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Real estate market collapse, no documentation loans, stated income loans, real estate market prices bottoming out over next 3-7 years, housing price adjustments
Best article I have read in some time. Doesn't deal so much about the whats and whys of how all this happened. Instead this gives you the whats and whys of the reason behind why housing prices are going to take such a LONG time to bottom out. I wonder how this next round of defaults will affect these people. I mean the Alt-A near prime and adjustable rate prime loans that are going to be resetting starting this year on through to the next 3 to 7 years.
Many sellers are still high from the last bull market, either thinking no recession could damper the value, or they think they can wait it out 3 years until the bull market returns. Whatever. Either way, move on.
Many sellers are still high from the last bull market, either thinking no recession could damper the value, or they think they can wait it out 3 years until the bull market returns. Whatever. Either way, move on.
Its the same with all the buyers that still want 100% financing at <6% rates with no points or documentation of income/assets. Some people are not willing to accept reality.
In reality, the market price on 77 percent of properties has dropped and only about 24 percent have risen or held firm, the Seattle company estimates.
Why estimate when you can use facts?
In a market like Cincinnati or Northern Kentucky where median housing prices are $131,000 and $137,000 respectively, a 6% decrease is no big deal unless you really do own the home (ie you have a lien free deed in hand).
Its the same with all the buyers that still want 100% financing at <6% rates with no points or documentation of income/assets. Some people are not willing to accept reality.
From what you have seen, are people still asking for ARMS?
Its the same with all the buyers that still want 100% financing at <6% rates with no points or documentation of income/assets. Some people are not willing to accept reality.
Totally agree. Buyers expect favorable financing AND favorable prices. Unfortunately the two don't always go hand in hand. Recently rates have inched higher... and in the most part I don't think we'll see rates < 6% for a long, long time.
A few months ago (April-June) there were favorable rates AND prices were down 20-40% in some areas. Add in the New Home Owner Tax Credit for those who bought >= April '08, and I think those people who bought in that time had a pretty good deal. Future buyers will have to tackle higher rates and wait for lower prices and increase their down (since the down payment seller's assistance is phasing out).
It's a balancing act... with prices and rates... prices could go down... but rates might get higher. It's great that you can now buy that "foreclosed" home for pennies on the dollar... but, because the owner foreclosed, banks have had to increase their rates on future owners. I only see this happening more... and rates increasing likewise.
Just playing around with a mortgage calculator and looking at the trend...
A .1% increase in rate brings the monthly up ~$20
A 10k decrease in price brings the monthly down ~$55
I bought a home near the top of the real estate market in my area. There has been a run-up of perhaps 13 to 15 % since my purchase. Some of my paper gains have already been eroded. Fortunately I don't have to sell now nor do I plan to sell in the next few year. Nonetheless, I'm nervous about the future. Since I was able to plunk down a large chunk of cash from the proceeds of the sale of my previous home at the top of the bubble in that area, my mortgage is easily affordable ( less than half of what the bank said we were qualified to borrow ). I'm not worried about foreclosure. I just don't want to see the value of my down payment eaten away. I'm not in denial about the possibility of that happening, but it's human nature not wanting that to happen. I don't think it's a bad thing not wanting to see ones assest depreciate in value, and I'm also aware that denial won't prevent that from happening.
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