Will Phoenix Housing Price continue to drop? (Maricopa: mortgage, credit rating)

[barryhussein]

I've been looking at a lot of deeds in Phoenix. So many ARMs. And what they haven't been talking about on the news is that 90%+ of these ARMs are tied to LIBOR, which is sky high right now. This is only going to increase the number of foreclosures, which will reduce prices. LIBOR plus 6 is very common in Phoenix. And they are paying that on a loan amount that is more than twice the value of their home.

[Howard Roark]

This has bee the goal of a certain large political party - to force banks to give no doc loans, low down payment loans or whatever type of loan to allow low income people to move into stable neighborhoods of much higher income people who actually could afford to live there.

This happened to my parents many decades ago (1978) in a similar way by allowing section 8 housing to be built across the street from their house. Of course, that was in the form of rentals. The neighborhood changed almost overnight - drug dealings, stabbings, shootings, break dancing (pre-cursor to rap). I was 19 and learned a lot about what government housing aid is all about - it's about forcing the erosion of property values of people who saved for decades to earn their station in life. Oh and yes, there was a gang fight (hispanics) on our front lawn outside my bedroom window because of the slums that "other" political party encouraged to be built.

I don't mean to get political and I'm sorry, but it is the truth and had a big impression on me that lasted all these years. My parents were self-sufficient and very thrifty and proud, but not wealthy.

Outside my returement accounts (all stock funds), I've been investing like an old man for the last 8 years and as if the depression is coming. I think I will buy a very high quality house in 2012 or 2013 when the option ARM resets are past peak. That $70,000 house will be selling for $45,000 and you will see some houses on Lincoln Blvd selling for 40% less than today.

I welcome a return to the humble times like when my parents grew up in, where people mostly live within their means and no one pretends to have a higher net worth than what they have.

Originally Posted by NiceJohn

Who is going to buy cheap house like 70K? A house like that should be located in ghetto areas or remoted desert. For a livable house in the nice area, we should rent now. I have been searching houses to buy. Now, I have decided to rent instead of buying. I am going to sign a one year lease. Even afeter tax breaks, mortgage is still much higher than renting, and housing price is depreciating.

[steve22]

Originally Posted by Howard Roark

This has bee the goal of a certain large political party - to force banks to give no doc loans, low down payment loans or whatever type of loan to allow low income people to move into stable neighborhoods of much higher income people who actually could afford to live there.

Yes, but you see, no one wants to talk about such things as the Community Reinvestment Act, or what essentially amounted to forced deregulation of crediting and banking institutions in the '90's, which kickstarted the whole "subprime" mortgage industry, while Fannie and Freddie grew to gargantuan proportions under the policies of Clinton and Andrew Cuomo as head of the HUD. Not to mention the deliberate lack of regulation by our Democratic congress over the last few years, while certain prominent Democratic members of congress and certain presidential candidates received sweetheart deals from certain of the most culpable institutions in this fiasco.

No, it's far easier to simply blame Bush and his economic policies for all of this. Hey, we blame him for everything else, so why not? Actually, I can't wait for Obama to win the election, so he can implement his socialist economic policies and drive this country into the ground for the next decade or so with them. That way, he'll basically ensure that no one from his party will ever get elected again, which could be the best thing that could happen. Careful what you wish for, America...

[barryhussein]

Steve,
You are right on.... First the banks weren't giving enough loans to minorities; now they gave too much....well, they can't have it both ways. The Community Reinvestment Act fueled this fire.

[Kevin Beasley]

Here is something to consider. I recieved information from a big retail exec that they predict a big bottom by mid 2009 then a sharp upturn then level by 2011 NOw this company paid big bucks for this reasearch, and I know its retail and not realty, but they kinda run hand in hand. It sounds logical to me. Sub prime people should be pretty thinned out by then, and perhaps new legislation around FHA requiremnents will ease the down payment reigns a bit.

[Jewels385]

I think the pendulum of "political correctness" is slowly swinging the other way. I say slowly since it's going to take a lot more problems that force decision makers to see there are truly problems out there that re-inforce stereotypes - it's not just being predudice (pre-judging).

Europe and other countries (Australia, New Zealand, Canada) are having a lot of problems with immigrants choosing not to assimilate and demanding they get their way or they cry foul (racism). A simple google search and you will see the crime waves in Sweden and France are a result of certain immigrants moving there and carrying the problems of the culture they ran away from with them. I am beginning to see an increase in folks being honest and saying "If where you came from is so wonderful why did you move here? and if you transplant 100% your culture with you as you move somewhere else you are also transplanting 100% of the problems that made you leave your "home" also.

