It’s impossible to tell right now. My guess 6 months ago was 2010ish. Since 01/07, I’ve been thinking values will be going back to 2001 levels in most San Diego areas. As a former wholesale AE, I know how much complete garbage is out there. I think the Option ARM product is going to have a much bigger impact than the subprime loans that are out there. The option ARM is what allowed San Diego to reach it’s highest average home value. I’d guess that 80-90% of people in those loans have absolutely no ability to make a real payment. My company didn’t offer that product but many of the offices I worked with did tons of them. It was almost comical how often borrowers were barely able to afford the minimum payment. Many were looking for something lower than 1% payment. Typically once the borrower found out how the option ARM loan really worked, they wanted out. Once they found out what the payment would be for a real loan, they realized that a real loan wasn’t an option. I’d usually get 2 of these scenarios a day and not one ever refi’d out of the option ARM.
I didn’t expect the level of govt. intervention that’s going on. It’s become clear that they are willing to try anything to make this go away. IMO, it is only going prolong the pain. Values have no choice but to go down since the products that fueled the stupid appreciation have been taken away. The level of bailout that ends up happening is definitely an x-factor in this whole mess.
