[PerryChase]

For a little perspective, here’s an article on CNN.
What seemed a big number back then is taken for granted today.

http://money.cnn.com/2007/03/27/real_estate/subprime_losses_spike/index.htm

Subprime losses lead to drop in home ownership
Despite the mortgage industry’s claims to the contrary, an advocacy group says that subprime foreclosures will leave 1 million fewer homeowners.

By Les Christie, CNNMoney.com staff writer
March 27 2007: 4:28 PM EDT

NEW YORK (CNNMoney.com) — About 2.4 million holders of subprime mortgage loans made between 1998 and 2006 will lose their properties to foreclosure, according to a report from the Center for Responsible Lending, a non-profit policy and advocacy organization for home owners.

Worse, that will result in a net home ownership loss of one million households.

[PerryChase]

Yes, Bugs has some of the best commentary. I can tell that he’s someone who’s grown wise from living the Real Estate market.

I’m not in the profession but I’ve watched from the sidelines since the late 80s. When bugs describes housing conditions, it’s exactly as I remember them. He sounds very fair and balanced — a first rate appraiser in my opinion.

[PerryChase]

Considering the prices in California, most buyers were Alt-A or below.

Given that it takes $150k income to qualify for $400k mortgage, few buyers met the truly “prime” qualifications.

As this housing cold spreads, I wouldn’t be surprised to see the mid prime and prime markets getting infected also.

[PerryChase]

I don’t focus on what powayseller is saying as much as I give her credit for her predictions and voicing her opinions.

NASDAQ 5000? $1 million median in California? Decline to $180k? To me it’s not anymore outlandish to predict steep declines than to say that it’s always a good time to buy real estate.

How about a $500k mortgage for $1400/mo? Mortgage brokers make that claim everyday. Doesn’t that sound out of this world?

[PerryChase]

Give powayseller some slack. Who do you know in the news that’s not quoting somebody else? If you think about it, everyone is full of bull. The NAR predits 2% price appreciation; and some economists predict 4% growth; Bush says that the surge is working. Do they provide proof? No, they just pull the info out of thin air. It’s up to you to believe it or not.

Like her style of not, Powayseller is one of the first to write about the subprime meltdown and the loan resets.

At least she goes out on a limb to make hard-hitting predictions that may turn out to be right or wrong. But at least she’s making those predictions.

To return to the quote above, powayseller is one of first to predict a problem with all ARMs (not just subprime). If a substantial number of long time homeowners get into trouble then the effects on RE prices will be long lasting.

[PerryChase]

Good point, no_such_reality. According to RealtyTrac, we can count on 40% of NODs going to auction. I wonder if that 40% number is national. If so, I’d be curious to know the number for California.

[PerryChase]

I agree with Bugs.

I believe that the Internet partly contributed to the upswinging in RE prices several years ago.

In the early 2000s, the then novel ability to view listing online made people feel confident that could “invest.” At that time, there were few listings so buyers felt like they would forever miss the boat if they didn’t buy.

However what was lacking was other data such as sales history and foreclosure data that is readily available today.

There’s a good chance that the Internet might prolong the downturn because when people see plenty of houses listed for sale, they won’t be in a hurry to buy. I still remember the days when you’d spend a week with a Realtor then on Monday morning he’d pressure to make a decision. The Realtor held all the information and selectively dribbled it down the buyer.

[PerryChase]

Way to go powayseller!

The quote from powayseller shows that she’s thinking a little bit ahead of the market.

I think that many prime borrowers will be caught in this downward spiral. The questions is how many? And how will that affect prices and the economy? We won’t know until we’d faced the facts in a couple of years as the loans reset.

[PerryChase]

I think that both Realtors are right.

We have a lot of pent-up demand from some of the idiots who were priced out and are thinking that now is the opportunity to buy since prices have been taking a breather. Plenty of average folks still believe that they can get rich on real estate.

Most people don’t watch the market like we do and when they hear Donald Trump say that now the time to buy, they rush out and do it.

Plenty of professionals are saying “better buy now before prices go up again.” This is kind of phenomenon always occurs at the beginning of a downturn.

[PerryChase]

Are they truly bailing out the homeowners? For how long?

Guess where the money will end up? In the pockets of the lenders who should’ve gone bankrupt for bad business decisions!

[PerryChase]

The Economist is one of the first major news magazine/paper to write about the bubble. They had a cover story several years ago.

We had plenty of advance warning of this Tsunami.

[PerryChase]

The truth is that people will buy all sorts of things because of the way the products are packaged. There needs to be a modicum of regulations to prevent buyers from being taken by charlatans.

Most average Americans believed their Realtors when they were told they could afford the monthly payments on that $700k house. “Don’t worry, we’ll take care of you. And after 2 years you can sell at a profit and move-up to a better house.” That was all fine as long as the market kept on moving up.

Now I think that we need to let this market crash to teach everyone an important lesson. We put criminals in jail as examples not to follow. We just need to let the speculators (flippers or homeowner-gamblers) go bankrupt so future generations won’t make the same mistakes.

Blaming Greenspan and bailing out the REIC won’t help. When children see their parents loose their homes, they’ll be very unlikely to commit the same mistakes. We need to swallow the bitter pill and hope for recovery.

[PerryChase]

I’m afraid that getting deeply involved in a church will cause you to build up even more resentment towards those you think are ruining your dreams of a happy life in San Diego.

From your other posts on immigration, Ireland and other matters it seems you are easily riled-up by what you perceive as wrongs. The truth is that there’s no right or wrong.

I think that if you want to find happiness and satisfaction you’d realize that no one is ruining your life. The world is fluid and ever changing. It up to you to adapt to it. If new immigrants can thrive in California, so can you. If you want a 3000sf house in a top school district in California, perhaps you should work a little harder or simply move out. Nobody is to blame for that.

[PerryChase]

Whatever happened to letting the markets work? Didn’t we lecture the Asians and South Americans against intervention?

[PerryChase]

I believe that, in England, the majority of mortgages are adjustable rate mortgages. Let’s see how long the price appreciation lasts.

Gordon Brown who will soon become Prime Minister will have to deal with the clean up of the mess he helped create as Chancellor of the Exchequer (he just submitted his new budget to Parliament).

[Author]

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