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Mortgage market in collapse
- Thread starter silk
- Start date
Quote from Willleung:
Just think of those greedy so call "investors" who keep on average down or picking bottoms.
Ever ask any of your friends why they buy and sell stocks? and more importantly what's their logic? When friends talk about stocks, I would ask, what's their logic being behind their certain purchases? All I get is certain stocks is on the move, or for saving and investing.
I got to know a Mainland Chinese univesity graduate load her father's retirement funds on local Mutual Funds two weeks before the crash, for god sake she didn't even know what's a stop loss before she met me.
Last Sunday after a large family dinner, I asked one of my uncle had he "stoploss" yet? He said no, his stocks are "Investments", then I told him not to average down and he gave me THE LOOK.
People acturally think stocks rises forever. Greed will kill them all.
stop loss on long term holdings? you're getting funny looks because they are well deserved. although you and I may agree buying Shanghai is not a great place to park $$ right now (understatement?), plenty of other markets are. its an asset of diversification that serves to at least meet inflationary benchmarks. If they're not betting the house, whats so wrong w/ putting some money in it.
If they're buying hong kong shares, averaging down may not be such a bad idea. i'm salivating at what arbitrage between H and A shares is going to do to the HK market.
Quote from dandxg:
It's getting ugly. As I have mentioned before my wife works in mortgage banking for one of the largest homebuilders. Their investors for 2nd loans are disappearing right and left in the last 2 weeks. There was talk about stopping some of their programs all together because the rates they would have to charge would be considered predatory. Freakin 20% on high risk loans. :eek:
Thank god. Now finally home pricing will stabilize that dumb money is finally out of the market.
Quote from Willleung:
Just think of those greedy so call "investors" who keep on average down or picking bottoms.
Ever ask any of your friends why they buy and sell stocks? and more importantly what's their logic? When friends talk about stocks, I would ask, what's their logic being behind their certain purchases? All I get is certain stocks is on the move, or for saving and investing.
I got to know a Mainland Chinese univesity graduate load her father's retirement funds on local Mutual Funds two weeks before the crash, for god sake she didn't even know what's a stop loss before she met me.
Last Sunday after a large family dinner, I asked one of my uncle had he "stoploss" yet? He said no, his stocks are "Investments", then I told him not to average down and he gave me THE LOOK.
People acturally think stocks rises forever. Greed will kill them all.
LOL.
That is so funny.
In the first few months of 2000 I talked to my family members about stop losses. I talked to friends buying Cisco at 80+ about stop losses (that was after the split). I talked to a guy on a plane who was an investment manager for one of the three wealthiest families in NZ about the market risk for the HiTech's he was just buying for them .... and no one could hear me.
Over the next two years I was very careful not to remind anyone of those conversations ... and to play down my enjoyment of the market conditions.
Quote from flytiger:
...and with it goes home improvement, second homes, business investment, ancillary purchases. Oh well.
i'm going to assume rents go up, yes, since subprime will be forced to rent instead of buying. but your assumption, widely held, may not actually happen. Subprime poor who are priced out (and/or defaulting on existing loans) are not the ones who typically are buying 2nd homes, spending too much on home improvement (because they are already overextended) or ancillary purchases.
For many, the real foundation of this economy, (the cash rich) this may be perceived as a great entry opportunity in real estate.
seriously, i've been nothing but a housing bear this past 4 yrs (despite buying and selling throughtout 2002, 2003, and 2005 in overinflated markets) -- but my view is quickly changing. Once subprime buyers are out of the market, suddenly increasing rents and a weakening price environment for entry level forces cap rates (effective yields) up on investment properties. If it pencils out, there will be a resurgence of demand. Furthermore, 4.5% unemployment rate despite construction job losses in a 1 yr old housing bear is pretty incredible ...
Quote from kiwi_trader:
LOL.
That is so funny.
In the first few months of 2000 I talked to my family members about stop losses. I talked to friends buying Cisco at 80+ about stop losses (that was after the split). I talked to a guy on a plane who was an investment manager for one of the three wealthiest families in NZ about the market risk for the HiTech's he was just buying for them .... and no one could hear me.
Over the next two years I was very careful not to remind anyone of those conversations ... and to play down my enjoyment of the market conditions.
Sell people what they want not what they need.
Quote from scriabinop23:
i'm going to assume rents go up, yes, since subprime will be forced to rent instead of buying. but your assumption, widely held, may not actually happen. Subprime poor who are priced out (and/or defaulting on existing loans) are not the ones who typically are buying 2nd homes, spending too much on home improvement (because they are already overextended) or ancillary purchases.
For many, the real foundation of this economy, (the cash rich) this may be perceived as a great entry opportunity in real estate.
seriously, i've been nothing but a housing bear this past 4 yrs (despite buying and selling throughtout 2002, 2003, and 2005 in overinflated markets) -- but my view is quickly changing. Once subprime buyers are out of the market, suddenly increasing rents and a weakening price environment for entry level forces cap rates (effective yields) up on investment properties. If it pencils out, there will be a resurgence of demand. Furthermore, 4.5% unemployment rate despite construction job losses in a 1 yr old housing bear is pretty incredible ...
Housing should be going through the roof with %6 fixed and 4.5% unemployment. The fact that it's not spells volumes about the potential of housing recovering anytime soon.
It wasn't the low rates so much as the lending standards that drove the last boom.
Some think rates are coming down which will get housing going again. Unless they return to loose lending standards then lower rates will not do any good with prices like they are.
With normal lending standards prices will have to return to pre boom levels, around what they were in 2000.
John
Quote from scriabinop23:
i'm going to assume rents go up, yes, since subprime will be forced to rent instead of buying. but your assumption, widely held, may not actually happen. Subprime poor who are priced out (and/or defaulting on existing loans) are not the ones who typically are buying 2nd homes, spending too much on home improvement (because they are already overextended) or ancillary purchases.
what I'm talking about is the use of home equity. What you find is, with a lot of equity, people feel well off. They also use equity to do other things. i know I do. There will be a lot of shock waves by the big decline in equity.
In Florida, the developers have, and still are building in the worst locations, advertising "from the high 300's," and they are on the nastiest canals looking over crummy stretches of Dixie Hgwy. They'll fail, and dry up some liquidity. The big development "Olympia" I guess it is, can't sell and is being marked down. You're right. Cash will find an in, but not for a while, and a lot of pain will ensue.
I think Rents go down rather then up. The reason being more houses on the market to rent. New houses use to cost more then the larger apartments to rent but not anymore. You can rent relatively new houses with 3, 4 bedrooms all day long now in the Atlanta area for $1500 a month. You have to go up north to get the good deals but they are there.
The other thing driving rents down is with housing cooling off a lot of Mexicans will be going back to Mexico because they can't find as much work as before. In SoCal I would guess that close to 500k to 1 million housing units are rented by Illegals.
That's another reason why the housing slowdown has not affected unemployement so much because for the most part our houses are built my Illegals. Ghost workers. They don't show up in any of the numbers.
John
The other thing driving rents down is with housing cooling off a lot of Mexicans will be going back to Mexico because they can't find as much work as before. In SoCal I would guess that close to 500k to 1 million housing units are rented by Illegals.
That's another reason why the housing slowdown has not affected unemployement so much because for the most part our houses are built my Illegals. Ghost workers. They don't show up in any of the numbers.
John