository mortgage executive told us that warehouse providers (Merrill, others) have a provision in their contracts, stipulating that a lender must be profitable at least every other quarter. In other words, if a mortgage banker loses money two quarters in a row, they could potentially lose their lines. Stay tuned...

Back in the fall Bear Stearns said it would buy the wholesale subprime production arm of ECC Capital for $26 million. All well and good, right? But when the deal closed last week, ECC wound up paying Bear $7 million. Why? Apparently ECC -- the parent of Encore Credit, the unit bought by Bear -- owed the investment banker some money tied to its warehouse borrowings and other matters. Last year the two parties had -- you guess it -- loan buyback disputes...

Maybe the Bakersfield prices have only come down a little because they were so drastically low compared to other areas of California in the first place? I know little about real estate, but is that a factor?

My real question is this, where do the people who work in a Silicon Valley McDonalds live??? Do they commute from Gilmore or something? Maybe they live under the golden arches?

The Bakersfield prices will fall to a level that the local econemy can bare, based on the pay scale for local jobs.

Most likely, the Silicon Valley McDonalds employees are either kids (part-time employees) living at home, going to College and being subsidized by home, have a Spouce who earns a good living, or live in a relatively cheap burrow somewhere that requires a commute.

With Santa Barbara being the most overpriced Real Estate in the entire Nation, where do you think that all of the Service Workers live? They live in the surrounding areas and commute in to work. I was there last Summer and asked several service workers that question.