miami inventories new high, prices keep dropping..
http://www.benengebreth.org/housingtracker/location/Florida/Miami/
http://www.benengebreth.org/housingtracker/location/Florida/Miami/
Housing Rolling Along 2
- Thread starter Covertibility
- Start date
yes, but in terms of things to do, basically fun factor.
From "Another Fu@ked Borrower" website...payment not up 7.5%, try 48%! OWP
http://anotherfuckedborrower.blogspot.com/
Thursday, December 01, 2005
Welcome to the gun-show...now show me your ARMs!
DAYUM!!! Mr. Greenspan should be a personal trainer...he has millions of home buyers working on their ARMs! Depending on what program you get on, your ARMs won't grow at all for a while...but then something happens....and BLAM they will really GROW!! I have seen people add 3" to their ARMs overnight!!
Yeah, too bad people's fascination with ARMs isn't in the fitness realm of things....it is in the financial.
Well, at least I'm here to "pump you up" with the real deal of what is going on out there...
Depending on where you are in the country, and whose numbers you use, ARMs (adjustible rate mortgages) are making up a staggering percentage of todays loan production. I have seen some statistics that say over 70% of the loans in California are ARMs...and many of those are interest only and option-ARMs (see my long post about them further down...or in the archives).
So what does this mean??? Here, I'll show you. Let's take the ever popular 2/28 loan that millions of "subprime", "alt-a", "non-conforming" borrowers have jumped into the past few years. Most of these have a 1.5% annual cap on the rate increases, and the index is usually the 6-month LIBOR plus the margin.
Let's just use a $300,000 loan amount as an example...and let's say the bwr got the loan a year or so ago when rates were "smokin".
$300,000 at 5.25% I/O 2/28 ARM
Payments for 24 months = (300,000 x .0525) / 12 = $ 1,312.50 a month
Now lets look at those payments when they adjust. Not only do the payments adjust, but you have to start paying the PRINCIPLE off as well (unless you refi/sell/foreclose). Let's say the rate jumps to 6.5% (could be higher) and NOW you have to amortize over the next 28 years because you didn't pay any principle during the 2 year I/O period.
Now, I'll compute the payment from my old-school HP 12c calculator...if you are smiling...you know what I'm talking about...you love'em or hate'em!
Payments when it adjusts = $ 1,941.05 a month
So the payment JUMPS $624.50 in one month!
NOW, let's assume that when you "qualified" for the loan, you met the 50% DTI (debt to income ratio). Now that your payment jumped 48% in one month, what kind of dent does that put into your cash flow?
But wait...what if you happened to have gone STATED to meet the 50% DTI requirement because you didn't make enough money to qualify for even the I/O payment??? Now what is your DTI??
I have no idea....because I don't know how much you lied your a@@ off to get the loan in the first place!
Well, I think you get my point. Now multiply this scenario by the tens of thousands. Sure, some will have sold, refi'd, or otherwise could have afforded the house in the first place...but is there any chance that maybe a few people cannot handle a $600 jump in their mortgage payments?!?!?!
Keep in mind...I only used a 300k loan amount. I see plenty of people doing this on loans from 500k to 900k and above.
Multiply the pain accordingly...
posted by SoCalMtgGuy at 2:40 PM
Sales have in fact dropped off, way off. No natural disaster either. Parabolic bubbles collapse under their own weight. Always. OWP
"Recurrent descent into insanity is not a wholly attractive feature of capitalism. The human cost is not negligible, nor is the economic and social effect. In the aftermath of 1929, the damage was great, and, as noted, it contributed visibly to the depression that followed."
- John Kenneth Galbraith, A Short History of Financial Euphoria
http://marinrealestatebubble.blogspot.com/
"Thursday, December 01, 2005
Marin Condo Sales for October 2005
"I previously wrote that October, 2005 condo sales dropped -50.6% from the previous month and were off -39.1% from a year ago. That's huge. So huge that I thought the original report must have had a typo or two. Well, the Marin Assessor's Office has finally updated their housing data and lo and behold there's that drop in condo sales. So it's for real. Here is the condo sales data for each of the past five Octobers:"
Quote from onewaypockets:
"I previously wrote that October, 2005 condo sales dropped -50.6% from the previous month and were off -39.1% from a year ago. That's huge. So huge that I thought the original report must have had a typo or two. Well, the Marin Assessor's Office has finally updated their housing data and lo and behold there's that drop in condo sales. So it's for real. Here is the condo sales data for each of the past five Octobers:"
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Condos are especially bad. During tops condos are expensive when compared with single family homes, yet they come with significant monthly fees that a normal house doesn't have. When the mania subsides, you can hardly give them away. The cool urban lofts in artsy areas are one thing, but alot of these condos are just crappy apartments that no one would want to buy in normal times.
Condo situation: agreed. They really only make sense in certain scenarios. I have not seen a single scenario in either the bay area or so. ca. that made sense since 1999-2000 and the these were rehabs with marginal profits.
Location and area is important but, at least in So. Ca., my feeling is that no area will be sparred from a downturn - only the severity of the move is in question. Good locations and properties will of course be spared from much of the damage but all of the marginal entries - here I am talking residential - of the last 5 years will likely be very poor exits or very long term holds.
When the bubble in hot regions burst, what would happen to mild growth regions? I don't think most people would sell their homes and relocate to cheap areas.
Yes, I lived in Atlanta for 18 years. I may move back. Atlanta is probably the best urban area to live in America with all things considered.
Only problem is race. They talk about it constantly there. I got sick of it and moved our here to San Diego to get away from it.
Seems like everyday the local media showed blacks killing each other and then talk about how it was whitey's fault.
John
I always enjoyed my business trips to atlanta but I would never move my family there precisely because of problems you mention. Even today, 40 years after the height of civil rights movement these problems are fairly severe in the atlanta area... off course you can insulate yourself in a neighborhood but venture out into the surrounding suburbs and counties and things are still pretty biased - on both sides by the way.