[macguy]

Originally Posted by firemed

there’s a huge credit bubble out there right now’ with about $2 trillion worth of adjustable-rate mortgages that will have to be adjusted to current market rates in the next two years. That could trigger a wave of foreclosures as people have to give up houses they no longer can afford, Its not over yet,I think its just starting. But thats just me.

Those loans are going to have to be re done. What good does it do the bank to foreclosure on houses when they have a willing person to make the payments as long as they are affordable. The lenders are between a rock and a hard place the same as the home owners. The lenders better hope people don't just walk on them. It is not like they have all kinds of equity to gain, many houses may not be worth what they have owed on them.

[Shores9]

Originally Posted by firemed

there’s a huge credit bubble out there right now’ with about $2 trillion worth of adjustable-rate mortgages that will have to be adjusted to current market rates in the next two years. That could trigger a wave of foreclosures as people have to give up houses they no longer can afford, Its not over yet,I think its just starting. But thats just me.

I can see your concern regarding credit, however every time I hear in conversation or read a post on the amount of outstanding ARM’s as it relates to a credit bubble the numbers seem to increase. For the longest time it was 1 trillion in ARM’s now its 2 trillion.

Could you please provide your source for this number.

Also are you making a blanket statement that any arm is a credit bubble problem? Arms make perfect sense for many people and it seems that you are suggesting anything other than a fixed rate and term is a credit problem

Also to this conversation I included a stat on refinances being up 41% I believe (as do many industry analysts) that many of these refi’s are people moving from higher rate and higher risk loans to more conventional financing while rates are still low.

[firemed]

The Herald Tribune reports from Florida. “Sarasota-Bradenton home sellers are cutting prices so aggressively that the median sales price was 18 percent lower this November than last, the biggest drop in the state. The median sales price for Sarasota-Bradenton fell from $343,600 in November 2005 to $281,900 last month.”

“After asking $549,000 for their Venice home starting in June, Cindy Gerber said she and her husband did a discount MLS listing of their own at $397,000. They really needed to sell, since they have purchased an English Tudor near Johnson City, Tenn.”

“‘We needed to move on, and we said, ‘The only way to do it is to take a loss and go,’ she said.”

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[firemed]

Originally Posted by Shores9

I can see your concern regarding credit, however every time I hear in conversation or read a post on the amount of outstanding ARM’s as it relates to a credit bubble the numbers seem to increase. For the longest time it was 1 trillion in ARM’s now its 2 trillion.

Could you please provide your source for this number.

Also are you making a blanket statement that any arm is a credit bubble problem? Arms make perfect sense for many people and it seems that you are suggesting anything other than a fixed rate and term is a credit problem

Also to this conversation I included a stat on refinances being up 41% I believe (as do many industry analysts) that many of these refi’s are people moving from higher rate and higher risk loans to more conventional financing while rates are still low.

Fort Myers News Press is the source.

[Shores9]

Originally Posted by firemed

The Herald Tribune reports from Florida. “Sarasota-Bradenton home sellers are cutting prices so aggressively that the median sales price was 18 percent lower this November than last, the biggest drop in the state. The median sales price for Sarasota-Bradenton fell from $343,600 in November 2005 to $281,900 last month.”

“After asking $549,000 for their Venice home starting in June, Cindy Gerber said she and her husband did a discount MLS listing of their own at $397,000. They really needed to sell, since they have purchased an English Tudor near Johnson City, Tenn.”

“‘We needed to move on, and we said, ‘The only way to do it is to take a loss and go,’ she said.”

“The Charlotte County market has so frustrated Dave Bonham that he moved his family to Idaho. He has been trying to sell his house since August 2005, and so far all he has to show for it are four price reductions and one failed deal. ‘We just had a little bit of poor timing there,’ said Bonham. He got it appraised for $285,000 and listed it for $279,000. Two expired listings and an attempted auction later, his price is $219,000.”

