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PerryChase
ParticipantI don’t think that households can tighten enough to make their increasing housing payments.
Considering how people spend at 7-Eleven, Starbucks and other “affordable” luxuries, they won’t have the discipline to make the adjustment. They’ll say f— it and walk. That is the American way.
ParticipantI just read an interesting article by Calculated Risk on the changes in the mortgage industry. Underwriting is a big difference between this downturn and the last.
There was a rush to finance everyone so risk management went out the window. Well, it turns out that FICO scores and computer models weren’t any good at managing risk.
But I don’t think that we’ll return to the days of manual underwriting (a very costly process) for the lenders. The lender will have to charge higher interest rates to make up for the losses and higher rates will dampen housing.
http://calculatedrisk.blogspot.com/2007/04/walk-down-subprime-memory-lane.html
ParticipantI think that you heard it from the crowd.
All the best to you and let us know how it goes.
ParticipantScary indeed.
We borrowed from the future. It’s payback sooner or later.ParticipantFind out how much her mortgage is. It’s unlikely she’ll take anything less than that.
ParticipantIf we really wanted to make homeownership something that most Americans can afford, we’d stop using homes as piggy banks and stop the financial institutions from using churn to create revenues for the industry.
We need lower prices so everyone can afford good shelter.
1) Remove tax mortgage interest deduction = that would automatically translate to lower prices.
2) Change capital gains exemption to 10 years = that would automatically translate to lower prices as it removes the speculator/homeowners from the market.
When citizens spend less on housing they have more to spend on other things = higher standard of living.
ParticipantFormerSanDiegan, you make a very good point. Interest rates are hard to predict.
One thing that we need to keep in mind is that the foreclosure losses haven’t yet been fully reflected on the portfolios of MBS and CDO holders. Can investor aversion to MBS lead to higher mortgage rates? We’ll see.
May we live in interesting times, indeed.
ParticipantRent at $1,100 for an old 1970s 1-bed is high. I think that $950 is more like it. I know someone who pays $950.
Rent will come down when all the for-sale units (including all the condo conversion units) in Fashion/Mission Valley hit the market. I’m willing to bet that rent will be down in the next 5 years, not up. People of working age are moving out of SD and thousands of unit will hit the rental market.
I think that prices for a 1-bd unit will settle at $90k in an old building and $125k in a newer building. Don’t pay more, rent and watch the market. If you buy now, you can easily loose your down-payment and more.
ParticipantInteresting that many of the experts/officials are already calling a bottom. They are try to talk the market up and prevent a panic. Some buyers believe it and are jumping back into the market. Too bad for them as they’ll regret it.
Based on Jim the Realtor’s data it seem like it’s the higher end customers who are jumping back into the market. There are fools are every income levels.
We haven’t even started this down cycle yet. The 2-year ARM reset foreclosures haven’t even hit the MLS yet. We still have the 5-year ARM resets to watch. 2010 would be the earliest bottom, in my opinion. We can’t call a bottom until all the 2.4 million foreclosures predicted by the Center for Responsible Lending are wrapped-up.
Home loan defaults skyrocket in county
http://www.signonsandiego.com/news/metro/20070329-9999-1n29default.htmlParticipantTracking the fraud is easy using computers. Software can easily track Brokers, loan officers, lenders and borrowers who have unusual foreclosure activity. ocrenter is doing a good job on his blog.
But is there the political will to find and prosecute the fraudsters? I doubt it.
Participant” A 1br unit now rent for apprx. $1000 per month, so taking into consideration the $200 per month HOA fee, a reasonable price for one of these units would be around 120K”
——–You sound fairly knowledgeable about the market and answered your own question.
Participant“… at some point in time, high rates will cycle down to lower rates and then you are in fat city as long as your home hasn’t depreciated to the point where you cannot refi.”
——–If the relationship of housing prices to interest rates holds true, if you buy at a low price when rates are high, when rates cycle down, then housing prices will be up. At that point, you’ll really be in fat city because you’ll have 1) accumulated plenty of appreciation, and 2) the ability to refi at a lower rate = low carrying cost + plenty of equity.
After you refinance at a lower rate, if you then continue to make the same monthly payments as when the rates were high, your house will be paid-off much sooner.
ParticipantI’m with you asianautica.
Housing prices generally move in the opposite direction of interest rates so any interest rate hike will be offset by lower prices thus resulting in the same carrying cost. I’d rather have mortgage rates go up to 10% and housing prices adjust downward accordingly. Any would-be-buyer should hope so.
23109VC, another thing is if you’re thinking about remaining in your home for 20 years, or for good, you’d want rates to go way high (with commensurate downward housing prices) because rates don’t permanently stay high. You can then refinance your mortgage when rates come down and thus end-up with a low mortgage balance and low rates.
The worse thing would be for rates to get lower and prices to stagnate high. That will prevent existing buyer from going under water, it won’t help you buy a house.
To look at it another way, high prices combined low rates put a floor on your cost of ownership. But low prices combined with high rates put a ceiling on your cost of ownership. With the latter scenario, you have the potential of future appreciation windfall as well as the possibility to refinance at much lower rates thus further decreasing your cost of ownership. So hope for rates to go up with a matching decrease in property values.
ParticipantHouse is now down to $598k with a 30% referral fee to out of state broker.
It seems like no one who lives in Amarillo can afford that albatross. It’s been sitting vacant for quite a while now.21 Sandhills, Amarillo, TX
http://www.21sandhills.com/This poster child for RE excess will be fun to watch.
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