Calculated Risk informs us that the new guidance on non-traditional mortgages may be with us in a few months.
Lansner at the OC Register is worrying about late tax payments, correctly identifying that homeowners are starting to get squeezed now that rates are rising and prices have flattened.
And—I know this is week-old news, but it bears repeating—the wonderful folks at the NAR inform us that 40% of homes purchased last year were for investment or vacation purposes. That, friends, is a little something we call speculative excess. But it’s ok, says NAR: "Some of these purchases may be a third, fourth or fifth investment property, showing that housing is a good investment." Huh?
April 10, 2006 @ 11:27 AM
“These types of products
“These types of products have been enablers when it comes to allowing home prices to rise,” said Christopher Cruise, a Silver Spring-based mortgage trainer who runs classes for lenders and regulators around the country. “Without these products, homes couldn’t be purchased. If they are taken off the market, it could precipitate a disaster of epic proportions.”
Or you could say the continuation of these products could precipitate a disaster of epic proportions.
Or better yet the rise in popularity of these products will prove to be a disaster of epic proportions.
Issuing guidance on these lenders is like confronting someone on a crack cocaine binge.
April 10, 2006 @ 3:58 PM
Concerning the NAR report,
Concerning the NAR report, Lereah said that “baby boomers are favorably positioned in terms of affordability”. What does that mean? I’ll wager it means that baby boomers have a lot of on-paper equity that they can borrow out with HELOC’s and refi’s in order to make speculative 2nd home purchases. If this is what he means, that’s our old friend the circular argument, “people can afford expensive real estate because they are making so much money in real estate.” My question is, break that cycle with flat or declining prices, and how many boomers will still be “favorably positioned”?
A few days ago I spoke to a financial advisor and asked him how he would protect against a coming economic downturn caused by a collapse in housing. His answer? There’s nothing to protect against, a cooling housing market won’t cause an economic downturn because, get this!, the speculative buying of multiple properties is only occurring “on the margins”. If 40% of all purchases in 2005 is “the margins”, that’s some margin! If that dries up, and if purchases of primary residenses continues to slow, a 50% or greater decline in sales during 2006 is entirely feasible! And with exponentially growing inventory, there will be a soft landing because speculation is on the margins…. Right!!
April 10, 2006 @ 5:30 PM
Weren’t all the financial
Weren’t all the financial advisors and economists promoting tech stocks until the last day?
They don’t know too much…
April 11, 2006 @ 5:33 PM
To me car salesman, real
To me car salesman, real estate agents, and financial advisors are pretty much the same. With few exceptions, all they want is to sell you their products (cars, houses, or mutual funds,) so they can receive their commissions…
April 12, 2006 @ 7:57 AM
There are financial advisors
There are financial advisors who work on a fee basis or charge an hourly rate as opposed to a comission. This allows for a considerable amount of objectivity. Financial advisors are a lot like realtors when you consider that the only honest ones are the ones YOU take the time to question. DO YOUR HOMEWORK! you can never ask too many questions of those who will shape your financial decisions. This is your money we are talking about so go ahead and ask as many questions as possible.
So, Army, your blanket statement of “car salesman, RE agents, and FA’s being the same with few exceptions”, smacks of emotional hyperbole and wild conjecture.
However, I have found it odd that the function or “job” of a car salesman stills exists now the internet has fully empowered car buyers.
“End of line.”
April 10, 2006 @ 8:15 PM
I think the subject of
I think the subject of property taxes isn’t covered enough. All those people who recently bought homes at inflated prices are also paying inflated property taxes, due to the new assessment on the home purchase. For instance, my elderly parents live in Laguna Beach and about 2 years ago, the house next door sold for $1,400,000. The new neighbor complained to my mother last year when he received his property tax bill – for a nice, big fat $17,000. That’s quite a bill from the tax collector. No wonder there’s a lot of late tax payments in OC.
April 11, 2006 @ 1:08 AM
I agree with Picpoule.
I agree with Picpoule. Property taxes must be a real thorn in the side for the thousands of people who have bought an over-priced home. This begs me to ask the question of how to reduce the tax burden on a home that is to be inherited? Such is the case with our parents’ home that they bought for $30K back in the 70s and pay very little property taxes due to Prop 13. I think I have heard that the home should be placed in a trust and it will be exempt from taxes. Any ideas from the expert panelists?
April 11, 2006 @ 1:55 PM
It’s my understanding that a
It’s my understanding that a homeowner may pass along the existing assessment value (and corresponding property tax amount) to their offspring. I’m unaware that it must be in a trust.
April 13, 2006 @ 10:35 AM
More on property
More on property taxes:
April 12, 2006 @ 9:59 AM
Today is the April 12th. It
Today is the April 12th. It sure would be interesting
to determine what percent of all property tax bills
were paid on time.
As Rich has noted in previous postings: Some buyers
will attempt to put off the day of reckoning forever.
(ie. pay higher interest to cover initial loan costs).
Unlike mortages, property taxes require payment
of on-the-barrelhead cash money.
So I pose this question:
If a buyer does not have the self discipline to
save cash to cover initial loan costs, why would
suddenly he find religion and save enough cash
to cover property taxes? Especially when many
bills are running 10K+
April 12, 2006 @ 10:26 AM
cuz either they find
cuz either they find religion and pay the property tax or they find their house repo’ed.
the gubbamint’ will get their money one way or another. whereas banks and lenders will perform all kinds of tricks to keep someone from defaulting for as long as possible.
i must admit i am shooting from the hip here.
“End of line.”
April 12, 2006 @ 11:02 AM
The SD County Tax Assessor
The SD County Tax Assessor gives you 5 years to get current on your taxes before they repo your house.
I read an article recently about their auction, and some folks came up with the money the morning of the auction, and although they were many years late, their house was not auctioned off after all.