JP,
Affordability is needed to bring the reality back.
You need to understand markets and bubbles, regardless of the product involved. The bubble bursts, and people are in denial all the way down, basing their perception on the peak prices.
Houses were never really worth what they were selling for.
It was greed that kept many people from selling in 2004-05, they wanted more.
It was 100% financing that fueled the mania, nothing more.
There are over 18,500 properties for sale in SD county this week, and over 50,000 in Riverside.
In December, about 1500 sold, about 8% of what is listed for sale in SD. There are thousands of other houses that people would gladly sell today, if only they could get the unrealistic price that they have in their mind.
It looks like January sales are 50% REO/lender owned, meaning that the public is being totally unrealistic about their asking prices.
As of today, most people are completely in fantasyland about the real value of their house today. If they HAD to sell it, it’s probably worth 25%-30% than they think, and will probably be worth less next year.
Nobody HAS TO buy a house, people want to buy.
Some people HAVE TO sell a house, and can only get what it is worth in today’s market.
I’m in the mortgage business. I see the real messes that some people are in. I hear the horror stories.
Many people who want to buy today simply do not qualify.
If conforming loan limits do get raised, everybody already assumes that pricing will be the same as today’s conforming amount. I don’t know if that is true.
For people who do qualify, they may just get cheaper loans. People who don’t qualify, still won’t qualify for a $600K loan.
The govt is willing to try ANYTHING to keep the house of cards from collapsing. Their concern is the economy, not the homeowner.
When a lender says that they want to help the “homeowner” stay in their house, it’s a lie. They really want to keep from having another foreclosure that they will lose money on.
If they were truly trying to help the public, they would make people realize that the best thing for many people is to walk away, after 6 mos + of no payments, and saving up some money.
Instead of being in debt for $600K on a home worth $450K today, they can go rent for much less than their ownership payment, and probably buy a similar property back in several years for $300K.
