[PerryChase]

Interesting topic.

Personally I don’t believe in government intervention because when they intervene, people will figure out ways to obviate government action.

Mortgage interest deduction was supposed to make houses more affordable. But the market automatically priced in the subsidy into the price of homes.

When the Federal government took away the non-mortgage interest deduction, people simply took out home equity loans to make their car and appliance purchases. The end result was the same to borrowers in terms of taxes. But it inflated homes prices because mortage interest deduction became more valuable so more people bought houses for the tax breaks. Plus consumers lost out because loans that were previously unsecured, became secured by the homes they could barely afford (and as we are now finding out, cannot afford).

As data shows, home equity is the lowest in many decades as people borrowed on their homes.

We are entering interesting time with record debts and little equity and savings.

[PerryChase]

Glad it’s working out for you JES. With the same salary as in California and a great house for about $150k, you can’t go wrong.

But think that SD prices are bad? In Manhattan, prices are triple and quadruple. But some people, like my friend, would never even consider moving accross the river to New Jersey. It’s all a state of mind.

Personally, I think that, in San Diego, I’m saving money on winter clothes, utilities and pest control. In SD the heating/cooling bill is minimal. On the East Coast, my friends have to pay for monthly pest control service.

[PerryChase]

Glad it’s working out for you JES. With the same salary as in California and a great house for about $150k, you can’t go wrong.

But think that SD prices are bad? In Manhattan, prices are triple and quadruple. But some people, like my friend, would never even consider moving accross the river to New Jersey. It’s all a state of mind.

Personally, I think that, in San Diego, I’m saving money on winter clothes, utilities and pest control. In SD the heating/cooling bill is minimal. On the East Coast, my friends have to pay for monthly pest control service.

[PerryChase]

HLS, with a teaser rate loan say starting at 3%, is there always some kind of negative amortization? I think there would have to be or the lender would be lending below their cost of funds.

What about prepayment penalties on ARMs? That might prevent a few from refinancing.

[PerryChase]

HLS, with a teaser rate loan say starting at 3%, is there always some kind of negative amortization? I think there would have to be or the lender would be lending below their cost of funds.

What about prepayment penalties on ARMs? That might prevent a few from refinancing.

[PerryChase]

I have to admit that before I started to closely follow the real estate market, I didn’t fully grasp how the easy money was affecting prices.

Now most analysts are saying that even a 10% downpayment requirement would crater the market. 10% is nothing and can disappear just like that in a downturn.

Many on Wall Street who aren’t intimately knowledgeable about housing still think that housing appreciation has to do with a productive economy.

During the boom buyers looked at housing like a dot com stock option that will pay off “for sure.” Now that option is worthless.

Yes, I walk away from all my bad investments and call them water under the bridge, unless there’s a chance of recouping my initial investment, or unless there’s a business relationship to preserve.

20-30 years ago, you’d go to church or PTA meetings with your local banker. Now, your loan servicer is in Kansas, and the holder of note in Beijing.

[PerryChase]

I have to admit that before I started to closely follow the real estate market, I didn’t fully grasp how the easy money was affecting prices.

Now most analysts are saying that even a 10% downpayment requirement would crater the market. 10% is nothing and can disappear just like that in a downturn.

Many on Wall Street who aren’t intimately knowledgeable about housing still think that housing appreciation has to do with a productive economy.

During the boom buyers looked at housing like a dot com stock option that will pay off “for sure.” Now that option is worthless.

Yes, I walk away from all my bad investments and call them water under the bridge, unless there’s a chance of recouping my initial investment, or unless there’s a business relationship to preserve.

20-30 years ago, you’d go to church or PTA meetings with your local banker. Now, your loan servicer is in Kansas, and the holder of note in Beijing.

[PerryChase]

What’s so shocking with walking away? We should emphasize that walking is an option provided by the loan agreement. In essence a mortgage is simply an option to stay and make the payments or walking and turning your house over to the lender.

You stay if you’re in the money, else walk away.

Cramer is right about the 2/28. Imagine 1%-3% teaser rate mortgages recasting at 8%-12%; combine that with 20% drop in real estate values. Of course, the owners will default at near 100% rate.

[PerryChase]

What’s so shocking with walking away? We should emphasize that walking is an option provided by the loan agreement. In essence a mortgage is simply an option to stay and make the payments or walking and turning your house over to the lender.

You stay if you’re in the money, else walk away.

Cramer is right about the 2/28. Imagine 1%-3% teaser rate mortgages recasting at 8%-12%; combine that with 20% drop in real estate values. Of course, the owners will default at near 100% rate.

[PerryChase]

Landlord need to honest with their tenants and tell them in advance or their signing the lease that they intend to sell the house.

If the owner decides to sell right in the middle of the lease, then it’s the landlord’s responsbility to be extra nice to get the tenants’ cooperation, not the other way around.

[PerryChase]

Landlord need to honest with their tenants and tell them in advance or their signing the lease that they intend to sell the house.

If the owner decides to sell right in the middle of the lease, then it’s the landlord’s responsbility to be extra nice to get the tenants’ cooperation, not the other way around.

[PerryChase]

Downtown is overvalued. No building meets you criteria. As far as resale is concerned, at today’s prices, you can forget it.

Owners cannot lower their prices because they owe too much. For good value, you need to wait until the assets are transferred to motivated owners. That’s a crucial feature of Capitalism so you need to wait until that takes effect.

In the mean time, review the downtown listing for their entertainment value. SDlookup allows you to sort by list price, by price/sf, HOA, etc. Just click on the heading to sort the listings.

http://www.sdlookup.com/MLS_Listings-24+0-Downtown?srtcol=8

Whatever you do, DO NOT get a Realtor involved at this point. You’ll be too tempted (perhaps influenced) to buy too soon. Watch the prices drop and enjoy the show.

[PerryChase]

Downtown is overvalued. No building meets you criteria. As far as resale is concerned, at today’s prices, you can forget it.

Owners cannot lower their prices because they owe too much. For good value, you need to wait until the assets are transferred to motivated owners. That’s a crucial feature of Capitalism so you need to wait until that takes effect.

In the mean time, review the downtown listing for their entertainment value. SDlookup allows you to sort by list price, by price/sf, HOA, etc. Just click on the heading to sort the listings.

http://www.sdlookup.com/MLS_Listings-24+0-Downtown?srtcol=8

Whatever you do, DO NOT get a Realtor involved at this point. You’ll be too tempted (perhaps influenced) to buy too soon. Watch the prices drop and enjoy the show.

[PerryChase]

I also suggest you go the CCDC office right outside Horton Plaza next to the Westin Hotel. They have a model of Downtown as well as information on all the buildings, existing and upcoming downtown.

http://www.ccdc.com/index.cfm/fuseaction/projects.home/category/residential

[PerryChase]

I also suggest you go the CCDC office right outside Horton Plaza next to the Westin Hotel. They have a model of Downtown as well as information on all the buildings, existing and upcoming downtown.

http://www.ccdc.com/index.cfm/fuseaction/projects.home/category/residential

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