Knife catchers jump in

[peterb]

Check out Mr Mortgage on foreclore and NOD data.

Unemployment is rising, credit is constricting and now it looks like a global recession is coming as well. Oh, and the RE sales season is comning to an end.

If any of this spells a bottom, please someone, explain it to me!!

[carlsbadworker]

I was out looking the past weekend and saw some REOs in good condition. I can comfortably own a home at the current price and I plan to hold onto the property until I die (if I don’t live in, I will rent it out).
But still I decide to pass. That is because many of the houses already have bids on it, so it will be hard for me to low-ball to hedge any future price drop. So I will wait. The other thing is that I am not convinced that the house is cash flow positive at the current price if one factors in vacancy, maintenance, management, property tax, insurance, and 30-year fixed mortgage. And that does not even include the potential rent drops due to unemployment.
That all said, I do see one argument supports knife-catcher: the interest is going up! The GEOs are having a hard time selling their bonds. So sooner or later the mortgage interest has to go up. People say price will drop when the mortgage rate increases, well, theoretically. In reality, the price drops always lags behind mortgage interest, so you will need to wait until at least 2010 for the price to catch up (or catch down?). For primary residence (not for investment purpose), it might not be worthwhile to waste 2 years of your life for the rock bottom price. Of course, everybody’s situation is different.

[carlsbadworker]

I was out looking the past weekend and saw some REOs in good condition. I can comfortably own a home at the current price and I plan to hold onto the property until I die (if I don’t live in, I will rent it out).
But still I decide to pass. That is because many of the houses already have bids on it, so it will be hard for me to low-ball to hedge any future price drop. So I will wait. The other thing is that I am not convinced that the house is cash flow positive at the current price if one factors in vacancy, maintenance, management, property tax, insurance, and 30-year fixed mortgage. And that does not even include the potential rent drops due to unemployment.
That all said, I do see one argument supports knife-catcher: the interest is going up! The GEOs are having a hard time selling their bonds. So sooner or later the mortgage interest has to go up. People say price will drop when the mortgage rate increases, well, theoretically. In reality, the price drops always lags behind mortgage interest, so you will need to wait until at least 2010 for the price to catch up (or catch down?). For primary residence (not for investment purpose), it might not be worthwhile to waste 2 years of your life for the rock bottom price. Of course, everybody’s situation is different.

[carlsbadworker]

I was out looking the past weekend and saw some REOs in good condition. I can comfortably own a home at the current price and I plan to hold onto the property until I die (if I don’t live in, I will rent it out).
But still I decide to pass. That is because many of the houses already have bids on it, so it will be hard for me to low-ball to hedge any future price drop. So I will wait. The other thing is that I am not convinced that the house is cash flow positive at the current price if one factors in vacancy, maintenance, management, property tax, insurance, and 30-year fixed mortgage. And that does not even include the potential rent drops due to unemployment.
That all said, I do see one argument supports knife-catcher: the interest is going up! The GEOs are having a hard time selling their bonds. So sooner or later the mortgage interest has to go up. People say price will drop when the mortgage rate increases, well, theoretically. In reality, the price drops always lags behind mortgage interest, so you will need to wait until at least 2010 for the price to catch up (or catch down?). For primary residence (not for investment purpose), it might not be worthwhile to waste 2 years of your life for the rock bottom price. Of course, everybody’s situation is different.

[carlsbadworker]

I was out looking the past weekend and saw some REOs in good condition. I can comfortably own a home at the current price and I plan to hold onto the property until I die (if I don’t live in, I will rent it out).
But still I decide to pass. That is because many of the houses already have bids on it, so it will be hard for me to low-ball to hedge any future price drop. So I will wait. The other thing is that I am not convinced that the house is cash flow positive at the current price if one factors in vacancy, maintenance, management, property tax, insurance, and 30-year fixed mortgage. And that does not even include the potential rent drops due to unemployment.
That all said, I do see one argument supports knife-catcher: the interest is going up! The GEOs are having a hard time selling their bonds. So sooner or later the mortgage interest has to go up. People say price will drop when the mortgage rate increases, well, theoretically. In reality, the price drops always lags behind mortgage interest, so you will need to wait until at least 2010 for the price to catch up (or catch down?). For primary residence (not for investment purpose), it might not be worthwhile to waste 2 years of your life for the rock bottom price. Of course, everybody’s situation is different.

