Housing Rolling Along 2

http://www.voiceofsandiego.org/articles/2006/07/15/housing/976condodrop.txt
“Chris Thornberg, at the University of California, Los Angeles, said the housing market is in uncharted territory. Thornberg attributes the ‘everything’s fine’ response from the realty industry to the ‘bunker mode’ mentality that comes in circumstances like these.”

“‘People are loathe to realize losses in homes,’ Thornberg said. ‘They don’t want to talk about it, to think about it.’ Thornberg said that these numbers aren’t evidence of a soft landing. ‘The industry has been really blase,’ he said. ‘This cooling off of the market is very, very hard and very, very fast; more than we’ve seen before.’”


“While marked decreases in the median prices of single-family attached homes were noticed in all areas of San Diego in June, South County experienced the largest differential, with decreases of 11.3 percent from the same month last year, 12.6 percent from January and 7 percent from last month. That’s a year-on-year price drop of more than $40,000.”

“Those decreases are hitting home for several of Chula Vista Realtor Dawn Lewis’s clients, four of whom are what Lewis calls ’short sales.’ These are people whose initial home loans were for a higher price than their homes are currently worth. ‘They think it’s better to cut their losses now than to wait to see what happens later,’ she said.”

“Lewis said she’s even willing to take less on commission if it means finding these often desperate clients a way out.”
 
Quote from Handsome:

Is it possible that housing is just pulling back and retracing some just like a strong stock does on an upward journey?....With what seems like everyone and their brother calling for a crash and a bubble bursting, is it possible that this is just like a retracement for awhile and then back upwards again?

Any thoughts?
More...

Not likely. People usually trade up when they have more equity in their house that they can use for a down payment on a new one. That depends on ever increasing prices.

Don't think stock market. Think house of cards.
 
I listened to one of those hokey RE investing/sales shows this morning and most of the calls were in the genre of "I have an option arm and need a way out." My payment is increasing 600-1500/month. Waaahhhhh!!!

The host never seemed to have a concern that rolling them into a new NegAm arm with a 3 year lock period was an issue. Don't worry in ten years it will be worth more than today was the mantra. Huge disservice IMHO.

Lots of water cooler "investors" about to get burned not only eating NegtAm but most also were running negative cash flows.

Can't wait for the lock periods to start resetting on these loans. It's going to devastate borrowers and flood the market with even more inventory.

One of the guys I spoke with today made a fortune in residential RE and he said he's been flat or totally out of the game for about 6 months. Only property he holds is LT rentals which are free and clear. This is the type of guy that doesn't flinch to drop 500K to 1 million on an older muscle car.

That's my two cents.
 
This article goes to show...morons have good company. If they couldn’t afford 30-year fixed at 5%, how on Earth are they going to afford it at 7 or 7.5%? It has continually amazed me how people of ordinary means toss out numbers like $500,000 and $600,000 as if it’s not a lot of money to pay for an average house. You need an income of about $175-200K to legitimately afford a $600K mortgage and you have people who make a third of that buying homes in that range. This will end badly. OWP

http://www.nytimes.com/2006/07/15/b...all&adxnnlx=1152997417-YMGrP/X+uH2jCRUXuQqENQ

“The raising of interest rates on millions of adjustable rate mortgages over the next several years has all the makings of a classic horror story. As home prices appreciated from ridiculously high to unbelievably higher, more Americans began using mortgages that allowed them to buy more house for less of a monthly payment.”

“Next year, a large portion of those rates move up and homeowners who opted for the exotic mortgages could find their payments doubled.”

“With more homes on the market, prices could begin to fall. That reduces home equity and could force people whose loans change in 2008 and 2009 to consider selling, further accelerating the drop in prices.”

“Mortgage lenders, however, say they are not worried. Why? ‘It offers an opportunity,” said Brad Brunts, at Citi Mortgage, a unit of Citigroup. He, like others in the mortgage industry, sees the higher payments as a boost to the flagging mortgage refinancing business. Lenders will adjust about $500 billion in mortgages this year and $700 billion next year. Expect to find the mailbox stuffed with refinancing offers.”

