[CAwireman]

Intrguing, do you have more information? Links, or chats with people you met while at SEH?

[CAwireman]

What would really be great is a report by zipcode of the number of ARM loans and month/year of reset.

Kicked this around a little bit at the meet up. Realistically, people thought it would be nearly impossible to get at this data – rather, more reasonable to see what happens on the back side: month per month, look at the lagging indicators (which I think sdrealtor is doing by tracking short sales stats each monday)to some degree.

The banks have their own data on this and I’m sure they have connected the dots and are positioning themselves as best they can (banks that ended up holding the loans, not
the banks that merely originated them.)

But, back to my imaginary report. If we could see the monthly/annual ARM reset data by zipcode, we could really do a good job in assessing the trends. So, the degree to which ARM resets affect realestate prices, would be the degree to which a report like this would be valuable.

1) For example, with the resets taking place, let’s say in Jan 07 in any/all zipcodes, watch the number of homes going up for sale, watch the number of shorts/foreclosures, continue tracking the pricing trends. In the first month, one wouldn’t expect much change – it takes time to react to a loan reset.

2) After watching this for 6 months, some trends might emerge. 12, 18, 24 months, even more.

3) For those bubble sitters like me who have a zipcode preference for eventually buying a place, we could watch the progress. If the zipcode for whatever reason was at or above the typical ARM saturation, then one might anticipate more downward price pressure. Or, conversely if the ARM saturatation in one’s dream zipcode was unusually low, then you might either accept that you’ll pay closer to the higher end of the scale for a property – or the cost may price you out and force you into your next more desireable zipcode.

4) As both the banking industry and the government are looking at the effects of allowing exotic loans onto the market, detailed monitoring and assessment of ARM loans and the like may help them to determine if the short term benefits the Mortgage folks appreciate are worth the long term suffering of: fearless homebuyers, RE industry, builders, banking industry, retail industry, and everyone else who might suffer if a realestate-induced recession takes place.

By the way, if the government creates this data, aren’t they obligated to make it public?

From an individual perspective, point 3 would benefit people who don’t want to repeat the sins of their fathers/mothers. Point 4 would provide some postmordem data to help the industry keep itself out of trouble in the future, unless the industry doesn’t particularly want to.

But anyway, I know that the data may not be available, but Christmas is just around the corner and you never know what St. Nick might surprise us with…..

I hope everyone’s Thanksgiving was enjoyable.

[CAwireman]

My wife and I share a 2000 Honda Civic and a 1999 Chevy Tahoe (2-door) interchangably – though she drives the Tahoe now since her commute is so short (less gas). Both were purchased used and are paid for. (Since we rent, we are currently living in a debt-free zone)

The Tahoe was purchased to go up to the mountains, drive through snow and also let’s us pull a boat (bought used and is also paid for). The Civic was purchased originally for my wife to learn to drive. But, since our commutes are short for her and longer for me, we swapped vehicles. Even though I drove a sporty convertable for many years before (bought used and drove it for 13 years), I have no problem driving the Civic now.

Some of our friends drive really nice auto’s and others not. Luckily none of our group members judge people on what they drive (as far as we know, wink). Everyone just drives the car they think is the best fit financially & practically.

There there’s the remainder of California (most on this forum excluded!).

[CAwireman]

Not that you’d want a US manufacturer’s car but if you wanted to see some drooling, ready-to- deal dealers, I think you’d easily find them at Ford or Chevy dealers.

The Foriegn auto’s (especially, BMW, Benz) are for whatever reason, nearly permanently trendy.

Maybe a year or so from now, the market for luxury cars will drop. But, just as the $ million dollar and above home buyers are insulated to some degree from the RE bubble (they aren’t as dependent on next week’s salary)they are also able to afford the luxury vehicles.

[CAwireman]

Yes, it was great to meet everyone (Rich, zk, JG, Powayseller, Barnaby, Lindi…) me and my wife had a
good time and had pizza leftovers for dinner on sunday!
Looking forward to the next meetup.

[CAwireman]

Some comments on this website which seem to speak to your interests:

Link

[CAwireman]

If this became common practice, it would definitely take the sting off of the current housing downturn.

[CAwireman]

JES, buck up. CNN just announced that the dem’s are projected to take the house of representatives. The senate race is close.

[CAwireman]

Get your ponies… 

Hi, Here are a few things to check out if you haven't made up your mind just yet:

1) A link from Berkley that's more tuned to SD – Definitely worth a look.

Link 

 http://www.igs.berkeley.edu/library/election2006/endorse2006.html

2) From San Diego City Beat Magazine, enlightening or at least entertaining.

Link

http://www.sdcitybeat.com/article.php?id=4969

[CAwireman]

JG,

This was also at that link you posted. Basically, 89% of
Refi-loans via Freddie Mac resulted in at least 5% cash out
in Q3/06.

Real Estate Bubble Watch:

November 1 – Dow Jones (Danielle Reed): “Despite higher mortgage rates, homeowners are still choosing to take cash out of their homes when they refinance, housing finance agency Freddie Mac said… In the third quarter of 2006, 89% of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least 5% higher than the original loan balances, Freddie Mac said… That’s up from 88% in the second quarter, and is the highest share since the second quarter of 1990. Cash-out refinancings have increased even as mortgage rates have risen, bucking historical trends, Freddie Mac said…‘Mortgage borrowers continue to refinance their mortgages at a higher frequency than historically would have occurred given the rise in mortgage rates over this year,’ said Frank Nothaft, Freddie Mac vice president and chief economist… One difference in today’s refinance environment, he said, is that there are now large numbers of mortgage borrowers holding hybrid…(ARMs) whose fixed-rate terms are almost over, meaning those ARMs are due to shift to floating rates. This ‘provides borrowers an incentive to refinance into a lower-cost ARM or fixed-rate mortgage,’ Nothaft said… The cash-out refinance report also showed that prices of properties refinanced during the third quarter of 2006 had a median appreciation of 33% from the time the original loan was made…”

If borrowers are converting to fixed rate loans, hat’s off to ’em.

But the fact that properties were apparently appraised at 33% greater values that when the loan was originated is interesting. If the loan originated recently, then maybe the value doesn’t equal reality. What madness this is.

JG (and PS) great posts, as usual.

[CAwireman]

PD I looked on the NPR website and couldn’t find anything. I heard the story (interview) on the radio today while driving home from work.

[CAwireman]

Shorting => There was an report on NPR today. It touched on the stock market and the fact that the run up in stocks is affected by a record increase in shorting along with record squeezing that’s taking place. Anyone else hear the same?

[CAwireman]

JG,

I dig the graphs. Looks like we are rivaling the NOD level of mid-year 1991. After that there were about 5 years before hitting the last peak. After that, the NOD’s fell off and started the most recent RE run up.

Also interesting is that we’ve gone from NOD levels which were lower by 1/2 of those in 89 and scaled roughly 2/3 of the difference between current bottom (750) and the most recent peak in 93.

[CAwireman]

JG, as always, great graphs. Question to the group. Are you surprised that rent and prices track so closely through those years.

I would expect to see some tracking variations, especially during the run up in prices during the last 8 years or so.

[CAwireman]

Dave, its good to get periodic updates like this.

The parents of friends of my son bought a place in San Marcos recently despite suggestions that they might want to wait.

People are still buying property despite the articles in the press warning of a downturn.

[Author]

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