housing a sucker’s bet now?

[SD Realtor]

“The only organic sales happening right now are low-end starter home purchases for people that were priced-out for the last 8 years and now want to buy. Pent-up demand seeking to satisfy their demand.”

Peter I do not agree with this statement. There are many more sales then you implied in housing in the 600k range on up. Are the sales “robust”? No not at all. Also I will compare some sales in those higher ranges. Without looking at the data, they are more likely lower then last year but to say that the only sales happening right now are lower end starter home purchases is something I disagree with. My thoughts are more that this type of housing is following the same trend as lower end housing did when it was starting to crack, just staggered by a few years. Let’s see what the data shows later tonite. All I know is, there are still people buying out there in the higher ranges and as a potential buyer it is FRUSTRATING the heck out of me.

Fearful as always I think that the efforts by the powers that be are simply intended to slow things down. There is no true solution to the problem outside of letting it correct properly but to many dominoes fall by letting it do that. Similarly with a nasty recession and unemployment coming on strong I can VERY easily see some sort of “relief act” passed by the legislature at the federal level that would strictly prohibit any unemployed citized from being foreclosed on.

Does anyone think this is a stretch?

Similarly it would not surprise me if any sort of blanket moratorium was passed. Maybe a 90 or 180 day duration.

Let’s talk more about the higher end. This really worries me. What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? If it kept him in his home it seems more then probable that he gets reworked because he is no different then the guy living in a 300k home who can only afford a 200k payment. Similarly this 600k comp is never a comp. That pretty much royally sucks.

Now right now the banks may be dragging thier feet on these sorts of reworks and there may be restrictions on these however to think that there will not be more programs in front of us to push stronger action into place is in just as much denial as the seller who prices his home wrong. This future is not happening cuz of Obama, it would have happened no matter who is in the white house.

Now what I do see helping us potential buyers is that there is NO WAY that this will halt the depreciation trend. What we WILL start seeing now is more distress due to economic conditions rather then what we have seen in the past 2 years. Our previous distress was due to people overconsuming and prices peaking and dropping leaving homeowners in a lurch. Now we have true distress caused by unemployment and that is gonna be a grinder.

So… we will see how it plays out. I do think we are well overdue for a chunk down move in the 800k on up housing.

[peterb]

Yes, I understand what you’re saying, but I think his experience was that the “first-time buyer” is a much bigger market than the number of buyers that would be in the “move-up” catagory. For obvious reasons. And most first-time buyers come in at the low-end. He’s buying and selling an average of 10 SFR’s a month for the last 6 months. This model needs volume. He claims he’s going into escrow within 15 days of listing. Paying 25% of the first morgage from the lender. Strictly a low-end strategy. Lower buy-in and with greater volume in this market.

I have two big concerns about this.
1) Selling homes for way over what the comps may be.i.e…would appraisers go for this? Do appraisers use auction/REO sales as comps for a retail loan appraisal?

2)As unemployment takes off, these buyers may dry up real fast.

As for govt intervention. Who knows. They’ve never been all that good at helping j6pak. I doubt that will change too much. If history is any indicator.

[peterb]

Yes, I understand what you’re saying, but I think his experience was that the “first-time buyer” is a much bigger market than the number of buyers that would be in the “move-up” catagory. For obvious reasons. And most first-time buyers come in at the low-end. He’s buying and selling an average of 10 SFR’s a month for the last 6 months. This model needs volume. He claims he’s going into escrow within 15 days of listing. Paying 25% of the first morgage from the lender. Strictly a low-end strategy. Lower buy-in and with greater volume in this market.

I have two big concerns about this.
1) Selling homes for way over what the comps may be.i.e…would appraisers go for this? Do appraisers use auction/REO sales as comps for a retail loan appraisal?

2)As unemployment takes off, these buyers may dry up real fast.

As for govt intervention. Who knows. They’ve never been all that good at helping j6pak. I doubt that will change too much. If history is any indicator.

