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HLS
ParticipantLostKitty,
Don’t think that you actually READ what I wrote.You aren’t IN SAN DIEGO and TIRED OF WAITING for prices to drop, nor do you seem anxious to buy too soon.
Not sure exactly what it is that you disagree with.
ParticipantThe real bottom of the market isn’t hours, days, weeks or months away. It is YEARS.
The people that are “tired of waiting” just do not understand market cycles, which will be part of the problem of getting to a true bottom. They will be too anxious, afraid of missing out.
Because $500K is less than $600K, some people think it’s a bargain and buy in. IF they were patient, it might have gotten to $300K.
Dot com stocks didn’t fall overnight $300 became $260 then $225 some eventually became $1 or less. Pity those that buy that close to the top.
It’s all supply and demand OR fear and greed.
Those are the forces that defy explanation.A very high % of SD county has equity and a decent mortgage.
Prices go up or down, most people aren’t selling or moving.The supply will be limited to what it will be.
If homes drop 50%, many people will still not be moving and will still have equity in their homes.Those that are tired of waiting don’t have an entitlement to buy a house at what they can afford. What is it exactly that they are waiting for ???
ParticipantSD,
You are my kind of agent… Take 100 agents at random and try and have a conversation with them about the state of the market and the general economy, and I think that you separate the wheat from the chaff pretty quickly.Over 20 years ago, I bought my first house from a guy that drove a dirty old Ford Torino. Had to move the trash off of the front seat so I could get in to his car. I didn’t mind at all, the house was a deal and he did what he said he would do for me.
I loved dealing with him. He knew what he was talking about.
I’m sure there were others who were better dressed, that drove me around in a fancier cleaner car, but they didn’t leave any lasting impressions.Most people are impressed/influenced by the wrong things, a sad statement of society.
The book THE MILLIONAIRE NEXT DOOR relates that many average looking people are quite wealthy, and many that look wealthy have a negative net worth.
ParticipantOf course it could happen. It did a few weeks ago.
Many people haven’t got a clue what is going on.
Accounts that are backed by FDIC insurance are covered to the maximum per the type of account.Few weeks ago there were plenty of people who withdrew from Counytrywide Bank EVEN THOUGH the accounts are FDIC insured.
Countrywide Bank is paying about the highest interest rate today on FDIC INSURED accounts. Liquid or CD’s.
It will happen again at a different bank.
It isn’t hard to understand what FDIC inurance is and what the limits are.
There is no reason to keep money in an account today that is not FDIC insured (or simiilar coverage)
Most bank money market accounts are not insured.
They are invested in a bunch of debt packaged from Wall Street, including ABS and MBS. BEWARE.ParticipantYour statement is true, but sad.
Some of my best friends are real estate agents.
There are some real professionals in the industry, but there are many that just aren’t.ParticipantAre you kidding ?? They are probably leased, and they could easily be behind in payments.
What people drive or wear or how nice their offices look do not impress me one bit.
People get fooled by slick. Give me someone who knows what they are talking about and does what they say.
I couldn’t care less how showy they are, and what they “appear” to be.Many RE agents are nothing more than used house salespeople looking for a commission that they can get by misleading people with their tainted opinions.
ParticipantYou need to get a cancellation in writing. You generally CANNOT cancel at anytime, unless that’s written in.
It’s a contract. There is an expiration date in your listing agreement.Whatever they told you verbally may mean nothing.
Talk to the agent’s broker. Talk to the agent.September 16, 2007 at 10:30 PM in reply to: possible rate cut this tuesday;will it boost home sales & prices? #84772ParticipantIn 2003 When Fed Funds Rate was 1%,
Lowest par conforming mortgage rates were 5% for 30 YR Fixed and 4.75% for 15 YR Fixed.Today, with Fed at 5.25%, 30 YR mortgage rate was 6% on Friday. 15 YR Rate at 5.75%….
SO, a move up of 4.25% in Fed rate now equates to 1% move up in long term mortgage rates.
Of course, while the Fed rate has been fixed for over a year, mortgage rates have been higher (+ 10% swing)Fed Rate will not directly affect long term mortgage rates.
