Monday, February 23, 2009

The Many Are Not Here

Flickr Photo Courtesy of DCJohn

I have purposefully held off on writing about the Federal Government’s new “Homeowner Affordability and Stability Plan” until I had a chance to read all the information and understand how it would impact our fair Island.

As details of the plan came out, I did not hold out much hope that it would do anything for Alameda homeowners.  Now that I have a chance to review the fine points of the plan it is proving to be true.

Carolyn Said, a very good real estate writer, over at the San Francisco Chronicle did a really nice job of breaking down the impact for the region. The article “Few in Bay Area qualify in housing rescue plan” tells us that more than 90% of the Bay Area will not qualify.

For you to qualify for under the here are the basics:

  1. Conforming Loan – The loan amount needs to be under $417,000
  2. The value of you home can not be less than 5% of the loan amount
  3. Primary residence

According to Chron story in a review of 117 regions the Bay Area ranked last in terms of those mortgages that would qualify under the plan. According to Zillow, an online home price evaluator, Alameda’s index home price is $ 578,000. According to Money Magazine, just three years ago the median home price was $682,500. My research shows that the median home price was $600,000 for 2008 a 12% decrease.

Conforming loans in Alameda are very rare, but even if you bought a home for 400,000 and took a 100% financing you new value could not be less than $380,000. That price just does not seem realistic for a Bay Area or Alameda home.

The good news is that is appears, so far, that most Alameda homeowners are hanging on to their property. With 38 total foreclosure and short sales currently listed this represents just 0.26% of the owner-occupied homes in Alameda. It does represent 38% of the total homes for sale, so distressed properties are hitting the market.

The one part of the President’s plan a $75 billion program that tries to persuade lenders to modify loans would apply to Alameda as it would in the rest of the country. The government is trying to support struggling homeowners, including both those behind on their payments and ones who are still current with this program and the plan to pour an additional $200 billion into Fannie Mae and Freddie Mac would also provide aid.

To read a little more about the plan here are the White House links:

Executive Summary




  1. re: conforming loan limits- It seems at least Freddy MAC defines them differently for Alameda per the Economic Recovery Act last year:

    $625,000 is the "super conforming" loan size for SFR in Alameda, CA per their excel sheet.

    I am not sure how lenders handle this though. It seems they still want to charge more for loans of this size regardless of these broadened definitions.

  2. The plan is unclear if the super conforming loans will apply, the details did not specify. Also what was unclear is will the plan have an income limit, like the tax credit. I will update if I find the details.