foreclosure wave about to hit — again! — and with a thunderous roar no less (per TG’s ladyfriend)

[temeculaguy]

No advice can be given in a vaccuum, the other factors in play need to be considered. As Rich pointed out, currency debasement and interest rates should be considered when deciding on a strategy. For the last few years, rate of return for cash has been extremely low, if CD’s were paying 10%, you would be better off with that investment than paying off a 5% mortgage. But that is not what is happening today, so Les is making a sound move today. For the rest of us, for those of us with more mortgage than cash, we need to wait and see.

In the 1970’s, here in So Cal, you could buy a nice house for 30k, by the 1980’s, that 30k would buy you a nice car. During that span, there were periods of 10% return for pedestrian investments. If we enter a similar time period, which we might, you need to change your strategy.

Many people have investments other than retirement accounts while maintaining a mortgage. Each day my investments rise in value, while my mortgage debt decreases. There will come a day, when these two numbers cross paths, when the liquid value of my investments equal my mortgage debt (not including retirement accounts). Will I sell my investments and pay off my mortgage, the answer is “I don’t know.” It all depends on what is going on when that day comes.

I personally think that currency debasement, high inflation and high interest rates are likely in the coming decade, so I keep my options and my eyes open. But if that day was today, I’d do what Les is doing, unfortunately that day for me is not today, so I will keep my eye on the ball until that day comes.

[peterb]

If accurate, this may be the coming trend for mortgage holders:
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/

[peterb]

If accurate, this may be the coming trend for mortgage holders:
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/

[peterb]

If accurate, this may be the coming trend for mortgage holders:
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/

[peterb]

If accurate, this may be the coming trend for mortgage holders:
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/

[peterb]

If accurate, this may be the coming trend for mortgage holders:
http://www.irvinehousingblog.com/blog/comments/bank-of-america-to-increase-foreclosure-rate-by-600-in-2010/

[Nor-LA-SD-guy]

Just to add balance,

I myself think there is something to this coming wave theory however longer-term I see the statistics in the link below playing out.

http://seekingalpha.com/article/198303-is-a-boom-in-u-s-homebuilding-coming?source=yahoo

Goldman Sachs economist that estimated new home demand in the United States (from the combination of new household formation and the replacement of old homes) of approximately 1.5-1.6 million units per year. Given that the U.S. population is around 300 million, this figure does not really stand out as being unreasonable, and it is in-line with other forecasts I have seen.

In the short term, current inventory combined with foreclosures, weak loan demand from the recession, and tighter credit standards all contribute to the fact that new housing starts in the U.S. today are near record low levels, coming in at an annualized rate of around 500,000 per year. At some point, however, it does seem likely to me that housing starts would have to begin to trend upward toward that 1.5 million figure, which is three times the current annual run rate.

Before you dismiss this potential need for new homes as being years and years away, consider the graph below showing annual U.S. housing starts from 1991 through 2009. (Click to enlarge)

You can easily see the effects of the housing bubble (from the early 2000’s through the 2005 peak of more than 2 million units), which resulted in home construction far outstripping demand (by 400,000-500,000 units if you use the 1.5-1.6 million base demand estimate). However, we also see if we ignore the bubble period that housing starts of 1.5-1.6 million per year would simply put us back to the level housing starts were in the mid 1990’s, when the U.S. population was much lower than today.

Despite the foreclosure glut we have in many states nowadays, this chart makes me think that the current housing start rate of 500,000 or so per year really is not sustainable for any prolonged period of time.

[Nor-LA-SD-guy]

Just to add balance,

I myself think there is something to this coming wave theory however longer-term I see the statistics in the link below playing out.

http://seekingalpha.com/article/198303-is-a-boom-in-u-s-homebuilding-coming?source=yahoo

Goldman Sachs economist that estimated new home demand in the United States (from the combination of new household formation and the replacement of old homes) of approximately 1.5-1.6 million units per year. Given that the U.S. population is around 300 million, this figure does not really stand out as being unreasonable, and it is in-line with other forecasts I have seen.

In the short term, current inventory combined with foreclosures, weak loan demand from the recession, and tighter credit standards all contribute to the fact that new housing starts in the U.S. today are near record low levels, coming in at an annualized rate of around 500,000 per year. At some point, however, it does seem likely to me that housing starts would have to begin to trend upward toward that 1.5 million figure, which is three times the current annual run rate.

Before you dismiss this potential need for new homes as being years and years away, consider the graph below showing annual U.S. housing starts from 1991 through 2009. (Click to enlarge)

You can easily see the effects of the housing bubble (from the early 2000’s through the 2005 peak of more than 2 million units), which resulted in home construction far outstripping demand (by 400,000-500,000 units if you use the 1.5-1.6 million base demand estimate). However, we also see if we ignore the bubble period that housing starts of 1.5-1.6 million per year would simply put us back to the level housing starts were in the mid 1990’s, when the U.S. population was much lower than today.

