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Old 10-03-2011, 10:15 PM
 
Location: NY,NY
2,896 posts, read 9,791,306 times
Reputation: 2074

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Quote:
Originally Posted by Kefir King View Post
All properties will sell at a proper price.

When owners, banks, mortgage companies, etc, FACE this fact, the market will settle matters.

There is a buyer for every distressed property...if the price is right. Banks don't want to face this reality PRICE! They would prefer their old appraisals...by somebody's brother-in-law.

So we get this dragged out agony. "Ohhh, it's WORTH $400K but nobody will pay more than $200KSo we CANNOT SELL".... complete IDIOCY!

Perhaps the banks are looking for another bailout so they can continue to make believe they were high rollers...in a game that finally took a look at reality!
You finally said something I can respect. Pleasantly surprised at your insight.
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Old 10-03-2011, 10:22 PM
 
Location: NY,NY
2,896 posts, read 9,791,306 times
Reputation: 2074
Quote:
Originally Posted by bluedog2 View Post
At this point being under water is not necessarily because of a "sketchy loan". There are people under water who bought their houses in 2005 and put up 30% and 40 % downpayments and who have impeccable credit and high incomes.Unfortunately for them their houses are now only worth about 1/2 of what they paid.
Quite correct.

The OP is a bit confused. 'Underwater simply means that the present market value of a home has fallen below the face value of the underlying mortgage.

Consequently, if the homeowner were to sell at market value, the proceeds from the saale would not be enough to payoff the mortgage.

Being 'underwater' has nothing to do with 'sketchy' loans, and all to do with buyers ppurchasing at the top of the market; and/or purchased at 'artificially' inflated prices FAR exceeding the 'real' and/or 'true' value.

Of course, this begs the questions, to what degree were prices artificially inflated, are present prices still inflated (artificially maintained), and what then is the 'true value'?

Quite complicated to answer, but if it is understood that prices were driven up by incredible 'demand', and that the demand was fueled by the (artificial) availability of money, that is easy obtainable loans (in other words 'free money'), then all one need do is look back to the market point/price immediately prior to the 'free money' era.

Lets say that the 'free money' period lasted 10 years, with NYC prices rising 85% in a matter of months during a point near the top of the market, and the market top occuring 2008/2009, then 'true value' is the market price of 1998/1999 or therebouts.

At minimum, 'true value' is 'top market value' less (minimally) the 85% run up which occurred in less than a year (I think that occurred in 2007, I can' recall the precise year).

By any logic or reason, 'true value' has to be even less. 85% plus the increase from that point (2007) to the 'top of the market (2008/2009).

Quote:
You might join them soon because it is predicted that the national "under water" rate could easily go to 50% in a few more years.
This is what *should* occur if/when the government stops artificially supporting prices.

Just a quick segeway (spelling?), this is just one factor which the ignorant public dosn't get. Without the so-called 'bank bailout', Banks w/h been under extreme pressure to put the 'bad paper' underlying these mortgages, which they continue to hold, either to the market, in which case, the bad paper w/h been written down to 'real value' AND foreclosures w/h ocurred with extreme force.

As it is, the banks are sitting on the bad paper and NOT foreclosing on the properties underlyed by the bad paper. The foreclosures, to date, does not represent even 5% of the underwater mortgages.

There is a LOT more to this and even greater consequences, but the same idiots 'occupying wall street' resenting the bank bailout are too ignorant to comprehend or even imagine the consequences of not bailing out the banks.

The reality is that 'the banks' had NO CASH, and all their 'Capital' was LOCKED in the value of the 'bad paper', which everyone knew was worth a good deal less than face value. So, not only were the banks out of cash, but their Capital base has been greatly eroded.

Without the cash infusion, banks w/h been forced to find cash (recall during the period, bank heads hopping the globe, the saudis, the chinese, the russians, seeking investors with cash) by liquidating assets and dealing with the consequences. The 'Occupiers' don't realize that a host of people would lose. A number far exceeding the present unemployed and the consequent social issues. Without the bailout unemployment and the consequences w/b at a minimum of fivefold greater.

Yet, the idiots, march and protest to have their economic throats cut!

****

Anyway, back on topic,

I don't know the specific numbers re Cobble Hill, but logic and reason dictates it to be relatively true. Just consider the average 'present value' against 'top of the market value', then the number of purchases completed at or near 'top market value'.

That is the number representing the largest portion of those underwater in NYC. It hasn't become a 'media' issue yet, as NYC has been hit the least with unemployment and income erosion/deflation. Unlike FL and CA, where prices have not fallen to such a degree compeling people to walk away or short sell.

Also, most significantly, people, at present, continue to have the income to make their mortgage payments on mortgages which are only slightly underwater. As well as, people still have ***confidence*** in the market.

