Perry Upon that we agree. Though its getting harder and harder much more quickly than last year. There are far fewer people to reel in, and the costs to do so are spiraling. Hence so many sub prime mortgage shops are going out of business.
What often seems to get lost in our debates is why historical norms are so important. I expect a reversion to the mean of prices, and flight to credit quality not because thats the way things were in the past, but because ultimately people don’t change. Lenders want to be paid even MBS lenders (and thats what they are.) Alot of the money that has been loaned out won’t be repaid, can’t be repaid under the terms it was loaned. Those lenders who are on the hook most likely will go under or be bailed out by our govt. Those that don’t will be forced, by their desire to be paid back, to tighten standards. Maybe we don’t go back to 30 year fixed mortgages altogether, but somehow it will all even out, even in the near term.
SDR here is where hope comes in. I hope you are wrong about pendings and closings. At this point if you are buying a house you are placing yourself in a very precarious spot. Our economy is contracting, especially in jobs that pay enough to support home ownership. Unless a person is wealthly enough to not care, getting anywhere near a solidly depreciating asset with leverage is a recipe for disaster. I was here last time, I saw it first hand. This time is going to be worse, much worse.