Despite the foreclosure glut we have in many states nowadays, this chart makes me think that the current housing start rate of 500,000 or so per year really is not sustainable for any prolonged period of time.

[Nor-LA-SD-guy]

Just to add balance,

I myself think there is something to this coming wave theory however longer-term I see the statistics in the link below playing out.

http://seekingalpha.com/article/198303-is-a-boom-in-u-s-homebuilding-coming?source=yahoo

Goldman Sachs economist that estimated new home demand in the United States (from the combination of new household formation and the replacement of old homes) of approximately 1.5-1.6 million units per year. Given that the U.S. population is around 300 million, this figure does not really stand out as being unreasonable, and it is in-line with other forecasts I have seen.

In the short term, current inventory combined with foreclosures, weak loan demand from the recession, and tighter credit standards all contribute to the fact that new housing starts in the U.S. today are near record low levels, coming in at an annualized rate of around 500,000 per year. At some point, however, it does seem likely to me that housing starts would have to begin to trend upward toward that 1.5 million figure, which is three times the current annual run rate.

Before you dismiss this potential need for new homes as being years and years away, consider the graph below showing annual U.S. housing starts from 1991 through 2009. (Click to enlarge)

You can easily see the effects of the housing bubble (from the early 2000’s through the 2005 peak of more than 2 million units), which resulted in home construction far outstripping demand (by 400,000-500,000 units if you use the 1.5-1.6 million base demand estimate). However, we also see if we ignore the bubble period that housing starts of 1.5-1.6 million per year would simply put us back to the level housing starts were in the mid 1990’s, when the U.S. population was much lower than today.

Despite the foreclosure glut we have in many states nowadays, this chart makes me think that the current housing start rate of 500,000 or so per year really is not sustainable for any prolonged period of time.

[Nor-LA-SD-guy]

Just to add balance,

I myself think there is something to this coming wave theory however longer-term I see the statistics in the link below playing out.

http://seekingalpha.com/article/198303-is-a-boom-in-u-s-homebuilding-coming?source=yahoo

Goldman Sachs economist that estimated new home demand in the United States (from the combination of new household formation and the replacement of old homes) of approximately 1.5-1.6 million units per year. Given that the U.S. population is around 300 million, this figure does not really stand out as being unreasonable, and it is in-line with other forecasts I have seen.

In the short term, current inventory combined with foreclosures, weak loan demand from the recession, and tighter credit standards all contribute to the fact that new housing starts in the U.S. today are near record low levels, coming in at an annualized rate of around 500,000 per year. At some point, however, it does seem likely to me that housing starts would have to begin to trend upward toward that 1.5 million figure, which is three times the current annual run rate.

Before you dismiss this potential need for new homes as being years and years away, consider the graph below showing annual U.S. housing starts from 1991 through 2009. (Click to enlarge)

You can easily see the effects of the housing bubble (from the early 2000’s through the 2005 peak of more than 2 million units), which resulted in home construction far outstripping demand (by 400,000-500,000 units if you use the 1.5-1.6 million base demand estimate). However, we also see if we ignore the bubble period that housing starts of 1.5-1.6 million per year would simply put us back to the level housing starts were in the mid 1990’s, when the U.S. population was much lower than today.

Despite the foreclosure glut we have in many states nowadays, this chart makes me think that the current housing start rate of 500,000 or so per year really is not sustainable for any prolonged period of time.

[Nor-LA-SD-guy]

Just to add balance,

I myself think there is something to this coming wave theory however longer-term I see the statistics in the link below playing out.

http://seekingalpha.com/article/198303-is-a-boom-in-u-s-homebuilding-coming?source=yahoo

Goldman Sachs economist that estimated new home demand in the United States (from the combination of new household formation and the replacement of old homes) of approximately 1.5-1.6 million units per year. Given that the U.S. population is around 300 million, this figure does not really stand out as being unreasonable, and it is in-line with other forecasts I have seen.

In the short term, current inventory combined with foreclosures, weak loan demand from the recession, and tighter credit standards all contribute to the fact that new housing starts in the U.S. today are near record low levels, coming in at an annualized rate of around 500,000 per year. At some point, however, it does seem likely to me that housing starts would have to begin to trend upward toward that 1.5 million figure, which is three times the current annual run rate.

Before you dismiss this potential need for new homes as being years and years away, consider the graph below showing annual U.S. housing starts from 1991 through 2009. (Click to enlarge)

You can easily see the effects of the housing bubble (from the early 2000’s through the 2005 peak of more than 2 million units), which resulted in home construction far outstripping demand (by 400,000-500,000 units if you use the 1.5-1.6 million base demand estimate). However, we also see if we ignore the bubble period that housing starts of 1.5-1.6 million per year would simply put us back to the level housing starts were in the mid 1990’s, when the U.S. population was much lower than today.

Despite the foreclosure glut we have in many states nowadays, this chart makes me think that the current housing start rate of 500,000 or so per year really is not sustainable for any prolonged period of time.

[Author]

Posts