San Mateo County Leads All Bay Area Counties in Increase of Foreclosures
According to Realtytrac, the amount of foreclosures in San Mateo is up 831% since last July. Out of the nine Bay Area counties, now San Mateo leads in the increase of foreclosures. Marin County is second where the foreclosure numbers are up 603%. Nationally, San Mateo is #36 with its foreclosure rate of 1 in 353 housing units. Most of the loans in San Mateo were jumbos considering that the median home price was $800k, so I think it will only get worse as these loans reset within the next 12 months. However, the foreclosure increase rate will go down since the number of existing foreclosures is much larger than before.
All San Mateo Cities Now in the HEART Program
I just read a press release today that Belmont joined the San Mateo HEART program and that means all San Mateo cities have signed up. HEART stands for Housing Endowment and Regional Trust and it was created to make housing more affordable in San Mateo. They have built a few affordable rental properties in the county, and now they are promoting a new home loans program that allows buyers to get a 3% down loan. The details of the program is here. The buyers’ income must not exceed $150k a year and the price of the home being purchased must not exceed $700k.
I think it is great that this program is doing this in San Mateo, but I think it is dangerous that they are still promoting loans with very little down payment. Isn’t that what got us into this mess? Yes, I understand that it’s pretty difficult to save up a sizable down payment for a median priced San Mateo home, but I’m afraid access to credit will get people into situations where they’re buying a home that is 10 times their salary. I think the lack of credit may boost savings, and that’s not a bad thing. The HEART program’s qualification criteria say that the debt a family has must not be greater than 45% of their gross income, but 45% of a family’s gross income is as high as 60% to 75% of that family’s take home income due to taxes. I don’t think that is very safe and could lead to more home sellers in trouble.
Anyway, I think HEART should build more affordable rental units and encourage people to save, and maybe spend some money on educating these buyers. I do support their effort in trying to make San Mateo a more affordable place to live for everyone, but I think offering more easy credit is not the way to do it.
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