Many remaining lenders have huge losses buried on their balance sheets. Somehow they will need to compensate for these losses to stay in business, possibly by raising profit margins on loans.
WAMU was brilliant in its marketing a few years back by offering absolutely free checking accounts, no service fees whatsoever. They attracted million of customers while BofA and others pissed people off. Now WAMU offers free checks, free outgoing wires and at least one overdraft a year free. Some banks still charge $15-$40 for these.
The more cash they have floating through their system, the more they can leverage and loan out.For the same reason, Countrywide Bank is offering 5.65% on 12 Month CD’s and 5.50% on liquid funds for accounts over $10,000 today. Both ARE FDIC insured to $100K.
ParticipantESM,
I’m not disagreeing with you. (I also saw that 123K wasn’t 17% of 550K, thus my confusion)Having the median drop 20% doesn’t mean that a median house a year ago is the same property at a median value today.
I still don’t know why median is even mentioned.20%+ declines have already occurred in some areas, and 50%-60% falls won’t surprise me. A real depression won’t surprise me at some stage either.
Great discussion, thanks.
In any case, the 90’s wasn’t as bad around here. People who did lose homes, lost them with down payments invested.
It was mostly due to job loss and soft economy.
There was no 100% financing. I think that 97% FHA was the closest that we got, but plenty of nice homes were $250K or less.100% +/- financing is what is going to make this correction bigger and better than any fireworks show. My condolences to anyone who bought in 2005–06.
Late 80’s early 90’s, $100-$125K bought a basic 3/2 in many inland areas. I don’t remember that prices slid more than about 20% by late ’96 and the recovery started about then.
It wasn’t until after the dot com bubble and 9-11 that low interest rates and 100% financing fueled the flames that lasted about 5 years.
While prices moved up rapidly, rents were way behind.
A 150% rise in prices was met with about a 50% rise in rents.It wasn’t making sense, but it kept right on going.
I’m in the mortgage biz in Murrieta, I know the market well.
It’s going to get beyond ugly.ParticipantOK,, Thank you for the update. I didn’t have those figures.
I was guessing.On City-Data it also states that
Housing units in structures:
One, detached: 530,430
One, attached: 98,101
For a total of 628,531.It is unclear as to the date that this is accurate, and how many new homes have been added since that time.
Your point is taken, however I still believe that plenty of people have plenty of equity.
I still don’t see that 17% were leveraged to 90%. You are assuming that every one of those 123,000 was ??
What month is that 123,000 through ? Recent sales haven’t dropped as much.In any case, well over 80% probably don’t have any problem.
Over 95,000 homes have no mortgage at all.I am as big a bear as anyone, but I think this is why the market hasn’t/won’t tank overnight and will probably bottom out at a level higher than what most of us are thinking it will or should.
Affordability will always be an issue and looking forward only well qualified buyers will be able to originate loans, but there will always be creative financing with AITD’s and owner carrying as necessary to maintain a free market AND there will be people buying that cannot afford them long term, but want to get in as they are afraid of missing out.
We don’t disagree, it’s just that it’s impossible to know exactly how bad things will get or really are.
ParticipantWe’re on the same page, however I don’t think that a very high % have used their home like an ATM to that extent.
I do expect general prices to continue declining, although not every neighborhood/area.What do you mean by “lots” of BK’s ?
There is no doubt that many did refi and take cash out, but those that refi’d to 100% in 2005 are few.
If someone paid $40K years ago and refi’d to $300K in 2002 they still have equity and (hopefully) an affordable payment. If they only took out $50k-$100K, it’s no big deal.
With the current subprime borrower crisis, about 85%-90% of borrowers ARE paying their mortgages on time, even with an increase. In excess of 95% of Prime borrowers are paying.
The defaults will be a tiny % of the overall market, but will still have impact.
Realize that the crazy exotic loans did allow many people to buy (who would not have otherwise qualified) after 2001 and they now have equity and an affordable payment, and they are not defaulting.
