Also, credit will now be given to those with good rating. The buyers of RE tomorrow will be low risk of default. Buyers of tomorrow in general will not default in mass numbers like recently, therefore giving banks money by interst paid on morgage, and giving banks credible debt to sell. And the mess of shady loans, no questions asked loans, and liars loans will become a thing of the past. But takes time to clean out.
Housing doom and gloom - ENOUGH already !!
- Thread starter Joab
- Start date
Everything has been inflated in the last 4 years. Our dollar dropped significantly. I think that regardless of what sparked "the bubble", the value of the dollar eroded so much that the bubbly prices are almost justified. Sort of like if there was a run on the price of gold because someone tried to corner the market on it, and before it could collapse, the dollar collapsed, essentially justifying a new higher value.
If it weren't for the foreclosure pain, folks talking about the eroded dollar and advocating investment in gold would also be advocating investing in real estate....its a real asset.
SM
True that. And to add to that, what is interesting is that the speculators/investors/flippers fall into two categories. Those who invested in empty or being constructed houses and those who invested in occupied houses.
The problem isn't the investors who bought houses which have occupants. They are just part of an ordinary market.
The problem are the houses that are being built now (mostly condos), or were recently built on speculation, or as part of a contract where the buyer walked away. The only way for someone to move into those houses is for them to vacate another one somewhere else. They are extra supply in the market that wouldn't be there under ordinary circumstances. These houses need population growth to fill up. Until that happens, the demand for new houses will be pretty low due to the cost of materials.
This is why the builders are getting their ass handed to them, but it is also why you can only view the new housing construction figures loosely as a barometer of the market's health because it is like amplified many times beyond the resale market. I mean, just because Toll brothers says they are cutting production by 50% doesn't mean that demand for all houses dropped that much.
The good thing is that most of these tend to be clustered into isolated areas. Miami, for example.
SM
Ok, so oversupply of new construction is another factor to waht brings RE price down. Then, being USD is weak, and we have oversupply of new construction, it looks like foreigners investing in US real estate is one channel to stop stagnation.
Sorry, but the 'population growth' theory kicking in to save the housing market has been debunked.
There is a languishing inventory or record-high levels of new homes - literally.
There is also a massive, mushrooming number of used (oh, sorry realtors - 'existing') homes on the market.
No more liar loan, no doc loans, interest only loans, $0 down loans - that was 82% of California, Florida, Arizona and Nevada's mortgage market.
Prognosis negative.
There is a languishing inventory or record-high levels of new homes - literally.
There is also a massive, mushrooming number of used (oh, sorry realtors - 'existing') homes on the market.
No more liar loan, no doc loans, interest only loans, $0 down loans - that was 82% of California, Florida, Arizona and Nevada's mortgage market.
Prognosis negative.
Murray Ruggiero
Sponsor
Problem is you can't sell them for a profit , when prices are falling banks don't want to loan the money for them, because they are afraid of losing if the home goes back into foreclosure.
Thanks for your insightful comments.
The fact is by lowering rates feds also lower adjustable mortgages, home equity lines of credit etc. That helps to adjust the monthly payment lower as all adjustable mortgages are doing now. That forestalls foreclosures.
Secondly the impact on long term rates comes via bond yields that have been dropping since Feds action that in turn lowers new 30 year and 15 year Fannie Mae and Fredi Mac mortgages.
Mortgage rates are the lowest at this time but credit is only available to buyers with 10% down and good credit and some FHA loans. Whatever it helps the real estate markets and stimulates real estate in general.
The Feds are on a rate cutting binge, they dont stop till they meet their objectives of stimulating growth and real estate. They are a tough bunch when they get it right.
Just see another 1/2 point doozie coming your way in second week of March 2008. That should get the housing market going this Summer..
Told you hard to get financing. You cannot get a loan without 10% down +closing costs, with good credit, no bankruptcies, foreclosures, and repos, on your credit report. What good its to you if those prices reflect 2005?
In my opinion Sept 2005 in Sherman Oaks, Tarzana and the San Fernando Valley area was the peak of real estate prices. You can see that data everywhere. So the prices have not gone down more than 5-6% any ways since than.
How many people does anyone here think can qualify for good old fashioned, 20% down, 30 or 15 year fixed rate mortgages?
I'm talking cash down (as in saved), W2's to prove current wages, and a respectable credit history.
Answer: Not many. Especially not many who don't already own a home.
I'm talking cash down (as in saved), W2's to prove current wages, and a respectable credit history.
Answer: Not many. Especially not many who don't already own a home.