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

[ArizonaBear]

Originally Posted by altus2006

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

And circumstances may be proving you to be correct: I swore we were near the bottom of the depreciation cycle------------after the events of the last few weeks-----------I am now worried.

[joninaz]

It's a very interesting time.

I never watch the local TV news because they thrive on creating drama. And I'm actually in the news industry (developing online news). The local TV segments will make anyone want to cower inside, as it seems like mayhem out there.

Meanwhile, everyone is rushing to report the latest doom and gloom news. Keep in mind that the average reporter has little understanding of business news. Also, the worst industry right now is traditional media. Just this week we lost half the reporters in town when the Tribune papers began closing shop... a process that began several years back.

Meanwhile, the overwhelming majority of folks in my average neighborhood are going to work, shopping, etc. Of 400 houses, maybe 15 are for sale. I'm not sure if this high or low. The price points seem to be lower than a year or two back, but all things are cyclical. And somehow a chunk of neighbors bought their places in 1962-ish, when they were $12,000.

They paid them off a long time ago. Some could have sold them for $400,000 just a year or two ago. Even if they sold now, at 300K, they'd make a great profit. But for whatever reason they are happy to stay put.

So I have to wonder... how much of the bad news is hype? How many stories keep things in context with the overall market? From my experience, they'll find the worst case scenario and do a story on them, implying we're all in the same boat.

[Ponderosa]

Originally Posted by joninaz

It's a very interesting time.

I never watch the local TV news because they thrive on creating drama. And I'm actually in the news industry (developing online news). The local TV segments will make anyone want to cower inside, as it seems like mayhem out there.

Meanwhile, everyone is rushing to report the latest doom and gloom news. Keep in mind that the average reporter has little understanding of business news. Also, the worst industry right now is traditional media. Just this week we lost half the reporters in town when the Tribune papers began closing shop... a process that began several years back.

Meanwhile, the overwhelming majority of folks in my average neighborhood are going to work, shopping, etc. Of 400 houses, maybe 15 are for sale. I'm not sure if this high or low. The price points seem to be lower than a year or two back, but all things are cyclical. And somehow a chunk of neighbors bought their places in 1962-ish, when they were $12,000.

They paid them off a long time ago. Some could have sold them for $400,000 just a year or two ago. Even if they sold now, at 300K, they'd make a great profit. But for whatever reason they are happy to stay put.

So I have to wonder... how much of the bad news is hype? How many stories keep things in context with the overall market? From my experience, they'll find the worst case scenario and do a story on them, implying we're all in the same boat.

Good points! This is the first business down cycle in which we have the internet and round-the-clock cable to fan the fires of fear. We've got talking heads and "internet MBAs" and housing bloggers feeding us their version of how events will unfold and predictions of deepening gloom like never before. I don't totally buy into the McCain line that the economy is "fundamentally sound". On the other hand, it is hard to conceive that defaults on a very small percentage of homes in Florida, Arizona, California and Nevada have brought the world's economy to its knees. I think a lot of the problem is irrational pessimism fueled by the "media".

[azjack]

"On the other hand, it is hard to conceive that defaults on a very small percentage of homes in Florida, Arizona, California and Nevada have brought the world's economy to its knees."

At what point are loan defaults not "a very small percentage?" I am just curious because I remember seeing that kind of spin on CNBC and from people like Cavuto on Fox when the figure was around 1% of mortgages, and continued as that figure rose. So, is 5 % or 10% of all house loans more than teeny, tiny? We are at a 30-days late rate of 6.41% nationally, and it is almost certainly higher in Arizona.

"Still, subprime-loan performance points to problems ahead: 18.7% of subprime loans were paid at least 30 days late in the second quarter, up from 14.8% the year before. The number delinquent by 90 days increased for all types of loans."

And since Arizona usually ranks number 2 (or at least top 5) in the percentage of subprime loans, those increasing default rates mean that much more. I was tracking Maricopa Co./Pinal Co. foreclosures earlier this year, and every month set a new record. I doubt that has slowed. Wait, a quick google news search reveals Week of foreclosure notices sets record .

Maybe if Neil Cavuto and Maria Bartiromo hold hands and click their heels together, we can overcome the "irrational" pessimism that some find so troubling.

[altus2006]

Originally Posted by azjack

At what point are loan defaults not "a very small percentage?" I am just curious because I remember seeing that kind of spin on CNBC and from people like Cavuto on Fox when the figure was around 1% of mortgages, and continued as that figure rose. So, is 5 % or 10% of all house loans more than teeny, tiny? We are at a 30-days late rate of 6.41% nationally, and it is almost certainly higher in Arizona.

"Still, subprime-loan performance points to problems ahead: 18.7% of subprime loans were paid at least 30 days late in the second quarter, up from 14.8% the year before. The number delinquent by 90 days increased for all types of loans."

And since Arizona usually ranks number 2 (or at least top 5) in the percentage of subprime loans, those increasing default rates mean that much more. I was tracking Maricopa Co./Pinal Co. foreclosures earlier this year, and every month set a new record. I doubt that has slowed. Wait, a quick google news search reveals Week of foreclosure notices sets record .

