[DaCounselor]

“Are you suggesting that the Alt-As won’t “recast” like the Option ARMs? Because when the reset hits, it’s not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate.”
____________________

I think FSD’s general point on this issue is that lower LIBOR = lower reset payments = no payment shock = no forced default. Maybe an oversimplification but that’s the gist. I agree as I have for the past year.

Alot of the 3/1 and 5/1 ARMS in SD have 10 yr IO periods, so anyone in these loan products is probably paying less now than they were originally. If LIBOR had not fallen off a cliff but was still in the 5.5% range, we would probably have had a ton more defaults after reset than we have seen.

I believe a huge percentage of people underwater are not in default because their payments are so low right now. I think the mentality is to ride things out for awhile and see what happens down the road. This environment was created by LIBOR tanking – otherwise I thnk most of these people would have had their hand forced by a big payment spike on reset and many would have just defaulted.

[DaCounselor]

“Are you suggesting that the Alt-As won’t “recast” like the Option ARMs? Because when the reset hits, it’s not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate.”
____________________

I think FSD’s general point on this issue is that lower LIBOR = lower reset payments = no payment shock = no forced default. Maybe an oversimplification but that’s the gist. I agree as I have for the past year.

Alot of the 3/1 and 5/1 ARMS in SD have 10 yr IO periods, so anyone in these loan products is probably paying less now than they were originally. If LIBOR had not fallen off a cliff but was still in the 5.5% range, we would probably have had a ton more defaults after reset than we have seen.

I believe a huge percentage of people underwater are not in default because their payments are so low right now. I think the mentality is to ride things out for awhile and see what happens down the road. This environment was created by LIBOR tanking – otherwise I thnk most of these people would have had their hand forced by a big payment spike on reset and many would have just defaulted.

[DaCounselor]

“Are you suggesting that the Alt-As won’t “recast” like the Option ARMs? Because when the reset hits, it’s not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate.”
____________________

I think FSD’s general point on this issue is that lower LIBOR = lower reset payments = no payment shock = no forced default. Maybe an oversimplification but that’s the gist. I agree as I have for the past year.

Alot of the 3/1 and 5/1 ARMS in SD have 10 yr IO periods, so anyone in these loan products is probably paying less now than they were originally. If LIBOR had not fallen off a cliff but was still in the 5.5% range, we would probably have had a ton more defaults after reset than we have seen.

I believe a huge percentage of people underwater are not in default because their payments are so low right now. I think the mentality is to ride things out for awhile and see what happens down the road. This environment was created by LIBOR tanking – otherwise I thnk most of these people would have had their hand forced by a big payment spike on reset and many would have just defaulted.

[DaCounselor]

“Are you suggesting that the Alt-As won’t “recast” like the Option ARMs? Because when the reset hits, it’s not just the interest rate. Nearly all of these borrorers are now well under water (See WSJ front page today). This means due to their decreasing LTV, monthly payment will still go up regardless of interest rate.”
____________________

I think FSD’s general point on this issue is that lower LIBOR = lower reset payments = no payment shock = no forced default. Maybe an oversimplification but that’s the gist. I agree as I have for the past year.

Alot of the 3/1 and 5/1 ARMS in SD have 10 yr IO periods, so anyone in these loan products is probably paying less now than they were originally. If LIBOR had not fallen off a cliff but was still in the 5.5% range, we would probably have had a ton more defaults after reset than we have seen.

I believe a huge percentage of people underwater are not in default because their payments are so low right now. I think the mentality is to ride things out for awhile and see what happens down the road. This environment was created by LIBOR tanking – otherwise I thnk most of these people would have had their hand forced by a big payment spike on reset and many would have just defaulted.

[DaCounselor]

deadzone nailed it. We’re not done by a longshot. I’d actually feel alright about buying in O’side (if I wanted to live there) right now as I think the downside risk from this point probably isn’t too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don’t make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in ’06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

[DaCounselor]

deadzone nailed it. We’re not done by a longshot. I’d actually feel alright about buying in O’side (if I wanted to live there) right now as I think the downside risk from this point probably isn’t too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don’t make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in ’06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

[DaCounselor]

deadzone nailed it. We’re not done by a longshot. I’d actually feel alright about buying in O’side (if I wanted to live there) right now as I think the downside risk from this point probably isn’t too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don’t make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in ’06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

[DaCounselor]

deadzone nailed it. We’re not done by a longshot. I’d actually feel alright about buying in O’side (if I wanted to live there) right now as I think the downside risk from this point probably isn’t too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don’t make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in ’06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

[DaCounselor]

deadzone nailed it. We’re not done by a longshot. I’d actually feel alright about buying in O’side (if I wanted to live there) right now as I think the downside risk from this point probably isn’t too bad. But the $1 mil market in CV? Or Enci? C-Bad? Not a chance, not for me.

