Housing Threatened by Defaults in Sub-Prime Mortgage Market

I usually like Kudlow,,,,but his "real estate is a little soft" stance is maddening...all of CNBC is like that....its like there's a giant Elephant in the room and nobody wants to talk about it:confused:
 
The real trouble hasn't even begun yet.

All those houses being listed now aren't selling, so the owners are taking them off the market until the spring. Check reality tracker. It's happening right now. Houses will sit for 6 months, unsold, and the realtors will tell the owners to take it off the market for now.

When the spring hits, there will be the largest spike ever in listings of homes for sale - a complete flood.

With the exception of very few markets (Seattle is one example), there will be incomprehensibly large inventories of unsold homes.

Supply and demand disequilibrium will crush prices.
 
Quote from ByLoSellHi:

There is no one more credible than Robert Shiller, and he has referred to it as the "by far the biggest asset bubble in history."

The Economist magazine, also long on credibility, did a wonderful expose on it that shows how it could (and will likely) lead to massive global liquidity contraction (as the U.S. cools quickly).

But then there's Goldilock Larry Kudlow, who disagrees with both.


You decide who is more credible - Kudlow or Shiller.
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Krudlow has NO credibility whatsoever... he's nothing more than a snake-oil salesman... a shill for the media Powers.
 
Agree. Kudlow and credibility are two words that don't belong together, at least not in a positive manner.


Quote from gnome:

Krudlow has NO credibility whatsoever... he's nothing more than a snake-oil salesman... a shill for the media Powers.
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subprime delinquencies......

Again, going up.. BUT WAIT! We aren't even at the 2002 peak!

Here's an excerpt I wrote on my blog earlier:

But, that was just the tip of the iceberg. With the recent troubles in the subprime space, if major lenders had seen the iceberg coming back in 2002, they wouldn't perhaps today be feeling the pain at the +12-13 levels that this index is trading at now. Why are they feeling this pain NOW at these levels as opposed to the highs of 2002? My best estimate is that with the Fed having raised the rates to 5.25%, back in 2002, there wasn't as many ARMS (Adjustable Rate Mortgages) that were being reset to higher interest rates. Now, many of these people 5 yrs ago that took out 5Yr ARMS at historically low rate levels are having to wake up to their rates being reset at the current prime (and subprime is even higher) rates. Some people who were able to finance a 5% arm, are now seeing those rates reset at 10+%. Combine that with in 2002, when we weren't exactly finished selling the "Instant ARM in 10 minutes with no-doc", the amount of money gone into the prime and even subprime markets is what is hurting these firms now. Billions more now coming resettable, and thousands of Americans are waking up to find that their once $1000/month mortgage, which might have been comfortable to some people, a bit of a strain on others, is now $1500, $2000, $3000/a month. A person who was having a slight strain on their lifestyle at $1000 a month with a 5Yr ARM, is now paying almost 2x as much, and that is burying a ton of people alive. Combine that with a slowing housing market, people are now trapped in their homes of which they cannot sell, and they cannot afford the payments to live there. It's the perfect storm of the housing market that is finally hurling back to Earth. Yes, I think this time, the sky is falling. I expect that we're going to surpass the delinquency rates seen in 2002, and we are going to see a bloodletting in the MBS marketplace. It's not going to be pretty. Insurance for protecting against MBS pool defaults has gone up from $300,000 for $10M financed, to over $800,000 for $10M financed, and that has been since January when the contract was created!
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Attachments

Quote from TheDudeofLife:

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNoc4LFUSOKw&refer=us


"...Prince Jones Jr. paid $170,000 a year ago for a six-room Cape-style home in St. Paul, Minnesota, financing it with an adjustable 30-year mortgage.

Jones, 27, got a so-called sub-prime loan because he was a first-time buyer who is a self-employed barber, has debts and makes about $500 a week. He planned to refinance before December when his monthly payment could jump to $1,646 from $1,291, hoping a good payment record on this mortgage would secure a lower rate..."


Ok, I am not a banker or a loanshark, but a $1,600 monthly payment for 30 years for a $170,000 home seems really really high. that is almost $600,000 in payments over the term of the loan. Either these facts are incorrect, my interpretation is bad or sub prime lenders make Tony Soprano look like a great deal.
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$1291 pmt/month is very very high % of his 2400 month income.

Sounds like a mortgage broker rammed thru that quote''deal '' unquote.Most local banks have better sense about cents/dollars


Also all adjustable rate mortgages are not equal;
that one is a good deal, that is for the lender, not barber

:D
 
Quote from TheDudeofLife:

http://www.bloomberg.com/apps/news?pid=20601103&sid=aNoc4LFUSOKw&refer=us


"...Prince Jones Jr. paid $170,000 a year ago for a six-room Cape-style home in St. Paul, Minnesota, financing it with an adjustable 30-year mortgage.

Jones, 27, got a so-called sub-prime loan because he was a first-time buyer who is a self-employed barber, has debts and makes about $500 a week. He planned to refinance before December when his monthly payment could jump to $1,646 from $1,291, hoping a good payment record on this mortgage would secure a lower rate..."


Ok, I am not a banker or a loanshark, but a $1,600 monthly payment for 30 years for a $170,000 home seems really really high. that is almost $600,000 in payments over the term of the loan. Either these facts are incorrect, my interpretation is bad or sub prime lenders make Tony Soprano look like a great deal.
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tony soprano IS a good deal
 
An ad:
"Stop throwing away money on rent and start becoming a homeowner today. Poor credit welcome."

"Poor credit welcome" - this is just sad
 
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