Housing doom and gloom - ENOUGH already !!

Quote from balda:

look at my post on page 7

house was purchased for 699 in September 2005 now offered for 489
How many buyers lined up for 30% discount?
5-6% my ass
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Maybe that is a foreclosure, maybe there are circumstances that makes them sell for a loss. That is not how real estate markets are valued though.

You still have not answered my question? How would you finance your purchase? Do you have 10% down + 3% closing costs? If not that house means nothing to you, go back to renting your one bedroom closet.
 
Quote from ByLoSellHi:

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.
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That's exactly my point. A handful will still qualify but with 10% down and A credit. The lending community is not letting borderline cases assume debt obligations that will result in defaults. That happens during tight credit markets and that also drags them down for sometime, till credit is made available.
 
Until the last 5-7 years a buyer always had to put cash down of 5%, 15% had PMI insurance, which was a 80% loan to value..


This was on a 3BR/2BA single family free standing house on a lot of 50' x 100'. Loan was fixed rate for 30 years....

There were millions of homes sold under these conditions....


So the assumption that no homes will ever be sold again unless it is on "nothing down, ARM mortgage" is just silly....

Congress berated real estate professionals for a little thing that was called "red lining".....areas of a city where lenders would not loan money for housing....made it illegal...

Now we know why lenders didn't want to lend to these people...

I saw a statistic that reported that only ONE% (1%) of all outstanding mortgages were in default......

Everbody is bitching about putting down some cash to purchase real estate.....to buy 1000 shares of GOOG you got to have $250,000 deposited with your broker.....

The country is going back to where home ownership was meant to be...a long term illiquid home that you paid off over the years...

Not "swing trading" houses......

SteveD
 
Quote from SteveD:

Until the last 5-7 years a buyer always had to put cash down of 5%, 15% had PMI insurance, which was a 80% loan to value..


This was on a 3BR/2BA single family free standing house on a lot of 50' x 100'. Loan was fixed rate for 30 years....

There were millions of homes sold under these conditions....


So the assumption that no homes will ever be sold again unless it is on "nothing down, ARM mortgage" is just silly....

Congress berated real estate professionals for a little thing that was called "red lining".....areas of a city where lenders would not loan money for housing....made it illegal...

Now we know why lenders didn't want to lend to these people...

I saw a statistic that reported that only ONE% (1%) of all outstanding mortgages were in default......

Everbody is bitching about putting down some cash to purchase real estate.....to buy 1000 shares of GOOG you got to have $250,000 deposited with your broker.....

The country is going back to where home ownership was meant to be...a long term illiquid home that you paid off over the years...

Not "swing trading" houses......

SteveD
More...

And, given that the housing market sustained the U.S. economy via consumer spending and job creation for the last 7 years, the fact that there will be just over 700k new homes sold in 2008 versus 2.1 million new homes sold in 2005, bodes very poorly for the economy going forward.

The robust housing market of recent years past hid the adverse structural changes to the U.S. economy in terms of quality job creation (or lack thereof) and real wage growth (or lack thereof).

As someone said earlier in this very thread, now that the housing market is in free fall, the jig is up.
 
Quote from day7793:

Maybe that is a foreclosure, maybe there are circumstances that makes them sell for a loss. That is not how real estate markets are valued though.

You still have not answered my question? How would you finance your purchase? Do you have 10% down + 3% closing costs? If not that house means nothing to you, go back to renting your one bedroom closet.
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I do not understand you. Are you saying that people that are not home owner are bankrupt and current home owners are well off?

by the way I purchased my house in June 1997 put 25% down and my monthly payment was almost 8K. Today my house worth more and I pay less but that doesn't cloud my mind because I could afford it 10 years ago and I can afford it today.
 
The only type of mortgage that should be allowed to exist are 30 year fixed rate mortgages, plus you must be able to put at least 20% down. If that was the case, homes would be alot cheaper than they are now, and there wouldn't be that many foreclosures happening as there are right now.
 
Quote from Vinny1:

The only type of mortgage that should be allowed to exist are 30 year fixed rate mortgages, plus you must be able to put at least 20% down. If that was the case, homes would be alot cheaper than they are now, and there wouldn't be that many foreclosures happening as there are right now.
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If you did that, where would the rest live? Heck, as it is, the government has to give all kinds of tax incentives just to lead those who can afford it to buy extra houses to rent out for those that don't.

No, the government knows its better if we have more homes available than the scenario you outlined. And it worked well for many years until recently. There is a concession between the two extremes somewhere, and the government and the financial community need to find it. And those financial institutions that best understand how to offset the risks with the reward will do well.

SM
 
Quote from Smart Money:

"... the government has to give all kinds of tax incentives just to lead those who can afford it to buy extra houses to rent out for those that don't.

"... it [NINJA loans, financed with ARMs] worked well for many years until recently.... ...financial institutions that best understand how to offset the risks with the reward will do well.

SM
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1. People who cannot afford to buy a house, don't "have" to live in one. That's what apartments are for.

2. "it worked well for many years"... was ALWAYS bad idea and high risk.... a Fed-induced, money-pump, RE Bubble phenomenon... Lots of things appear to "work well at first", but fall apart at the first difficulty.

3. Right. 20% down, income qualified to service the loan. (Where have I heard that before?)
 
Quote from ByLoSellHi:

And, given that the housing market sustained the U.S. economy via consumer spending and job creation for the last 7 years, the fact that there will be just over 700k new homes sold in 2008 versus 2.1 million new homes sold in 2005, bodes very poorly for the economy going forward.

The robust housing market of recent years past hid the adverse structural changes to the U.S. economy in terms of quality job creation (or lack thereof) and real wage growth (or lack thereof).

As someone said earlier in this very thread, now that the housing market is in free fall, the jig is up.
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As they say, a little knowledge is a dangerous thing. Either that or you don't understand simple math.

That certainly appears to be the case with the above comment. Don't worry, you are not alone- the human brain has trouble scaling large numbers.

If 2.1mm homes were sold in 05 at an average price of 217,000 ( that's the 06 number by the way), then the total value of the new homes market was just under 456 billion. The total value of the us economy was 15 trillion. That means new home sales account for a fraction over 3% of US output/gdp. Even if no new homes were sold, it's hardly catastrophic.

As already reported here and elsewhere, less than 50% of US homes are mortgaged. Of those that are, less than 1% are in foreclosure. If prices fall another 30% from here, it ain't a major problem, honestly. Painful yes, but not enough for a great depression ya de ya etc etc etc
 
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