“‘Nothing has really changed as far as people moving here,’ said Bonham. ‘The difference, is where each buyer had three houses to choose from, suddenly each buyer has 30 houses to choose from.’”

The Miami Herald. “South Florida home sellers dropped prices last month to combat a buyer’s market that has taken firm hold of the real estate industry this year. ‘If you look at the skyline, a lot of those buildings have not been finished,’ real estate analyst Jack Winston said. ‘We know 70 to 80 percent of those buyers were speculators. They’re going to have to face the music.’”

This is exactly what I was trying to avoid when I said

Originally Posted by Shores9

Aside from the “in my neighborhood” examples and the “Lot and Lots” vague kind of answers which no one considers valid are there any of you who care to explain why you think the housing market is headed for a big bust.

Just because some 2 bit paper prints an article about the trials and tribulations of a particular homeowner it does not mean that the real estate world is falling apart. Let’s stick to statistics and not local Aunt Betty and Uncle Jim stories.

So is this why you feel the housing market is going bust???

[Shores9]

Originally Posted by firemed

Fort Myers News Press is the source.

I've just finished searching their site and could not find anything on the subject. If you have a direct link please forward it.

However if you Google the subject you will find numbers ranging from 1 trillion to 3 trillion dollars. This may help clear up the issue;

Approximately $1.1 trillion to $1.5 trillion of ARMs will be eligible to reset next year Around $600 billion to $700 billion of those loans will likely require refinancing into various loan products including fixed rate loans while $500 billion to $800 billion will reset

Source: "Mortgage Bankers Association Report

Remember the refi rate is as stated earlier up 41%

[Nomoresubways]

Can I add something here? Isn't the resetting of ARMs really only an issue once the rates go up higher? Right now, rates are still very historically low. And, from what I've heard (I have no statistics to back this up), rates may dip down a bit more next year. So where's the catastrophe in ARMs resetting? Sure, maybe in 2 years, but I don't see the issue right now.

[Shores9]

Originally Posted by Nomoresubways

Can I add something here? Isn't the resetting of ARMs really only an issue once the rates go up higher? Right now, rates are still very historically low. And, from what I've heard (I have no statistics to back this up), rates may dip down a bit more next year. So where's the catastrophe in ARMs resetting? Sure, maybe in 2 years, but I don't see the issue right now.

Your absolutely right. Most arms are indexed against the One year Treasury or the 11th district cost of Funds Index.

Under normal circumstances the average borrower in an ARM product will not see any significant change in their interest rate/P&I payment for as far as we currently can foresee. In fact as you point out and many fail to realize it is possible for their rate/payment to go down. Chances for that increase greatly if the Fed starts to lower rates as many [economists] are now suggesting will happen in 2007

However, there are some…. who have opted for financing with an initial teaser rate that will in fact jump higher adding significantly to the piti payment. Problem is the numbers that most media sources report don’t break out these high risk arm/option arm type loans in relation to the overall ARM market. Lets face it it’s much more scintillating to report that trillions of dollars of mortgages are at risk.

Fact is even though these types of risky loans were more prevalent in the last year or so (really 2005) they only represent a small percentage of the overall arm market

[tallrick]

There's a standoff going on in south Florida, so prices should edge up and down several times before people realize they are way ahead of incomes. When the next hurricane hits insurance will go up yet again. Next year's energy price spikes will push inflation ever higher. Sooner or later the foreigners will tire of financing stupid US debt and demand higher interest or go somewhere else. I hate the fact that savings accounts don't even pay 2% it's better to just put your money under a mattress! The bottom hasn't fallen out yet, that's a future event to look forward to!

[SunshineState]

[December 28, 2006]
Home sales hotter, just not here(St. Petersburg Times (FL) (KRT) Via Thomson Dialog NewsEdge) Dec. 28--Maybe it was balmy weather up North, maybe it was lower interest rates, but the country as a whole experienced a mini spike in new home sales in November.Pity poor Florida: The Sunshine State, and most of the South for that matter, didn't enjoy the rebound.

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