San Diego Housing Bubble News and Analysis

The headline clearly says MAY become more expensive/harder.. I'll believe it when I see it.

FHA is the next subprime, a taxpayer bailout will be needed. FHA losses must be staggering and well hidden. the BIG CHANGE that FHA made awhile back was going from 3% down to 3.5% down. Politicians bought and paid for. I don't think you will ever see FHA @ 10% down. The housing market would collapse.

FNMA has already earmarked around 115 BILLION dollars of taxpayer money out of $400 billion allotted.. They lost $19BN in Q3 and $15BN in Q2,,, $34 billion loss in 6 months,,,niiiice.

There was no govt intervention on the way up while the bubble was inflating, there will be no shortage of intervention on the way down.

The only fix for the housing mess is accelerated foreclosures not delaying them. Modifications are just a delay.
When I tell people that I don't think they can afford the house they want to buy they think I'm nuts.

There's still way too much optimism about prices "recovering"... Prices falling IS the recovery, back to reality.
I don't think that it is possible for homes to ever be worth what they were in 2005-06 in today's dollars, yet many people in bubblicious areas are hanging on solely because they don't want to lose money.

Foreclosures are not the problem, foreclosures are the solution. Houses wont sit empty, they will be purchased for what they are worth and what buyers can afford to qualify for at the time.

Don't forget, mortgage rates are near the lowest ever, yet millions cannot qualify for one reason or another.

if FHA loans do get more expensive, then they were cheaper before they got more expensive. maybe they ARE a bargain right now after all. though I doubt it. If you have actual money to put down, it seems like it's better to wait until FHA gets more expensive or at least becomes a public nuisance and there is some uncertainty a s to whether it will become more expensive.

This cannot be repeated enough. So many people still don't get it.

It's not a "foreclosure crisis." The crisis occurred when credit was expanded to such an extent that housing prices became so unaffordable that foreclosures were **guaranteed** to happen.

As usual, HLS has hit the nail squarely on the head.

But in that case, making the FHA harder & more expensive to get would mean fewer people would qualify and that will have an impact on the sales and, eventually, sales prices, right?
I think making the FHA requirements at least 5% down and squeaky clean credit, and perhaps increasing the mortgage insurance, would be (part of) a solution, don't you? If they make the FHA GRADUALLY more expensive, perhaps in a tiered fashion like they alluded to, the market may not collapse and it may just go down slowly...

I am hoping that the gov't will start moving this way in the right direction... the bailouts cannot continue ad infinitum...

so what is the next level of intervention? how much more inteventionized can it get? can interest rates get significantly lower? can the govt raise the tax credit? is there some sneaky new plan that hasn't been yet unleashed? how could a govt hell-bent on keeping prices high accomplish it?

Next they are going to legislate home price declines as illegal or helicopter drop cash into mira mesa

Allowing people to stay in homes is a HUGE mistake, even if these people have to deed the property back. It will just prolong the pain, agony and reality.

There are 3 groups of people.
1. Those that lied about their income and assets and/or bought with 100% financing and never should have been allowed to qualify for a loan in the first place.
2.Those who truly qualified for a loan but chose to gamble with an interest only ARM and now cannot afford a real payment.
3. Those with a down payment who qualified for an A paper prime loan at the time, but now have hardship and cannot afford to pay.

Should any of these groups be allowed to stay in the house when they cannot afford to pay today ??
IF they can afford to pay something, they will not be homeless. Perhaps there needs to be a huge reshuffling of residences. There is something called "RENTING what you can afford"

I know families of 6, 3 generations that grew up in 3 bedroom <1500 sq ft home. Today, if people were told to do that there would be lawsuits that their civil rights were being violated.

Foreclosing on a home and having it sell for what it is worth today would mean dragging down the value of ALL other homes in the area AND create a loss that must be realized on the books. More chaos, more paper wealth disappearing like a hooker on El Cajon Blvd when the vice squad shows up. Vanish into thin air.

If ppl are allowed to stay in the home, everybody can pretend what the value is AND the loan amount remains artificial on someone's books, since it doesn't get paid off at 50c on the dollar.
Mark to market accounting is avoided.
This is absolute artificial accounting about what the value of assets actually are. Solvency of many is truly at risk.

Perhaps many people can afford a house, but they cannot afford the one that they are currently living in. Facing this reality would be painful for millions, to have to be told (and face) that they are living beyond their means, which would probably lead to even more lawsuits of people's rights being violated.

More government intervention is definitely coming.
Perhaps boarding houses will make a comeback and families of 3 or 4 will be TOLD to live in 1 or 2 bedrooms, instead of being given food stamps and extended unemployment benefits to be able to continue to buy things that they really cannot afford, while staying in their 5 bedroom house with a temporary loan modification because it is "good" for the economy and will "stabilize" housing prices. This is delusional.

The govt is putting band aids on a drug addicted patient who just had a lung transplant and is in a coma. Perhaps to some people it looks like they are doing something, but to those who understand, that band aid is going to very little to cure that patient...

Hmmm....

They are currently the lowest down product available.
Except for VA loans.
I am not sure they can be rightly called the new sub prime.

A $300k buyer with 10k in savings and minimum 620 FICO is not perfect but not a terrible credit risk.

FHA appraisals tend to be pretty rigorous too.

I'm not the brightest bulb but I have two questions. I live in Seattle and have a credit score of 720. Based on the housing prices in Seattle, I'm relegated to the condo/townhouse market. I could either get a conventional loan an pony up 20% which would be at least 40k. Or, I could get an FHA loan, hold on to my cash, and in essence get into a townhouse with a very low down payment if you factor in the 8K tax credit. I would lean more towards a true townhome because you can cancel the MIP on a townhouse with a 78% LTV (I believe it's permanent on a condo). Am I way off base here? I calculate that I would have to be in the house 12 years to make putting up 20% worth it. I don't think it is, especially since cash is king now. I think the FHA loan for me is a better option. I know this is similar to the other post, but I really don't see the benefit of going conventional when you are in the under 300k market and don't plan on the purchase being your final home.

Any analysis as to why I am way off-base or on track would be greatly appreciated.