Housing won’t hit bottom ’til 2012

[sdrealtor]

My best friend had a 5/1 ARM that reset last year. He doesnt have any equity but isnt underwater either. He makes plenty of money, comes from a wealthy family and has plenty saved so he isnt worried at all. The reduction in his monthly payment was enough to make the monthly payments on his new BMW.

[sdrealtor]

Articles like that are written to sell newpapers and are pretty meaningless. What does it mean when they say high end prices are about where they were in 2005? It doesnt mean anything to my client who is in escrow on a prime coastal property at what is a 2000 and possibly a 1999 price. We are already close enough to a bottom. There is no point in time when everything magically hits bottom. There is a period of time where the smart buyers can go out armed with knowledge, money and a great agent to make their own bottom. That time is now and will persist for a few years. That is were the big winners will be found. Those of you sitting out there waiting for some magical moment will not be among them.

[sdrealtor]

Articles like that are written to sell newpapers and are pretty meaningless. What does it mean when they say high end prices are about where they were in 2005? It doesnt mean anything to my client who is in escrow on a prime coastal property at what is a 2000 and possibly a 1999 price. We are already close enough to a bottom. There is no point in time when everything magically hits bottom. There is a period of time where the smart buyers can go out armed with knowledge, money and a great agent to make their own bottom. That time is now and will persist for a few years. That is were the big winners will be found. Those of you sitting out there waiting for some magical moment will not be among them.

[sdrealtor]

Articles like that are written to sell newpapers and are pretty meaningless. What does it mean when they say high end prices are about where they were in 2005? It doesnt mean anything to my client who is in escrow on a prime coastal property at what is a 2000 and possibly a 1999 price. We are already close enough to a bottom. There is no point in time when everything magically hits bottom. There is a period of time where the smart buyers can go out armed with knowledge, money and a great agent to make their own bottom. That time is now and will persist for a few years. That is were the big winners will be found. Those of you sitting out there waiting for some magical moment will not be among them.

[sdrealtor]

Articles like that are written to sell newpapers and are pretty meaningless. What does it mean when they say high end prices are about where they were in 2005? It doesnt mean anything to my client who is in escrow on a prime coastal property at what is a 2000 and possibly a 1999 price. We are already close enough to a bottom. There is no point in time when everything magically hits bottom. There is a period of time where the smart buyers can go out armed with knowledge, money and a great agent to make their own bottom. That time is now and will persist for a few years. That is were the big winners will be found. Those of you sitting out there waiting for some magical moment will not be among them.

[sdrealtor]

Articles like that are written to sell newpapers and are pretty meaningless. What does it mean when they say high end prices are about where they were in 2005? It doesnt mean anything to my client who is in escrow on a prime coastal property at what is a 2000 and possibly a 1999 price. We are already close enough to a bottom. There is no point in time when everything magically hits bottom. There is a period of time where the smart buyers can go out armed with knowledge, money and a great agent to make their own bottom. That time is now and will persist for a few years. That is were the big winners will be found. Those of you sitting out there waiting for some magical moment will not be among them.

[ucodegen]

[quote briansd1]Yeah, deadzone. The resets are what we need to watch — not necessarily interest rate resets, but resets to include principal paydown. [/quote]
Just a slight technicality:
reset = Interest rate change – like with an I/O or amortizing loan that tracks LIBOR or Prime.
recast = When an I/O mortgage becomes fully amortizing. The recast signifies a change in the ‘structure’ of the loan and not just the interest rate. Mortgage modifications or loan modifications are sometimes known as recasts – particularly if I/O to amortizing or amortizing to I/O.

[ucodegen]

[quote briansd1]Yeah, deadzone. The resets are what we need to watch — not necessarily interest rate resets, but resets to include principal paydown. [/quote]
Just a slight technicality:
reset = Interest rate change – like with an I/O or amortizing loan that tracks LIBOR or Prime.
recast = When an I/O mortgage becomes fully amortizing. The recast signifies a change in the ‘structure’ of the loan and not just the interest rate. Mortgage modifications or loan modifications are sometimes known as recasts – particularly if I/O to amortizing or amortizing to I/O.

[ucodegen]

[quote briansd1]Yeah, deadzone. The resets are what we need to watch — not necessarily interest rate resets, but resets to include principal paydown. [/quote]
Just a slight technicality:
reset = Interest rate change – like with an I/O or amortizing loan that tracks LIBOR or Prime.
recast = When an I/O mortgage becomes fully amortizing. The recast signifies a change in the ‘structure’ of the loan and not just the interest rate. Mortgage modifications or loan modifications are sometimes known as recasts – particularly if I/O to amortizing or amortizing to I/O.

