Hazardous rocks

El Dorado Hills residents are thinking the U.S. Geological Survey is the Grinch who stole Christmas. They had wanted a clean bill of health from the scientific community investigating the affects of asbestos in the Serpentine Rock scattered across their community. What they got was the completed findings and publication from the U.S. Geological Survey, confirming that the prestigious foothill community is sitting on a large bed of hazardous asbestos. The USGS on Tuesday confirmed the earlier finding of the Federal Environmental Protection Agency of a “particularly dangerous” kind of asbestos on playgrounds in El Dorado Hills.

The EPA study found that children and adults in El Dorado Hills can significantly raise their exposure to breathable asbestos particles simply from the dust kicked up riding a bicycle or playing basketball on outdoor courts.

The main public health concern related to such exposure is mesothelioma, an inoperable and almost always fatal cancer of the membranes lining the chest and other body cavities. About 1,000 of the 31,000 El Dorado Hills residents packed the Community Park’s gymnasium Tuesday to learn more from federal scientists.

It’s too early to tell the affect on home values with the negative finding of the USGS but I suspect it will not add to the desirability of living is the area. For the last three years most real estate agents have been advising their El Dorado Hills buyers about the “potential” dangers of living above Serpentine Rock. The study now confirms what the EPA had suspected in their earlier findings and our “potential” is now a “confirmed” finding.

There has never been a reported case of mesothelioma attributed to the rocks in El Dorado Hills but local officials are taking no chances are have been involved in mitigation measures. Serpentine Rock is the official state rock and is common in 35 of California’s 58 counties. Left undisturbed, serpentine rocks don’t present a health hazard and are frequently used for landscaping.

Wishing all my readers a very Merry Christmas and Happy Holidays. I will be back on-line Tuesday.

Soaring loan defaults forecast

A reader writes:

Hi Ken –
Last night’s news made a big deal about home loans going into foreclosure in the Sac/Placer county areas. I know you’ve touched on this in the past few weeks, but what, if any, effect will this have on interest rates and qualifications for 1st time home buyers. Are we looking at some “good buys”, or just more inventory?

Hi Sandie, I read the newspaper article this morning. The article was not worthy of the “above the fold position” it received in the Bee. Like much that is reported by the major news media, there is more to the story that wasn’t printed.

The North Carolina based non-profit group, The Center for Responsible Lending, has a political ajenda. They would like to do away with all sub-prime loans. There are a higher percentage of minority sub-prime borrowers than non-minority and the Center for Responsible Lending believes lenders are intentionally discriminating against minorities and pushing them into sub-prime loans. The conclusion in their recent report is that defaults and foreclosures will increase among mostly minority borrowers because of discriminating practices.

There is no question that we will see higher foreclosure rates on sub-prime borrowers regardless of the racial status. That’s why they are called “sub-prime” loans! The interest rates and fees are higher than they are on prime loans. The report says that 21 percent of sub-prime borrowers in Sacramento and Oakland are projected to go into default.

While some neighborhoods in Sacramento may experience an increase in foreclosures, the capital region will not have a significant number. Most independent and recognized sources of real estate data, predict a lower number of defaults in California than will be experienced nationally.

Once upon a time, if a borrower had bad credit they could not get any type of home loan. The home ownership rate was 50 percent for all families and the home ownership percentage of minorities was less than 20 percent. Then, sub-prime and creative lending came along. Today the percentage of families who own their own home is 70 percent (the highest ever) and for minorities it is 40 percent. The system for poor credit risk borrowers isn’t perfect but at least it is a vehicle for them to obtain a home loan at rates well below what we all pay on our credit cards.

Even if the Center for Responsible Lending is on target with their predictions of a 20 percent default rate among borrowers (who 30 years ago would not even be considered for a loan) that would mean that 80 percent of poor credit risks borrowers do own a home today because they were able to get some type of loan in order to buy one.
Some discrimination and steering of borrowers to sub-prim loans may exist in lending but I suspect it is few and the penalties are severe. The competition for a borrowers loan business is fierce. With the Internet and the plethora of lenders both prime and sub-prime borrowers have many choices as to who gets their business.
I believe the Center for Responsible Lending is over stating a potential problem. Our region continues to create jobs, our population continues to grow and anyone who wants a job can easily find one. All good signs for an expanding housing market.

"Survey Says...........

According to a recent Pew Research Center study, nearly half of U.S. homeowners, 46 percent, say their home has increased in value "a lot" over the last few years. But only about half of those homeowners think they'll get similar appreciation in the future. The bulk of homeowners overall, 55 percent, believe the value of their homes will go up "a little" in the future; 26 percent still think they'll enjoy "a lot" of appreciation. Just 10 percent of homeowners in the U.S. say they think the value of their house will decline in the future.

It may be that homeowners are taking home prices in stride. Only one-quarter in the Pew survey report that rising home prices have had some or a great deal of effect on their personal finances. Three-quarters say the value of their home has little or no influence over their finances.

The study also found that only 20 percent of homeowners said they have a second mortgage or home-equity loan on their property, and of those nearly half, 45 percent, said they were using that money to pay for home improvements or repairs. Less than three percent of all homeowners were using a second mortgage to invest in real estate or buy a second home. About two percent were using home-equity money to pay credit cards or other debt and about the same percentage bought a car with their proceeds. Just over one percent were using the money to fund an education.

About a third of homeowners say that their home accounts for "all or most" of their personal financial worth, and another third say it accounts for about half.

"People leaving"

If you decided to sell your house and move, would you move to another location within the state or would you decided to look at other sates?

For the first time in 10 years, more people decided to move from California to another state than did people living in other states move to California. According to a recently released report from the California Department of Finance, California recorded a net domestic loss of 29,000 people last year. It was the first year since the mid-1990s that more people moved out of state than moved into the state. Our total population did increase by 400,000 but the increase was attributed to births, and legal and illegal immigration from foreign countries and not from the other 49 states.

Usually more people move into California than move out but cashing-in on large increases in home equity was too attractive for thousands to pass up. The most popular destinations states for Californians were: Arizona, Nevada, Texas, Washington and Oregon.

A net loss of 29,000 people isn’t something that the California Department of Tourism will want to publish in their “Golden State” brochures but the outgoing migration of 2005 was the result of a very good economy and booming housing market. In 1994 the state reported a net loss of 350,000 (workers, taxpayers, employers, homeowners) people. It was the result of a severe recession and record job losses that resulted in a depressed housing market. It appears that if the economy is too good, people will move out of state and if the economy is poor, people will move.
Many Californians, who sold their properties in 2005 and moved or retired to other states, purchased their real estate during the last housing recession in 1995. Then sold for a record profits. Every situation is different but historic cycles have a way of repeating themselves.