Maybe if Neil Cavuto and Maria Bartiromo hold hands and click their heels together, we can overcome the "irrational" pessimism that some find so troubling.

Don't forget to figure in the fact that many of us have lost almost half of our savings with the stock debacle and I don't foresee good things happening there for years either.

altus2006

[NiceJohn]

Media helped inflate the economic bubbles. Also, media blow off the bubbles.

Phoenix housing will go down, who can guess the percentages? We will check your answer five years later.

[Ponderosa]

Originally Posted by altus2006

Don't forget to figure in the fact that many of us have lost almost half of our savings with the stock debacle and I don't foresee good things happening there for years either.

altus2006

Cruel irony! Many people would have been better off had they taken their savings this time last year and bought a foreclosure property (or two or three). While worrying over a possible loss of a few percentage points on a distressed and underpriced foreclosure, they have now lost 50% of their saving in the 401k account; they may find that that stellar credit rating they have is still not good enough in today's mortgage market, and they will have to pony up 20% or more of their reduced cash to buy a home now rather than the 2-3% they would have needed a year ago. It is not lost on me that the economic deterioration is going to further knock down demand and prices, but frankly, it is a lot better looking at this sorry financial landscape from the window of my own home than it would be from a rental where I am living out of suitcases and boxes while longing to have my own place. When I get angry about it I can kick a hole in the wall without losing my deposit. The moral of all this is that if you want to be a homeowner, be one, and quit trying to be an investor.

[twiggy]

Originally Posted by Ponderosa

Cruel irony! Many people would have been better off had they taken their savings this time last year and bought a foreclosure property (or two or three). While worrying over a possible loss of a few percentage points on a distressed and underpriced foreclosure, they have now lost 50% of their saving in the 401k account; they may find that that stellar credit rating they have is still not good enough in today's mortgage market, and they will have to pony up 20% or more of their reduced cash to buy a home now rather than the 2-3% they would have needed a year ago. It is not lost on me that the economic deterioration is going to further knock down demand and prices, but frankly, it is a lot better looking at this sorry financial landscape from the window of my own home than it would be from a rental where I am living out of suitcases and boxes while longing to have my own place. When I get angry about it I can kick a hole in the wall without losing my deposit. The moral of all this is that if you want to be a homeowner, be one, and quit trying to be an investor.

So how many holes do you have in your wall? XD

[ArizonaBear]

Originally Posted by Ponderosa

Cruel irony! Many people would have been better off had they taken their savings this time last year and bought a foreclosure property (or two or three). While worrying over a possible loss of a few percentage points on a distressed and underpriced foreclosure, they have now lost 50% of their saving in the 401k account; they may find that that stellar credit rating they have is still not good enough in today's mortgage market, and they will have to pony up 20% or more of their reduced cash to buy a home now rather than the 2-3% they would have needed a year ago. It is not lost on me that the economic deterioration is going to further knock down demand and prices, but frankly, it is a lot better looking at this sorry financial landscape from the window of my own home than it would be from a rental where I am living out of suitcases and boxes while longing to have my own place. When I get angry about it I can kick a hole in the wall without losing my deposit. The moral of all this is that if you want to be a homeowner, be one, and quit trying to be an investor.

To run with your ball further: this is going to infuriate many people but I am saying it anyway.

The cold reality is we have way too many people living (or trying to) off of investments, retirement, investments, disability, etc. and we are not even discussing minor age children still in school------------all dependent upon a vastly diminished work force compared to even 20 years ago. A birthrate of 2.1 children per woman (replacement level) and declining is shrinking the supply of worker bees even more and more-----------look at Europe and Japan.

Face it guys: the financial 'house of cards' just collapsed and when it is said and done: aside from the truly elderly, etc.------------most of us will have to keep working, even of only 1-2 days a week.

The party is over.

[twiggy]

Originally Posted by ArizonaBear

To run with your ball further: this is going to infuriate many people but I am saying it anyway.

The cold reality is we have way too many people living (or trying to) off of investments, retirement, investments, disability, etc. and we are not even discussing minor age children still in school------------all dependent upon a vastly diminished work force compared to even 20 years ago. A birthrate of 2.1 children per woman (replacement level) and declining is shrinking the supply of worker bees even more and more-----------look at Europe and Japan.

Face it guys: the financial 'house of cards' just collapsed and when it is said and done: aside from the truly elderly, etc.------------most of us will have to keep working, even of only 1-2 days a week.

The party is over.

Totally agree bear! I live much different now then I was. Gambling with your college funds, or retirement is not going to pay off. We should keep these investments out of the stock market for good.
Quakers anyone? Sort of looking wise to me now! And I'm not kidding.

Oh, and I take back my statement about the bail out helping or preventing home price decline, looks like I was wrong!!! Another one bit the dust this week on my street. Its the first time we have had real haunted broken down houses on our street. (foreclosures with broken windows, green pools, uncared for lawns, etc.) The kids get to run by them on halloween night and get a fright!

So sad, this one had renters in it that had no idea it was going to foreclose until the police came to the door. They had their stuff all over the street, they were so pissed! I felt so bad, everyone watch what you rent right now!!!