Forum Replies Created
-
AuthorPosts
-
September 21, 2006 at 9:51 PM in reply to: Could a Fed Funds Rate of 3% Revive the Housing Market #36036
PerryChase
Participantsocalarm, I think if prices decline, people will not hold on to their houses, regardless of whether they can afford the payments. They would want to sell to get better a better deal. Or if they’re way under water, they would walk.
ParticipantYes, PS, that’s the point. Even if the borrower could afford to keep on making payments on that $1.1 million note, he most likely wouldn’t if the house is then worth only $500k.
My prediction is that well-to-do people are smart. They’ll get emotionally “detached” very quickly when they realize that their homes are only worth 1/2. That that reason, I don’t think that upscale neighborhoods will be insulated from the downturn.
The borrower’s job should not be affected and he can simply relocate in the same neighborhood (for 1/2 the cost) so his kids stay at the same school.
ParticipantWow, hardly to beleive but true.
Most recent buyers speculated on their homes (as the Professor pointed out in an article). This guy just did it on 6 house. Even now, his nonchalant attitude shows that he still hasn’t learned anything.
The speculation and the exotic loans will cause the popping of this bubble.
ParticipantImagine a borrower purchased a $1 million house. At the reset time he owes $1.1 million. The house is then only worth $500k. What’s that borrower likely to do?
1) Keep on making payments on the $1.1 million loan to live in a $500k house?
2) Walk and let the bank have house?I think the more expensive the houses, the more likely the borrowers are to walk.
ParticipantSounds to me like the NAR is coming to terms with the deteriorating real estate maket the same way the Bush Administration is dealing with Iraq.
Sorry, I couldn’t resist. 😉
ParticipantI don’t know of any new development in San Diego that doesn’t have HOA. A gated community is not the same thing as HOA. All townhouses and condos have HOAs.
I also hate HOA and gated communities.
A friend of mine lives in a non HOA, 1990’s community but they have a special road and park assessment. That works out about the same as HOA.
The only way to buy a non-HOA house is to buy an old house in an established neighborhood and restore it. I’m thinking about getting a Bay Park or South La Jolla house when the market crashes. The problem with an old house is that you either have the money to do the work all at once, or you end up living for years in a house with bad plumbing, insulation, etc…. I believe one reason people buy new houses is that they can finance the upgrades (custom carpet, cabinets, marble, A/C, etc… ).
ParticipantShe should be able to get her deposits back.
She should just go see the builder and tell them that due to personal financial reasons, she can’t go through with the contract. It’s done all the time and they should return the money to her.
Since no escrow has been entered into, the builder doesn’t want her to make a big stink about it and possibly affect future sales to others. The builder also would not want to force her enter an escrow that would not close.She’s lucky to have seen the light.
ParticipantMy observation of human nature is that people are emotional about themselves but expect others to be rational. That applies to everything — houses, kids, wives, cars, etc…
ParticipantI don’t think that there’s any way an existing loan can be renegotiated with more lenient payment terms. It’s against regulations as far as a know. A new note has to be funded with the old note being paid-off, even if it’s with the same lender.
Imagine that prices are tanking and borrowers are making minimum payments. Their notes outstanding are increasing as the value of their houses are decreasing. If it continues on a while, borrowers may just walk and let the lenders have the collateral.
ParticipantNot surprising. Plenty of supposedly “respectable” individuals do all sorts of weird things (adultery, drugs, sex, you name it). The more conservative and “respectable” someone is, the more likely there are bones in the closet.
Ronald Reagan – divorced the mother of two of his children to marry Nancy Reagan, who bore him a daughter only 7 months after the marriage.
Bob Dole – divorced the mother of his child, who had nursed him through the long recovery from his war wounds.
Newt Gingrich – divorced his wife who was dying of cancer.
Dick Armey – House Majority Leader – divorced
Sen. Phil Gramm of Texas – divorced
Gov. John Engler of Michigan – divorced
Gov. Pete Wilson of California – divorced
George Will – divorced
Lauch Faircloth – divorced
Rush Limbaugh – Rush and his current wife Marta have six marriages and four divorces between them.
Rep. Bob Barr of Georgia – Barr, not yet 50 years old, has been married three times. Barr had the audacity to author and push the “Defense of Marriage Act.” The current joke making the rounds on Capitol Hill is “Bob Barr…WHICH marriage are you defending?!?
Sen. Alfonse D’Amato of New York – divorced
Sen. John Warner of Virginia – divorced (once married to Liz
Taylor.)Gov. George Allen of Virginia – divorced
Henry Kissinger – divorced
Rep. Helen Chenoweth of Idaho – divorced
Sen. John McCain of Arizonia – divorced
Rep. John Kasich of Ohio – divorced
Rep. Susan Molinari of New York – Republican National Convention Keynote Speaker – divorced
She and her husband where the perfect young conservative couple.Participantpowayseller, I love your post. I like the “in my opinion” sprinkled throughout your text. How about alternating with “in my view, I feel, I think, I surmise, i deduce” etc… 🙂
It’s scary indeed. I’ve come accross a lot of annecdotal evidence that buyers are in over their heads. A friend talked me into visiting an $800k + development in Del Sur and the loan officer told me that that majority of buyers do interest only 100% financing or as little downpayment as they could. I told her that I didn’t want to put any downpayment. She said that she would find me a good payment plan.
Of course, I’m not buying. I’m taking advantage of the time to become familiar with the neighborhoods in San Diego so when the right time comes, I’ll be ready.
By the time all this unravels, people might be wishing for only a 50% drop from the peak.
ParticipantFutureSDguy, another thing to remember about Realtors is that they have a vested interest in generating transactions. Whether the market is high or low, they need transactions to occur. Realtors will always be biased for more “deals.”
ParticipantI’m a North County Coastal homeowner. And I don’t care if my house drops 50%. I bought it a long time ago and I made a conscious lifestyle decision to live there.
A 50% drop would give me the opportunity to buy something I would rather live in central San Diego city.
A 50% drop sounds like a catastrophe. But if you think in terms of dollars, it’s not. It wasn’t too long ago that we had median prices about $300k. And at that time, housing was alredy too expensive. Prices can revert back to the mean and we’ll be fine. People in real estate related businesses will be hurt, but everyone else will be fine. Just roll back the clock 5 years.
I think that all housing will be affected by the same percentage at different times. I don’t know of any downturn before where “superior” products declined a lower percentage. Actually, the supply of “luxury” housing is propertionately greater so it could well be that “luxury” housing will turn into average housing.
Another psychological point that affects feelings about real estate is that homeowners who stretched to buy feel that they worked really hard to afford their homes. Thus they feel entitled to be rewarded with housing appreciation. People stretch to buy all sorts of things. What’s different with a house? Should buying a house be “rewarded” anymore than working hard for a Ferrari or a big diamond ring or a luxury vacation to Europe?
ParticipantPredictions are never “facts” and they are always based upon assumptions. Why should powayseller be held to a different standard than someone who’s prediting a soft landing?
What about professionals who are still predicting appreciation? Are their views not even more outlandish?
300k median prices in San Diego sounds reasonable to me. We’ll know the “facts” when they happen. Until then everything is opinion.
I happen to like powayseller’s “strong witty” style. It’s a nice change from the same old. powayseller’s style is like a RE investment informercial but in reverse. That’s OK by me because we need variety.
It’s only money. Please don’t take is personally.
-
AuthorPosts
