People put zero down. There is NO wiggle room. Hence, they cannot reduce (w/out approved short sale).
So the process is first, from what I’m gathering, people can live in their homes and not pay their mortgage anywhere from 4 to 9 months. Therefore, dragging this out longer.
Initially I was thinking 3 months after not paying, the place is bank owned. But since the inundation of people not paying their mortgage is so overwhelming, I guess this is delaying the foreclosure process.
Therefore and consequently, all these places that are not moving in price will either get bought (I read something about greater fool theory) or will eventually get bank owned down the road up to 9 months later, and reduced accordingly.
I do not believe we have even begun to see the vast inventory that will rear its ugly head. When you have completely run out of the greater fools and the banks catch up w/their paperwork, stand by.
By then, there should be significant drops. Just checking various areas in San Diego county, I’ve already seen 20% drops in a year’s time.
From what I understand, regardless of the interest rate reductions recently, there will still be some loans resetting in June 2008. I suppose that means up to 9 months later, potentially more bank owned homes.
And lastly, we will have those who are walking away that can make payments.
What is most amazing to me is how people can still believe the real estate market is healthy, w/all this glaring inventory and shrinking demand. Shrinking demand b/c less greater fools, people who want to buy who refuse to pay the over-valued price, and few qualified buyers in view of the tightening credit standards. How can one still insist the market is healthy? Maybe they have inside information that the economists and media haven’t gotten wind of.