As long as Rich keeps this site up, we will be able to come back in several years and see who was right and who was wrong.

As for ps, I am willing to give credit where credit is due, she was right about massive devaluation. Please don’t make me run through most zips in SD County to show how bad it has been. Devastating. Yes there are the hold-outs but as deadzone says we are not done yet. And if we end up 40% down in CV as opposed to 50%, I am still going to give ps credit for calling a big decline correctly. If we see a CV home that sold for $1.3 in ’06 close for under $800K in a few years, I will say close enough, ps, pretty damn good call.

Make no mistake I am not a ps fan, especially in light of the recent flip-flop, but I call em like I see em and right is right and close enough counts in my book.

[DaCounselor]

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the “new” powayseller position. A buyers’ agent developing an opinion based upon clients’ emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it’s no surprise that is the mentality she is seeing – that’s the demographic that’s out there shopping.

Frankly I do not know where we stand as far as inventory goes – are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that’s what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation – is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don’t think we are even close to being done yet in the more upscale neighborhoods.

So I’m clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation – so I’m assuming the new call is that it is these areas that will avoid massive devaluation? We’ll see – as we have already seen, hindsight is 20/20 and the numbers will not lie.

[DaCounselor]

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the “new” powayseller position. A buyers’ agent developing an opinion based upon clients’ emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it’s no surprise that is the mentality she is seeing – that’s the demographic that’s out there shopping.

Frankly I do not know where we stand as far as inventory goes – are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that’s what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation – is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don’t think we are even close to being done yet in the more upscale neighborhoods.

So I’m clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation – so I’m assuming the new call is that it is these areas that will avoid massive devaluation? We’ll see – as we have already seen, hindsight is 20/20 and the numbers will not lie.

[DaCounselor]

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the “new” powayseller position. A buyers’ agent developing an opinion based upon clients’ emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it’s no surprise that is the mentality she is seeing – that’s the demographic that’s out there shopping.

Frankly I do not know where we stand as far as inventory goes – are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that’s what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation – is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don’t think we are even close to being done yet in the more upscale neighborhoods.

So I’m clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation – so I’m assuming the new call is that it is these areas that will avoid massive devaluation? We’ll see – as we have already seen, hindsight is 20/20 and the numbers will not lie.

[DaCounselor]

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the “new” powayseller position. A buyers’ agent developing an opinion based upon clients’ emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it’s no surprise that is the mentality she is seeing – that’s the demographic that’s out there shopping.

Frankly I do not know where we stand as far as inventory goes – are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that’s what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation – is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don’t think we are even close to being done yet in the more upscale neighborhoods.

So I’m clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation – so I’m assuming the new call is that it is these areas that will avoid massive devaluation? We’ll see – as we have already seen, hindsight is 20/20 and the numbers will not lie.

[DaCounselor]

Regardless of the state of the real estate market, there will be those somewhat desperate souls with the burning desire to own, logic and rationality be damned. I think powayseller may have not initially recognized this or at least discounted it heavily in taking her bearish stance years ago. Her current recognition of this market force appears to be one of the foundations of the “new” powayseller position. A buyers’ agent developing an opinion based upon clients’ emotions, of course, lends itself to its own myopic tendencies. I would argue that there are an awful lot of bears still out there and not many of them are aggressively seeking real estate right now. Therefore leaving the buyers demographic (investors aside) to be comprised of those who may be less than financially rational and instead just want to get that home and get it now. So it’s no surprise that is the mentality she is seeing – that’s the demographic that’s out there shopping.

Frankly I do not know where we stand as far as inventory goes – are we low on a historical basis? Very low? I know we have extremely low interest rates, government subsidies, properties slow to market due to lender strategies, etc. With this background, do we have enough logic-be-damned gotta buy now buyers to keep transactions flowing in a low inventory environment? Seems to be the case and that’s what I would argue if we are in fact in a low inventory environment.

At the end of the day hindsight is of course 20/20. But I think powayseller was calling for an approximate 50% devaluation – is that about right? We have certainly seen that or something close to it in plenty of zip codes in SoCal, have we not? In a general sense, she was of the mindset that we were going to experience substantial devaluation, and we have seen just that in many areas. And I don’t think we are even close to being done yet in the more upscale neighborhoods.

So I’m clearly not getting it, because massive damage has already been done, so she cannot possibly be changing her tune regarding those areas as the game is already over. Now we are left with better areas that have yet not experienced the same level of devaluation – so I’m assuming the new call is that it is these areas that will avoid massive devaluation? We’ll see – as we have already seen, hindsight is 20/20 and the numbers will not lie.

[DaCounselor]

This neighborhood is getting crushed. In a few years I bet we will see closings in the $350K range – maybe less.

[Author]

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