Here We Go Again: Sacramento Sells $425,000 Pads With No Money Down

There were plenty of bad actors that contributed to the housing crisis in 2009…the banks that underwrote mortgages for people that they knew couldn’t afford the home they were buying and then turned around and sold those loans to unsuspecting insurance companies via RMBS structures…the high school janitor making $50,000 a year who suddenly figured he could afford a $750,000 home…the 22-year-old Las Vegas stripper who took out millions in mortgages so she could make “easy money” flipping homes…there was plenty of blame to go around. 

But, given that those mistakes were made just 8 short years ago, you can imagine our surprise to learn today that a developer in Sacramento seems intent upon making all the same mistakes all over again. As the Sacramento Bee points out, The Mill at Broadway is a brand new housing development where recent college graduates, with no savings and minimal credit history, can easily pick up a $300,000 – $400,000 home with no money down…

The Mill at Broadway, central Sacramento’s largest infill housing development, has begun offering mortgage loans with no down payments, hoping to entice more young first-time buyers who don’t want to pay high rents, but don’t have cash for upfront payments on a house, its developer said.

The new housing will be priced from the high $200,000s to the low $600,000s, he said.

While the prices are billed as affordable by Sacramento’s recently escalating real estate standards, the typical down payment requirements and closing costs make homebuying impossible for many, especially members of the millennial generation, Smith said.

“There are a number of qualified people who may have just graduated and gotten their first state job, and have some student debt, so they don’t have a big nest egg to put down, and they are not from a family where Grandma and Grandpa can write a check for down payment,” Smith said.

Smith said his goal is to sell to people who have “reasonable financial circumstances” which will enable them to make monthly mortgage payments, even if they don’t have money to put down.