In San Diego county, I think that it would be a HUGE stretch to say that 10% of homes are leveraged over 90% even at todays price.
I don’t know how many homes there are in the county.I’d say that 90% of homeowners in SD county today could not afford to buy the home that they own today. There is something wrong with that.
The real problem is about 24-30 months of purchase window AND those who refi’d with large cash out.
I really do understand your point. (Some people who took money out improved their properties)
I just think that the number of real problems is low as an overall %.
No doubt there were a few that took out $500K and just blew it, but how many ??
Sure there will be some BK’s, but not a high %.Some people expect a complete collapse, rolling back prices to 2001 levels. I don’t think it will happen.
Too many people have equity and only need to afford the difference of moving up or they just aren’t going anywhere.Back to the OP question, there are people that have old houses owned free and clear, that they can sell for $700K+ and they can move to a brand new $1M tract house with a mortgage of less than the conforming $417K amount.
Although the market is weak and will correct, it’s not going to collapse.Riverside county is a different scenario. A higher % there will be losing their homes due to affordability.
ParticipantI don’t expect a soft landing.
Just a long drawn out process of builders continuing to lower prices until they can walk away from a completed project (with a sigh of relief)
coupled with…….
The denial of resellers as to what todays realistic price is and asking more for a used house than a new one.Once that fight is over, the next wave will be flat prices with few buyers to step in due to affordability.
While this is playing out over the next few years, the “must sells” and REO’s and foreclosures will continue, establishing values in each area based on supply and demand.
It still wont affect the owner occupied property in an old established neighborhood who will be a few years closer to being fully paid off. It’s remains the majority of homeowners.
NAR spokespiece said that mid-late 2008 will be the bottom. Can you imagine ? I’m not sure that 2010 will be the bottom.
ParticipantMEDIAN is a meaningless statistic.
Which part of my rant do you think is wrong ?Many of these people have been living here for a very long time. LOTS of retired military, etc. Many bought $30K homes MANY years ago that are $700K today, they even bought a rental or two that they still have.
Homes that were $90K 20 years ago became about $500K at the peak. It wasn’t that long ago, but still sheer insanity.
Dealing with the median, $20K, $50K, $200K, $1M, $2M
The median is $200K… To the other 4 people the median means absolutely nothing to their personal situation.I’m yet to figure out WHY the median is used, other than to mislead.
ParticipantMMW,
Loans are NOT impossible to find/fund. Your source is flawed. What IS impossible, is getting the truth about what is really going on.Lending standards are just returning to the good old days. They are NOT getting stricter every week, and you don’t need “pristine” credit to get a loan.
There is still TONS of money available to borrow IF YOU QUALIFY.
I’m as big a bear as anybody, but the media reports flippant comments like you are stating.
There was an idiotic article the other day that states that prices are holding because the MEDIAN is about the same. Repeated by people who don’t understand what they are saying.MOST people do not have a mortgage problem. My guess is that at least 90%-95% of San Diego county bought their homes prior to 2005. IF they didn’t use their home like an ATM machine, many have a tiny to huge amount of equity and a fixed rate loan, or no loan at all.
Many older solid neighborhoods may not fall very much.
For every person that bought at/near the top, there was a seller, many of whom made a pile of cash and timed the market perfectly, and are sitting on the sidelines. Ex-SD (On this borad) for one, was a genius, and moved to South Carolina with his stash of cash.
There are plenty of people that have a huge net worth. Many truly wealthy “old money” people live modestly
and there are a fair amount of younger professionals who make 6 figure incomes, with H&W making well over $200K a year. They may well have $200k for a down payment on a $1M house, and can afford an $800K mortgage.Only an intelligent CHARGER player would be looking at a $1M home today. Others want McMansions. There are plenty of $3M+ homes around too.
The highest end of the market isn’t as soft as many people think. Many with $3M+ homes aren’t hurting or desperate and large estates or spectacular views are what’s most attractive to wealthy foreigners. The weak dollar represents a bargain to some. A $3M home was 3 million Euros, and today is now only 2.2 million Euros.
I’m in the lending biz. Jumbo rates are closer to 7% or under.
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