Continuing with the theme of this thread, here is another article on the front page of Finance Yahoo saying subprime is hitting the high end of the market
“Subprime Mortgage Crisis Spreading to High-End Housing Market”
This part of the article is what I found interesting and important
“But aside from the financial impact of higher rates, in certain high-priced real estate markets, the effect of the suddenly tighter lending environment is more psychological, mortgage bankers and real estate agents say, as buyers and sellers alike don’t want to plunge into an uncertain future.
“Showings are down, contracts written are down, and sellers are just as backed away as buyers are,” said Lou Barnes, a partner in mortgage bank and brokerage Boulder West Financial Services in Boulder, Colo. The company arranges for financing on many higher-priced condominiums and houses in the state.
“I think the psychological damage is worse than the financial damage” which is already bad enough, he said. Even for buyers who have plenty of cash or can easily afford higher mortgage rates, the sudden change in the financing environment reduces “the ardor to buy a house unless you have to,” he adds.
With numerous buyers and sellers sidelined, the higher cost of big mortgages is bound to put downward pressure on home prices should the lending environment stay tight for a long period of time, said Ellen Bitton, president of Park Avenue Mortgage, a mortgage bank and brokerage that does business in several states, including New York, Florida and Utah.”
Will August 2007 be the moment of this bubble where Psychology truly shifted?? I have people that I know (friends, family, work) that were skeptics of the housing bubble and me for the past 2 years that are literally going out of there way to ask me my opinion on what is going on. That speaks volumes to me. Evidence to support a profound shift is right here in the South Bay of LA and the almighty Manhattan Beach where pendings in the super high end have come to a trickle
“Question: Is anyone even looking in the $2m+ range?
A quick glance shows a total of 10 new escrows/pending sales in August (SFRs, west of Sep.), most of those in the first week of the month. That’s about half the monthly volume for Spring and Summer this year, but the dropoff after Week 1 is the part that startles.
Meantime, we see hints of one late-stage escrow in trouble, but let’s wait till that’s news.”
When Manhattan Beach is hitting a brick wall, we are all hitting a brick wall. I am making a call that on the human psychological level August 2007 is when we heard the bubble go “POP”.