Of course, it is just a matter of time, when the above reverses itself. Soon, I believe. Especially so if the 'occupiers' get their way and 'wall street' is prevented from *profiting*. This would lead to lowered profits, layoffs, lowered bonuses, and a lowered economic outlook---meanong lowered 'confidence'; and, I'm just talking about NYC and the region.

Such a scenario, which is already in motion, will be the deathknell for NYC realestate!

Wall Street’s troubles--Charles Gasparino - NYPOST.com
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Old 10-04-2011, 06:29 AM
 
4,502 posts, read 13,446,261 times
Reputation: 4098
To put it simply: Housing prices skyrocketed 10 or so years ago because interest rates fell. Houses that were previously selling for $150-$175K were going for $500K or better. People who never should have applied for home loans were getting loans. They were getting "no credit check/no income check" loans and were being handed 100s of 1000s of dollars to buy homes they could never, not on their best day, afford. After that? They were taking out second mtgs, refi-ing. They were living high on the hog and had nothing to back up any of it. Need more money? Take a loan out of the house. Ridiculous.

Now that the "housing bubble burst" and people aren't having credit thrown at them, they can no longer afford anything and they're all in foreclosure. It's not just in Cobble Hill or Carol Gardens and neither location is an "anomolie" as the OP believes. It's happening EVERYWHERE.
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Old 10-04-2011, 09:09 AM
 
Location: Manhattan
25,364 posts, read 36,934,766 times
Reputation: 12760
And the only reason it was made possible was because the banks made ridiculously optimistic appraisals of these houses' future value. If you move into a home that is "GUARANTTED" to double in value in 5 years, a homeowner CANNOT lose and the bank MUST make money.

The banks misguessed and came to the taxpayer with huge silver cups that were promptly filled with gold.

Blaming ANYTHING on those seeking mortgages is like blaming a person for being beaten to death by thugs.
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Old 10-04-2011, 09:27 AM
 
8,743 posts, read 18,337,360 times
Reputation: 4168
That was an interesting choice of words..."optimistic" appraisals. The real word is fraudulent...the banks conspired with appraisers to keep the money flowing no matter what...subsequently inflating prices, increasing loans and fees, and playing hot potato until the music stopped...except WE were left with the aftermath while the banks got bailed out.
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Old 10-04-2011, 09:54 AM
 
4,502 posts, read 13,446,261 times
Reputation: 4098
Quote:
Originally Posted by Kefir King View Post
And the only reason it was made possible was because the banks made ridiculously optimistic appraisals of these houses' future value. If you move into a home that is "GUARANTTED" to double in value in 5 years, a homeowner CANNOT lose and the bank MUST make money.

The banks misguessed and came to the taxpayer with huge silver cups that were promptly filled with gold.

Blaming ANYTHING on those seeking mortgages is like blaming a person for being beaten to death by thugs.

I agree with everything except the highlighted part.

I KNOW I cannot afford to purchase/upkeep a home. I even looked into condos and know it's just not possible for me. Sure, I can probably get a loan but why would I???? Am I stupid enough to believe the home is going to "double in value" in 5 years???? Who would believe something like that?????? Back then, I could have easily gotten a home loan (or 2 or 3!!) but knew better. I'm no financial expert but I was telling people this is NOT going to last; 10 years from now, people are going to be crying over this. Common sense. It couldn't have lasted.

The people who took out the loans have no one to blame but themselves. No one. The bank didn't chase them down forcing them to take any loans. "Brokers" didn't come knocking on their apartment door harassing them until they took a loan. No, they knew how simple it was to get a loan and they went and applied for one. They chose a house and asked the bank to give them a 100% or 125% loan for it --- remember all those signs? "YOU CAN BUY THIS HOME WITH NO MONEY DOWN, NO CREDIT CHECK, NO INCOME CHECK". Are you kidding me????????? What kind of FOOL would fall for something like this???? Gee, I work at McDonald's, my wife works at KFC but we can afford a mortgage, insurance, taxes, ConEd, etc etc etc...... Duh. Idiots. Plain and simple. Take responsibility for your own stupid decisions.
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Old 10-05-2011, 07:38 AM
 
Location: Manhattan
25,364 posts, read 36,934,766 times
Reputation: 12760
A bluedog says "sketchy loans" is only half or less of the picture. When real estate values fall, even sound loans get buried.
To throw a wrench into the works of the best planned loan, have the breadwinner lose his 6 figure job, or have a one-industry town lose that industry.


Why one area and not another? Probably those areas developed at the top of a bubble will see dramatically worse results percentage wise because EVERYONE bought in at the high price so the risk of underwaterness becomes magnified over older more stable neighborhoods.

That's why recent new mega-developments in Nevada, Arizona, Florida, the Poconos are all suffering so badly. They were built in the go-go years.


Can I presume Carroll Gardens and Red Hook have more recent housing developments than the rest of the City? I'm not well versed on them. But heck, 20% underwater sounds pretty good when compared to much of the rest of the nation.
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