It is unfortunate how many more problems will need to be experienced before people across the globe have "had enough".

Back in the 60's and before (1800s - 1950s) folks were often treated different based solely on their appearance which is of course ridiculous. Today however, it's often based on behavior but the treatment and past problems are overshadowing that. As far as I'm concerned it's about behavior not looks. Do certain people act certain ways? Yes. Are there always going to be exceptions? of course. Are there good and bad folks in every culture - yes unfortunately.

As the saying goes "You can not change what you do not acknowledge". So until there is accountability in areas of what I would call "very poor behavior" just to simplify...the problems will only continue. It takes courage to criticize anyone today except caucasions.

[markas214]

Originally Posted by Kevin Beasley

Here is something to consider. I recieved information from a big retail exec that they predict a big bottom by mid 2009 then a sharp upturn then level by 2011 NOw this company paid big bucks for this reasearch, and I know its retail and not realty, but they kinda run hand in hand. It sounds logical to me. Sub prime people should be pretty thinned out by then, and perhaps new legislation around FHA requiremnents will ease the down payment reigns a bit.

Next year unemployment will be at least 25% higher. Anyone who is predicting a recovery of housing is either biased or has his head in his @ss oblivious to the meltdown of the financial market. All of the big investment banks in the US are now history. We will see a many more bank failures next year and credit will only be available to the credit worthy who have money to put down.
Houses are still $400k plus in the worst neighborhoods of LA and over 700K in SF and NYC. Wages are flat and will remain flat. Deflation is a real possibility. This is not going to be a quick and painless recession. It will last years. There is way to much excess and it is going to take time to unwind the damage done during the lat 8 years.

[ArizonaBear]

Originally Posted by steve22

Yes, but you see, no one wants to talk about such things as the Community Reinvestment Act, or what essentially amounted to forced deregulation of crediting and banking institutions in the '90's, which kickstarted the whole "subprime" mortgage industry, while Fannie and Freddie grew to gargantuan proportions under the policies of Clinton and Andrew Cuomo as head of the HUD. Not to mention the deliberate lack of regulation by our Democratic congress over the last few years, while certain prominent Democratic members of congress and certain presidential candidates received sweetheart deals from certain of the most culpable institutions in this fiasco.

No, it's far easier to simply blame Bush and his economic policies for all of this. Hey, we blame him for everything else, so why not? Actually, I can't wait for Obama to win the election, so he can implement his socialist economic policies and drive this country into the ground for the next decade or so with them. That way, he'll basically ensure that no one from his party will ever get elected again, which could be the best thing that could happen. Careful what you wish for, America...

One can blame Clinton all they want: that stated; both houses of Congress and the White House were controlled by Republicans from 2001-07 so I have to lay the failure to reel things back in on the feet of the GOP----------this coming from one very disappointed/angry Republican (myself).

[azjack]

"Wages are flat and will remain flat. Deflation is a real possibility. This is not going to be a quick and painless recession. It will last years. There is way to much excess and it is going to take time to unwind the damage done during the lat 8 years."

Yes, depressions are deflationary. The asset bubble creations go back even earlier than 2000.

[altus2006]

Originally Posted by Kevin Beasley

Here is something to consider. I recieved information from a big retail exec that they predict a big bottom by mid 2009 then a sharp upturn then level by 2011 NOw this company paid big bucks for this reasearch, and I know its retail and not realty, but they kinda run hand in hand. It sounds logical to me. Sub prime people should be pretty thinned out by then, and perhaps new legislation around FHA requiremnents will ease the down payment reigns a bit.

The research this man paid for is history now and certainly does not take into account the current financial mess of the country.

From what I have read, the "Liar Loans" are going to be even worse than the subprime loans as far as contributing to more foreclosures. These loans aren't factored into the "help" some will get from the new bailout package.

I nearly stroked out when I saw the DOW was around 8500 yesterday and am looking for a cheaper house than previously because our stocks have tanked.

I think all of the uncertainty in the market will force housing lower and will not stabilize prices next year. I just talked to a loan processor today and he said there is a Conventional loan package coming out soon that will allow buyers to only put down only 2%. FHA has for years only required 3% down and even that can be rolled into the new loan, so low down payments are already available and the down payments are not the biggest problem out there.

Renting is a viable solution for a lot of people now and they may be the smartest of us all.

I do not believe anyone who "feels" that the worst is over, no matter how great the research has been. The past two weeks have socked us all in the financial gut and the financial gurus totally missed the extent of the mess.

altus2006