[peterb]

Yes, I understand what you’re saying, but I think his experience was that the “first-time buyer” is a much bigger market than the number of buyers that would be in the “move-up” catagory. For obvious reasons. And most first-time buyers come in at the low-end. He’s buying and selling an average of 10 SFR’s a month for the last 6 months. This model needs volume. He claims he’s going into escrow within 15 days of listing. Paying 25% of the first morgage from the lender. Strictly a low-end strategy. Lower buy-in and with greater volume in this market.

I have two big concerns about this.
1) Selling homes for way over what the comps may be.i.e…would appraisers go for this? Do appraisers use auction/REO sales as comps for a retail loan appraisal?

2)As unemployment takes off, these buyers may dry up real fast.

As for govt intervention. Who knows. They’ve never been all that good at helping j6pak. I doubt that will change too much. If history is any indicator.

[peterb]

Yes, I understand what you’re saying, but I think his experience was that the “first-time buyer” is a much bigger market than the number of buyers that would be in the “move-up” catagory. For obvious reasons. And most first-time buyers come in at the low-end. He’s buying and selling an average of 10 SFR’s a month for the last 6 months. This model needs volume. He claims he’s going into escrow within 15 days of listing. Paying 25% of the first morgage from the lender. Strictly a low-end strategy. Lower buy-in and with greater volume in this market.

I have two big concerns about this.
1) Selling homes for way over what the comps may be.i.e…would appraisers go for this? Do appraisers use auction/REO sales as comps for a retail loan appraisal?

2)As unemployment takes off, these buyers may dry up real fast.

As for govt intervention. Who knows. They’ve never been all that good at helping j6pak. I doubt that will change too much. If history is any indicator.

[peterb]

Yes, I understand what you’re saying, but I think his experience was that the “first-time buyer” is a much bigger market than the number of buyers that would be in the “move-up” catagory. For obvious reasons. And most first-time buyers come in at the low-end. He’s buying and selling an average of 10 SFR’s a month for the last 6 months. This model needs volume. He claims he’s going into escrow within 15 days of listing. Paying 25% of the first morgage from the lender. Strictly a low-end strategy. Lower buy-in and with greater volume in this market.

I have two big concerns about this.
1) Selling homes for way over what the comps may be.i.e…would appraisers go for this? Do appraisers use auction/REO sales as comps for a retail loan appraisal?

2)As unemployment takes off, these buyers may dry up real fast.

As for govt intervention. Who knows. They’ve never been all that good at helping j6pak. I doubt that will change too much. If history is any indicator.

[Fearful]

[quote=SD Realtor]
What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? [/quote]

Thank you for your insights and taking the time to post them.

Maybe bailouts for “rich” homeowners are even less politically palatable than for the general public.

Overdue, yes. Imminent? Who knows.

[Fearful]

[quote=SD Realtor]
What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? [/quote]

Thank you for your insights and taking the time to post them.

Maybe bailouts for “rich” homeowners are even less politically palatable than for the general public.

Overdue, yes. Imminent? Who knows.

[Fearful]

[quote=SD Realtor]
What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? [/quote]

Thank you for your insights and taking the time to post them.

Maybe bailouts for “rich” homeowners are even less politically palatable than for the general public.

Overdue, yes. Imminent? Who knows.

[Fearful]

[quote=SD Realtor]
What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? [/quote]

Thank you for your insights and taking the time to post them.

Maybe bailouts for “rich” homeowners are even less politically palatable than for the general public.

Overdue, yes. Imminent? Who knows.

[Fearful]

[quote=SD Realtor]
What about the guy that bought the 900k home and really could only afford the equivalent payment of a 600k home. Maybe he got a 5/1 option arm in 05 or 04. Why wouldn’t his loan be reworked into that new 600k payment? [/quote]

Thank you for your insights and taking the time to post them.

Maybe bailouts for “rich” homeowners are even less politically palatable than for the general public.

Overdue, yes. Imminent? Who knows.

[Author]

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