“Anyone with a rate that will increase in the next few years ought to worry. If homeowners have an adjustable-rate mortgage, they can hope or pray that there is a recession severe enough for the Federal Reserve Board to lower interest rates. But they would also have to hope or pray that the recession was not so severe that they lost their jobs.”

“‘It all depends on the ability to refinance before the interest rate resets,’ said Suzanne Mistretta, senior director of Fitch Residential Mortgage, which analyzes credit risk of mortgages. ‘Most of them will get out. Hopefully, they will get out,’ she said. ‘That is the big question.’”

“Sometimes, though, homeowners may have to take more drastic steps. The lender may not be interested in refinancing a home loan when the value of the home is below the loan amount. That could happen because a homeowner took out all the equity in a previous refinancing. (Freddie Mac estimates that Americans took $556 billion out of their homes through cash-out refinancings and home equity loans since 2004.)”

“It could happen if the price of the house has fallen or if the owner has been making only the minimum payment on a payment-option loan so that the loan balance has actually grown. The best option then is probably to sell the house and scale back. Homeowners may also want to sell if they can clearly see that there is no way they can make the higher, refinanced payment.”

“In that case, it is better to act now before a few million other interest-only mortgage holders dump their homes on the market.”
 
Spin. Spin, Spin

So shittygroup isnt worried since higher rates afford them refi opps? really? the buyers went in with no DP and now values have dropped... higher payments with nequity (neg equity = underwater, blub, blub, blub!!!). gonna have to have a crew of crooked appraisers to get those loans to value out...

i talked to a resi appraiser at a seminar last week. alot of his biz is people trying to refi to takeout PMI... they need 20% equity and dont have it.... tough spot. appraiser mentioned condos too.
 
Quote from Copernicus:

http://money.cnn.com/magazines/moneymag/bplive/2006/top100/index.html

location, location, location, doubt any of these cities will take a hit.
More...

I live in city number 35 (Simi Valley, Ca). Extremely low crime, good weather, nice people, a little boring but one of the safest cities in America according to the FBI list. Took a a$$ pounding in the last downturn (1990-96), and also in the downturn before that (1979-83). Inventory right now is up over 50% in the last six months, sales have fallen by the same amount. Price reductions all over the place with no end in sight.

Another world away I have been watching a very nice house (click pictures) near number 36 (Wisconsin). Here is a link...

http://www.fsbomadison.com/details.asp?ID=8343

This guy in the last six months has reduced the price around $45k, that's significant for this price range, and still not sold.

I love the headlines for today in this paper...

http://www.boston.com/business/arti...ome_sellers_push_their_prices_down/?page=full

"Coldwell Banker Residential Brokerage, Massachusetts' largest real estate firm with more than 3,500 agents, is coaching agents on how to persuade clients to list their homes at an asking price that undercuts those of comparable ones on the market."

"Called "drama pricing" or "energy pricing", it is a drastic measure for difficult times. And it seems to run counter to the conventional strategy of selling your home for the highest price possible."

"Coldwell Banker's course "is formalizing something that's happening anyway. The effort may help push the market's inevitable evolution ``along faster and will give it impetus," she said."


lol...drama pricing....wtf!



OWP
 
``It's not a buyer's market," she said. ``It's a procrastinator's market."

LOLz.

:-)

I who would want to own a house these days ?


***EDIT: Who would want to own a liability these days ?
 
my sister lives in camarillo... i wouldnt live in simi valley - for one thing, it gets smoking hot out there. i wont even go out there when they offer me a job to do.

there is one little stretch (1/2 mile or 3/4 mile) of street between the fwy and beach in o]side, CA. the last couple weeks there have been +/- a dozen r.e. sale signs. lots of open houses over the weekend. prime beach sales time; i wouldnt be in a hurry to grab anything - even if the market doesnt deteriorate, prices will likely be lower in the winter.
 
You must log in or register to reply here.
Back
Top