[ucodegen]

[quote briansd1]Yeah, deadzone. The resets are what we need to watch — not necessarily interest rate resets, but resets to include principal paydown. [/quote]
Just a slight technicality:
reset = Interest rate change – like with an I/O or amortizing loan that tracks LIBOR or Prime.
recast = When an I/O mortgage becomes fully amortizing. The recast signifies a change in the ‘structure’ of the loan and not just the interest rate. Mortgage modifications or loan modifications are sometimes known as recasts – particularly if I/O to amortizing or amortizing to I/O.

[ucodegen]

[quote briansd1]Yeah, deadzone. The resets are what we need to watch — not necessarily interest rate resets, but resets to include principal paydown. [/quote]
Just a slight technicality:
reset = Interest rate change – like with an I/O or amortizing loan that tracks LIBOR or Prime.
recast = When an I/O mortgage becomes fully amortizing. The recast signifies a change in the ‘structure’ of the loan and not just the interest rate. Mortgage modifications or loan modifications are sometimes known as recasts – particularly if I/O to amortizing or amortizing to I/O.

[briansd1]

[quote=permabear]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

[/quote]

Here’s my acquaintance’s situation. I won’t call her a friend because acquaintance is a better word.

The mortgage balance is $345,000
Monthly interest-only payments at $1,725 6% fixed, not adjustable.
Recast (edited from reset per ucodegen’s post above) to $2,472

The place is valued at about the loan balance (on a lucky day) so no refi possible.

Her heart is not in the place anymore so I’m telling her to walk. She’s going to try to buy something else first, then walk. Hell, why not?

[quote=permabear]
I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.[/quote]

If they have adjustable rates, then they might be OK. Until rates move up. Hope they have enough equity and good enough credit to refi before rates jump.

We’ll see how long the government is able to keep rates low.

[briansd1]

[quote=permabear]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

[/quote]

Here’s my acquaintance’s situation. I won’t call her a friend because acquaintance is a better word.

The mortgage balance is $345,000
Monthly interest-only payments at $1,725 6% fixed, not adjustable.
Recast (edited from reset per ucodegen’s post above) to $2,472

The place is valued at about the loan balance (on a lucky day) so no refi possible.

Her heart is not in the place anymore so I’m telling her to walk. She’s going to try to buy something else first, then walk. Hell, why not?

[quote=permabear]
I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.[/quote]

If they have adjustable rates, then they might be OK. Until rates move up. Hope they have enough equity and good enough credit to refi before rates jump.

We’ll see how long the government is able to keep rates low.

[briansd1]

[quote=permabear]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

[/quote]

Here’s my acquaintance’s situation. I won’t call her a friend because acquaintance is a better word.

The mortgage balance is $345,000
Monthly interest-only payments at $1,725 6% fixed, not adjustable.
Recast (edited from reset per ucodegen’s post above) to $2,472

The place is valued at about the loan balance (on a lucky day) so no refi possible.

Her heart is not in the place anymore so I’m telling her to walk. She’s going to try to buy something else first, then walk. Hell, why not?

[quote=permabear]
I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.[/quote]

If they have adjustable rates, then they might be OK. Until rates move up. Hope they have enough equity and good enough credit to refi before rates jump.

We’ll see how long the government is able to keep rates low.

[briansd1]

[quote=permabear]

But what is her payment going to reset to?

Interest rates may well be lower than her existing fixed-rate. LIBOR with spread is at around 3% right now. Has she called the bank to ask what her new payment is going to be? Even with principal it could be lower.

[/quote]

Here’s my acquaintance’s situation. I won’t call her a friend because acquaintance is a better word.

The mortgage balance is $345,000
Monthly interest-only payments at $1,725 6% fixed, not adjustable.
Recast (edited from reset per ucodegen’s post above) to $2,472

The place is valued at about the loan balance (on a lucky day) so no refi possible.

Her heart is not in the place anymore so I’m telling her to walk. She’s going to try to buy something else first, then walk. Hell, why not?

[quote=permabear]
I’d be curious to hear whether it’s going to go up or down. I have several coworkers who were freaking out, but then their payments went down rather than up.[/quote]

If they have adjustable rates, then they might be OK. Until rates move up. Hope they have enough equity and good enough credit to refi before rates jump.

We’ll see how long the government is able to keep rates low.

[Author]

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