Charlotte Metro Home Prices in Free Fall (It's Breathtaking!)

[MikeyKid]

Originally Posted by yantosh22

I won't end until there are some significant structural changes in the US economy that creates real jobs and not those supported by some sort of taxation. Housing follows wages or rather household income. Housing rose significantly over the last decade wages did not so there is still a long ways to go before it's done. It shouldn't be much in the speculation dept. to determine that people who don't work are not looking to buy. However it's worse than this......

There is another big time bomb called the FHA loan. There is a sweet spot being held open by the federal government in the 200K to 450k range by these now irresponsible loans. When they are finally forced to kill this program, there will be a collapse not to be believed. It hasn't happened because the politicians that can change it, are scared to death of it. However if they don't, investment will still flow into this black hole and force more people out of work. Either way, it's a whole lot of bad.

It's not really a speculation. The math behind it doesn't lie.

There's nothing wrong with HUD in general and specifically programs like FHA and VA loans... You're pointing out the issues with Freddie and Fannie messing with lending standards, packaging mortgages, mislabeling the risk, fraud, etc. Lenders like Countrywide who took it to another level. One hope that was or will be eaten by TARP... FHA has already tightened lending standards (higher FICO) and just raised MI (extra mortgage insurance that has to be paid for at least 5 years even if you do hit 80% LTV). Everyone who uses FHA pays a 1% surcharge, so that and the extra MI lets the program fund itself very well. You might point to USDA 100% programs, but even then you're talking lower maximums and very rural areas.

FHA will be lowering maximum amounts to borrow later this year and they will increase downpayment sizes at some point in the future. I agree that will have an impact... But the program is not going away. It would be silly to kill it.

[MikeyKid]

This one for yantosh...

[js1mom]

Originally Posted by anifani821

Much wisdom in this post! I was sitting back in wonderment, too . . . there was some discussion about it on the boards, as well and when I voiced my concerns and predicted a crash (based on the subprime and ALT-A loans and derivatives market) . . . I was lambasted-by all but a few people who could see it coming, too.

THe crash was inevitable to anyone who had studied the financing instruments and the derivatives market.

There were some folks who made some big bucks while the getting was good, though, lol. Just too bad it ended up spelling financial disaster for millions (homeowners as well as workforce due to job loss b/c of the crash).

But as we have been speculating . . . who knows when it is gonna end? I think we surely have gotten to nearly the bottom on prices. I would think the lowest it will go here in Charlotte would be 1998 or so levels. Surely?

To be honest, I personally don't see how we can possibly even gauge an "educated" guess at when, or what level, prices will bottom out. What happened here is rather unprecedented historically, so all of the charts and graphs in the world can't really help us much in this particular situation. Frankly, until all of the homeowners who purchased during the boom who will invariably end up foreclosing have actually foreclosed---- we can't know how far the prices will drop. And we haven't seen the last of the foreclosures by a long shot yet...

Once we do, the full impact of this fiasco will be realized by investors who bought the (criminally) bad bonds backed by these mortgages and real estate will be an even more "taboo" investment tool than it currently is. With nobody buying and nobody backing the lending-- well, I just think we can't delude ourselves into thinking we have seen the light at the end of the tunnel yet.

Really, IMO, if you can get a fantastic deal- it can't hurt to buy real estate right now if you plan to live in it yourself and will have no need of being guaranteed that you can sell it without somewhat of a potential "loss" at anytime in the foreseeable future. Or--- if you have tons of surplus funds to throw around and can get stellar deals on foreclosures in areas that have historically been real estate goldmines, ONE DAY they will possibly still make you a tidy profit when all is said and done, and maybe even a really big one WAY down the road, not to mention the rental income until you sell (though landlording is not for the faint of heart.)

Also, I believe that people throw around the "I lost/will lose x amount of dollars..." scenario a lot, but the reality is that they still need to evaluate for themselves how much of a loss a "loss" really is where owning your own home is concerned. As rents go up (which they most certainly will, because they can, unless banks get smart real quick and get into the rental business until they can unload their surplus of foreclosures...) one has to consider how much they will spend in mortgage and maintenance costs versus rents over the long term. In my opinion, if you take a $10,000, $20,000, $30,000 "loss" on a property over the course of say 5 years as opposed to having paid out $60,000- $90,000 in rents during that same time frame--- what have you really lost? Plus- you lived as you pleased, decorated as you pleased, had peace of mind that no one was going to ask you to leave or up your rent--- not to mention the tax breaks of home ownership...

Personally, I'm not afraid. Of course, I sold my house for twice what I paid to build it JUST before the bottom fell out, and I now live in a mortgage free home that I bought with those proceeds. However, if I had to apply, and actually get approved, for a loan right now--- I may be a little more concerned about my prospects.