[CAwireman]

Do you have a link to a story?

HiggyBaby

[CAwireman]

I would agree with sdr in that the listing prices are only the first shoe that falls.

Need to see what the property actually sells for. That’s the second shoe that needs to drop.

(Did I get that right sdr?)

But Kev, thanks much for providing these examples. What web site are you using to view them? Is it available to non-RE folks and without subscription? It helps to see real world examples of a declining market. I need to show them to my wife to get her to believe me.

Indeed, the lower asking prices show a market that’s declining. Its just a very slow decline so far and its zipcode/neighborhood specific. The hot locations are holding up pretty well from what the realtors on the site are indicating.

HiggyBaby

[CAwireman]

LL,

Nicely shown.

April 2007 is down 586 over March 2007.

April 2007 is down 517 from April 2006.

Additionally:

The 2006 March to April drop was 221, which is less than
half that of the 586 number for this year!

Thanks for posting the Sandicor data.

Sincerely yours, HiggyBaby

(Formerly known as cawireman)

[CAwireman]

JG,

What do you think of “conservative” bonds or ibonds?

Are they at all safe? Thanks!

(Formerly known as cawireman)

[CAwireman]

sdr, what was the 01/18/2007: $1,005,750 thing? Does
this show up when a house is foreclosed upon?

Thanks for the info. I won’t mention this one to my
wife 😉

Sincerely yours, HiggyBaby

(Formerly known as cawireman)

[CAwireman]

wantobuy,

If working people can’t affort payments (esp after ARM resets) then having a job doesn’t do enough good.

But the point you bring up is a good one. Its just that adjustable rates play a much bigger role this time around than last. And, the adjustments can easily shift someone out of being able to pay the monthly mortgage, whether employed or not.

From the article:

“Unlike people who purchased a home several years ago, those who bought in 2006 have little equity, if any, and may even be saddled with negative equity if the value of their home has fallen below the purchase price. Those homeowners won’t be able to refinance as teaser rates rise over the next couple of years.”

“The nonprofit Center for Responsible Lending predicts the subprime failure rate for loans written in 2006 will reach 22.8% in Santa Ana, Anaheim and Irvine; 22% in Los Angeles, Long Beach and Glendale; and 24.2% in Bakersfield.”

“February foreclosure data from RealtyTrac shows California filings soaring. Former boom states Nevada and Florida are No. 1 and No. 3 for foreclosure rates.”

“I fully anticipate that we’ll see a higher delinquency and foreclosure rate in California this year and into next,” Zandi said. “If the job market started to weaken (in California) it would be a complete mess.”

Even for the working, ARM adjustments may be brutal.

(Formerly known as cawireman)

[CAwireman]

Hi, This is the guy formerly known as Cawireman.

The old handle was so hard to remember (you’re caveman, right?), that I decided to change it.

So, going forward, I’ll be Higgybaby.

Well, it was great to talk to everyone on Saturday at the meet up. It was one gal and the rest guys. (Lindi, where were ya? missed ya).

I look forward to the next one!

[CAwireman]

Much appreciated!

Thanks sdr for the data and thanks to Arifact for the graphs!

I look forward to them each week.

[CAwireman]

Before finding this forum, I had no concept of the overall RE market. Still have ocean’s more to learn.

But, I’m now able to take a somewhat educated gamble with some element of understanding, at least far greater than I had before Piggington. And basically, there’s a consensus that fundamentals are out of whack. The exotic loans discussed on this forum are having an impact on companies and, at times, even the stock market. The theories presented here have been born out in reality.

Basically, I’m holding my cards for now and I’m willing to wait 1 to 3 years, and even longer depending upon what the numbers look like.

As with all risks (the one here is potentially being wrong and that the cost of realestate won’t drop notably) there aren’t any gaurantee’s. We have to make the best decision presented to us at the time based upon what we know, or what we think we know.

I believe this forum in general and in specific allows people from all occupations and regions to benefit from data presented from learned individuals. And, that it has no equal in prior business history in relational to breadth of knowledge presented and number of participants involved. Maybe I’m wrong, but that’s the way it appears to me. At a time when financial RE fundamentals have never been more out of alignment, its great for non-RE people like most of us on this forum to be privy to both this kind of data and the posts of those who actually do have industry knowledge.

sdr – I was on the forum when Doctuer posted his farewell and it would be great if he were to actually return.

[CAwireman]

Exeunt,

Interestingly enough, when I open the wpost link, a pop-up about low-mortgage rates is shown. Ironic!

While the entire article is a good one, I especailly liked this portion:

“While there are losers in this story, there are also winners. The transaction costs borne by home buyers are income for those in the real estate industry. Upwards of 2 million subprime borrowers are expected to default in the next few years, with as many as 20 percent of subprime borrowers being hit over this period. If the average purchase price for these borrowers’ homes was $200,000, these home buyers would have generated close to $40 billion in real estate and mortgage fees. That considerable sum is likely to persuade many to hear the gospel of the ownership society.”

[CAwireman]

Ditto JG,

It will be great to see what these houses, or ones nearby, sell for. And the auction results would be very interesting.

[CAwireman]

2cents –

I speak from direct experience from the last downturn. Basic options I can see:

1) Sell the house for what you can. Take out a loan on the remainder and pay it off. This will result in your credit remianing at its current level. Had I to do it all over again (and if I decided not to be a landlord), I would take this option because it results in being able to freely manueuver when the next RE boom begins. A negative mark on your credit history could tie your hands if the lending practices tighten up (which is likely).

2) If you’re willing to accept a moderate or heavy hit to your credit (as SDR and others already described, so I won’t) then, consider these options:
a) Short sale
b) Foreclosure – just walk away and mail in the keys to your property. Minimum 7-year credit hit, potentially even longer.

3) Landlord – this is the long plan and eventually SHOULD pay off. The term for it to become a profitible resale or a desireable assett? Anyone’s guess. In my situation, had I held on to my property, rented it, and sold during the boom, I could have made a respectable profit. Being a landlord can be a real pain and not everyone is a good fit for that role. Tough choice.

In summary, I’d pick either 1 or 3 if I were you. The short sale is an attractive choice, but will have credit implications later and tax implications sooner. And, the lender may not allow it (mine didn’t, though I tried like heck!).

Good luck and please let us know the details of what you decide and how it transpires. Thanks for sharing your situation.

[CAwireman]

I’m definitely not an expert in the RE field.

I’m pretty surprised at the lack of evidence of more of a home value downturn in SD.

Q2 will be pretty interesting. If sales figures don’t suggest SD to be falling off a cliff or at least sliding down a blue-square ski run, my spouse will be all over me to buy, buy, buy!

[CAwireman]

We’ll try to make it too! Enjoyed the last one.

[CAwireman]

Please see my 2 cents here:

http://piggington.com/emc_refinancing_subprime_fbs

[Author]

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