Who are the buyers in this market and economy?

[SDEngineer]

[quote=Arraya]They also fail to mention that the FHA’s mortgage insurance is more costly (and can handle a higher default rate WITHOUT passing that on to taxpayers) and that the FHA historically “cures” defaulted loans at a higher rate than the banks.

http://www.bostonherald.com/business/general/view/2009_05_11_Home_loan_quagmire:_Rep_warns_another_U_S__agency_may_need_big_bailout/srvc=home&position=also
Rep warns another U.S. agency may need big bailout

[/quote]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer. As far as I can tell, this is a problem that has already been solved by both eliminating the seller funded DPA and requiring a minimum standard of creditworthiness.

Given the changes, I expect the FHA to return to historical norms for it’s performance (especially considering that the requirements in place now are tougher requirements than have been historically needed on it).

[peterb]

Any “investment” one makes is essentially a bet being placed on an expected future outcome. Certain variable like past performance, time frames and the amount of the investment may allow for the mitigation of the risk that that expected future outcome may or may not be realized. But, this does not change the fact that the bet is still being placed on an “expected” future outcome.

[peterb]

Any “investment” one makes is essentially a bet being placed on an expected future outcome. Certain variable like past performance, time frames and the amount of the investment may allow for the mitigation of the risk that that expected future outcome may or may not be realized. But, this does not change the fact that the bet is still being placed on an “expected” future outcome.

[peterb]

Any “investment” one makes is essentially a bet being placed on an expected future outcome. Certain variable like past performance, time frames and the amount of the investment may allow for the mitigation of the risk that that expected future outcome may or may not be realized. But, this does not change the fact that the bet is still being placed on an “expected” future outcome.

[peterb]

Any “investment” one makes is essentially a bet being placed on an expected future outcome. Certain variable like past performance, time frames and the amount of the investment may allow for the mitigation of the risk that that expected future outcome may or may not be realized. But, this does not change the fact that the bet is still being placed on an “expected” future outcome.

[peterb]

Any “investment” one makes is essentially a bet being placed on an expected future outcome. Certain variable like past performance, time frames and the amount of the investment may allow for the mitigation of the risk that that expected future outcome may or may not be realized. But, this does not change the fact that the bet is still being placed on an “expected” future outcome.

[Arraya]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer.

That is not true delinquencies are still trending up even with loans originated after the seller funded down payment was stopped. Probably because of two reasons:

1: Unemployment
2: Huge shift in origination towards low down loans. Which trajectory is still moving up. Don’t discount “ambitious” mortgage originators either!!

The theoretical and real world are much different places.

[Arraya]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer.

That is not true delinquencies are still trending up even with loans originated after the seller funded down payment was stopped. Probably because of two reasons:

1: Unemployment
2: Huge shift in origination towards low down loans. Which trajectory is still moving up. Don’t discount “ambitious” mortgage originators either!!

The theoretical and real world are much different places.

[Arraya]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer.

That is not true delinquencies are still trending up even with loans originated after the seller funded down payment was stopped. Probably because of two reasons:

1: Unemployment
2: Huge shift in origination towards low down loans. Which trajectory is still moving up. Don’t discount “ambitious” mortgage originators either!!

The theoretical and real world are much different places.

[Arraya]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer.

That is not true delinquencies are still trending up even with loans originated after the seller funded down payment was stopped. Probably because of two reasons:

1: Unemployment
2: Huge shift in origination towards low down loans. Which trajectory is still moving up. Don’t discount “ambitious” mortgage originators either!!

The theoretical and real world are much different places.

[Arraya]

None of which addresses the fact that the loans that are going heavily bad on the FHA side are the 0 down (through seller funded DPA) loans to folks with sub 620 scores – which simply aren’t available any longer.

That is not true delinquencies are still trending up even with loans originated after the seller funded down payment was stopped. Probably because of two reasons:

1: Unemployment
2: Huge shift in origination towards low down loans. Which trajectory is still moving up. Don’t discount “ambitious” mortgage originators either!!

The theoretical and real world are much different places.

[(former)FormerSanDiegan]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

This is a great strategy, and offers good downside protection. The only problem is there have been at most about 4 or 5 years in the past 30 years where you could do this in San Diego.

We are likely entering (or are already in, depending on location) another one of these windows. The problem is that one also has to be ready from a personal standpoint (career, family, financial situation).

I would suggest that one should buy when they can afford to, while avoiding times when the market is extremely overvalued (e.g. 2003-2006 or 07) in relation to rents.

My rule of thumb would be when the cost to own is equal to rent plus a modest mid-sized sedan car payment (e.g. $300-400/mo or so). It is easy to forego a new car as the price to own versus rent.

[(former)FormerSanDiegan]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

This is a great strategy, and offers good downside protection. The only problem is there have been at most about 4 or 5 years in the past 30 years where you could do this in San Diego.

We are likely entering (or are already in, depending on location) another one of these windows. The problem is that one also has to be ready from a personal standpoint (career, family, financial situation).

I would suggest that one should buy when they can afford to, while avoiding times when the market is extremely overvalued (e.g. 2003-2006 or 07) in relation to rents.

My rule of thumb would be when the cost to own is equal to rent plus a modest mid-sized sedan car payment (e.g. $300-400/mo or so). It is easy to forego a new car as the price to own versus rent.

[(former)FormerSanDiegan]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

This is a great strategy, and offers good downside protection. The only problem is there have been at most about 4 or 5 years in the past 30 years where you could do this in San Diego.

We are likely entering (or are already in, depending on location) another one of these windows. The problem is that one also has to be ready from a personal standpoint (career, family, financial situation).

I would suggest that one should buy when they can afford to, while avoiding times when the market is extremely overvalued (e.g. 2003-2006 or 07) in relation to rents.

My rule of thumb would be when the cost to own is equal to rent plus a modest mid-sized sedan car payment (e.g. $300-400/mo or so). It is easy to forego a new car as the price to own versus rent.

[(former)FormerSanDiegan]

[quote=nostradamus]No, you should wait until the cost of owning is equal to or less than the cost of renting. So rents have to rise or home prices have to fall.

I bought in 1998.[/quote]

This is a great strategy, and offers good downside protection. The only problem is there have been at most about 4 or 5 years in the past 30 years where you could do this in San Diego.

We are likely entering (or are already in, depending on location) another one of these windows. The problem is that one also has to be ready from a personal standpoint (career, family, financial situation).

I would suggest that one should buy when they can afford to, while avoiding times when the market is extremely overvalued (e.g. 2003-2006 or 07) in relation to rents.

My rule of thumb would be when the cost to own is equal to rent plus a modest mid-sized sedan car payment (e.g. $300-400/mo or so). It is easy to forego a new car as the price to own versus rent.

[Author]

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