With respect to mortgage and housing and today’s Fed action, we already knew most of what was announced. If a week from now you can go out and get an Agency Jumbo ($417,001 to $625k) under 6.5% or a bank portfolio Jumbo from $625,001 to $1 million+ under 7.5% I will pay attention. But as of now it is more of the same — the foreclosure market is the real estate market, higher grade paper defaults are accelerating, negative-equity is epidemic, and higher end home prices are compressing on lower end prices due to lack of financing and able buyers.
Will conforming ($417k and below) rates going from 6% a few weeks ago to 5.25% today really have that much impact on the market? What if 4.5% comes around – remember, home ownership was at 68% a couple of years back. Combine that and the fact that at present, some 70% of all home owners with mortgages in the most important housing markets in the nation are either underwater or near-underwater (within 5% and unable to refi or sell without paying), and there is just not enough active participants to quickly solve this problem quickly through low interest rates. There are millions of units presently on the market and millions more in the foreclosure pipeline that have to be churned through. Cramer’s prediction of a housing market bottom in June 2009 is a pipe dream, that is for sure.
Are you aware that 60% of all homes in CA are at or near negative equity?
I originally posted the negative equity story below on November 10th. I am hard to shock, but this one is worth revisiting now that analysts and the media think we are going through some major mortgage recovery. Reality could not be further from that. Remember, in bubble states negative equity is so epidemic that 60% of all homes in CA, greater than 95% in NV, 65% in AZ and 63% in FL are in or near negative equity. Nationally, 41.6% of all home owners are at or near negative-equity and can’t refinance or sell without bringing significant cash into the transaction, which very few ever opt to do.
Don’t believe the hype of the realtors on this board. At least one of them bought during the bubble and they all have a vested interest in you buying a house.