[carlsbadworker]

I was out looking the past weekend and saw some REOs in good condition. I can comfortably own a home at the current price and I plan to hold onto the property until I die (if I don’t live in, I will rent it out).
But still I decide to pass. That is because many of the houses already have bids on it, so it will be hard for me to low-ball to hedge any future price drop. So I will wait. The other thing is that I am not convinced that the house is cash flow positive at the current price if one factors in vacancy, maintenance, management, property tax, insurance, and 30-year fixed mortgage. And that does not even include the potential rent drops due to unemployment.
That all said, I do see one argument supports knife-catcher: the interest is going up! The GEOs are having a hard time selling their bonds. So sooner or later the mortgage interest has to go up. People say price will drop when the mortgage rate increases, well, theoretically. In reality, the price drops always lags behind mortgage interest, so you will need to wait until at least 2010 for the price to catch up (or catch down?). For primary residence (not for investment purpose), it might not be worthwhile to waste 2 years of your life for the rock bottom price. Of course, everybody’s situation is different.

[carlsbadworker]

[quote=Ren]There are millions of people that still have a bubble mentality, nervously ready to pounce at what looks like the bottom to them, because they think the market will suddenly change direction and rocket upwards – leaving them “priced out forever.” Those people are helping drive prices down, and therefore are our friends 🙂

I’m even more relaxed and sure about the direction of the market now than I was in 2006. I was planning on buying this winter, but now I may hold off until late 2009.[/quote]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon. So for some people, it does make sense to jump in while they still can. In real estate, a lower price does not always mean affordablity will improve.

[carlsbadworker]

[quote=Ren]There are millions of people that still have a bubble mentality, nervously ready to pounce at what looks like the bottom to them, because they think the market will suddenly change direction and rocket upwards – leaving them “priced out forever.” Those people are helping drive prices down, and therefore are our friends 🙂

I’m even more relaxed and sure about the direction of the market now than I was in 2006. I was planning on buying this winter, but now I may hold off until late 2009.[/quote]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon. So for some people, it does make sense to jump in while they still can. In real estate, a lower price does not always mean affordablity will improve.

[carlsbadworker]

[quote=Ren]There are millions of people that still have a bubble mentality, nervously ready to pounce at what looks like the bottom to them, because they think the market will suddenly change direction and rocket upwards – leaving them “priced out forever.” Those people are helping drive prices down, and therefore are our friends 🙂

I’m even more relaxed and sure about the direction of the market now than I was in 2006. I was planning on buying this winter, but now I may hold off until late 2009.[/quote]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon. So for some people, it does make sense to jump in while they still can. In real estate, a lower price does not always mean affordablity will improve.

[carlsbadworker]

[quote=Ren]There are millions of people that still have a bubble mentality, nervously ready to pounce at what looks like the bottom to them, because they think the market will suddenly change direction and rocket upwards – leaving them “priced out forever.” Those people are helping drive prices down, and therefore are our friends 🙂

I’m even more relaxed and sure about the direction of the market now than I was in 2006. I was planning on buying this winter, but now I may hold off until late 2009.[/quote]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon. So for some people, it does make sense to jump in while they still can. In real estate, a lower price does not always mean affordablity will improve.

[carlsbadworker]

[quote=Ren]There are millions of people that still have a bubble mentality, nervously ready to pounce at what looks like the bottom to them, because they think the market will suddenly change direction and rocket upwards – leaving them “priced out forever.” Those people are helping drive prices down, and therefore are our friends 🙂

I’m even more relaxed and sure about the direction of the market now than I was in 2006. I was planning on buying this winter, but now I may hold off until late 2009.[/quote]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon. So for some people, it does make sense to jump in while they still can. In real estate, a lower price does not always mean affordablity will improve.

[Eugene]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon.

I think it’s a big misconception. “Tightening lending standards” only apply to private lenders. Government is doing the opposite. You can get a FHA loan of up to $625,000 with 3% down, credit score of 660, and 45% gross DTI ratio. That does not qualify as “tightening” for me.

[Eugene]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon.

I think it’s a big misconception. “Tightening lending standards” only apply to private lenders. Government is doing the opposite. You can get a FHA loan of up to $625,000 with 3% down, credit score of 660, and 45% gross DTI ratio. That does not qualify as “tightening” for me.

[Eugene]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon.

I think it’s a big misconception. “Tightening lending standards” only apply to private lenders. Government is doing the opposite. You can get a FHA loan of up to $625,000 with 3% down, credit score of 660, and 45% gross DTI ratio. That does not qualify as “tightening” for me.

[Eugene]

By the way, the lending standard is tightening. So if you don’t have 20%+ down, good credit score etc, you theoretically will be “priced out forever” soon.

I think it’s a big misconception. “Tightening lending standards” only apply to private lenders. Government is doing the opposite. You can get a FHA loan of up to $625,000 with 3% down, credit score of 660, and 45% gross DTI ratio. That does not qualify as “tightening” for me.

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