Palisades Homes...CANT SELL, very frustrated. Hard community to sell anything! (Hickory: HOA, insurance)
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But you have to be honest. Everyone knew interest rates could go up, but who REALLY ever thought they would see values fall in the way they have back 10-5 years ago. Really. Flatten?? sure... Fall?? I think if we are honest, you would say it wasn't a thought.
I can't speak to what may have been going on in Charlotte, but in California, a place I bought in 2002 for 250, was selling for close to 370 in 2007 and is selling for 150 today. That's absolutey unheard of. If home prices didn't fall in this way, folks with those ARMS would have been refi'ing as they assumed. And don't even get my started on how an ARM loan goes up from 5 to 7% even though interest rates are still available at the low 5% -- if the property could appraise. Had banks not refused to work with folks and lower their increased rates when this crisis started, flooding the market with thousands of short sales and forelosures, a lot of this mess could have been avoided.
JMO. Interesting discussion.
Quote:
Originally Posted by CouponJack
Here's the problem. 95% of people didn't ask their mortgage broker "what if rates go UP?" Many wanted to hop on the train that Govco, and anyone in the real estate business was promoting back then (ie NAR, NAHB, etc) (you better BUY now so you can cash in on annual double digit increases...)
I agree about how many in the mortgage industry are no better than snake oil salesmen. I have friends who work as loan officers and the fees they collect are rediculous...half a percent here and there add up BIG TIME. But if you can get them from an ignorant public, go at it......Higher commissions for higher fees and exotic loans (ie Liar loans, etc) Don't mean to single them out but they come to my head first....LOL
Your statement is quite wrong. You may not realize it, but when I bought, back in 02, differnces in payment b/w the arm and the ballon and the fixed were about 75.00. I had a 200k loan. My place as 250K, I put 50k down. My lowest payment would have been 1186(ARM) my highest was 1260. Not much of a difference. ....
But you were buying a house that you could afford and did it in a reasonable manner by putting down 20%. It does not sound as if you were looking to get into something risky. These are not the people who are in trouble.
Keep in mind, they were making ARM loans with 0% down and 0% equity being paid back with a huge balloon in 5-7 years. In addition, these loans were heavy discounted on the front end with large rate adjustments towards the back end to make up for it. This allowed people to afford the home that you or someone worked hard to get into without having the means to actually afford the place.
The rationale for this financial insanity, made by buyers is that it is OK to buy a place they can't afford because there will be more insane people behind them to pay even more for it. So in the near term they plan to sell that house at big profit before the negative affects of the ARM kick in. Of course this is nothing more than a pyramid scheme that apparently a great deal of the nation from buyers, developers, contractors, bankers real estate brokers, etc etc etc all jumped onto. Nobody stopped to think what happens when it starts to unravel. Now we know.
To be fair, The Palisades is not "in the middle of nowhere" with "no restaurants or retail around it" (quoting from OP). It is in a developing area and within 4 miles there is a shopping center with a SuperTarget, Home Depot, Best Buy, Old Navy, CVS, as well as several restaurants. Directly across the street is Harris Teeter, BiLo, Blockbuster, Five Guys, two nail salons, two hair places, two chinese places, a brand new Exxon station, two pizza places and Hickory Tavern. Oh, I forgot the new CMC Steele Creek just across 160 from Rivergate (the SuperTarget shopping center), not to mention dentists, insurance agents, family doctors and other offices in the different plazas.
OP, I'm sorry you are in such a tough situation. Being a realtor, I'm surprised you did not have more insight into what was coming. In 2005 there were places in the country where the bubble had already burst. Regardless of the market, it is never a good idea to gamble your money in an ARM or any other shady financing. You are always at the mercy of an interest rate, whether you think it will go up or down. Also being a realtor, you should have known that buying into a new community is always a gamble as well. Stop trashing your neighborhood on the internet - it will only hurt your chance and your neighbor's chances to sell.
The market started showing signs of a break down 10 years ago. People were seeing the big increase in values up till then and figured that they could buy one and in 5 years sell for a profit or build alot of equity...You could up till then but slowly homes being built were overpriced for true value and people were stuck. It has got worse and worse until the mess right now. People took a bad gamble and it didnt pay off.
But you were buying a house that you could afford and did it in a reasonable manner by putting down 20%. It does not sound as if you were looking to get into something risky. These are not the people who are in trouble.
Again, you are so wrong. I know a LOT of people who have lost who were making smart moves as well. Another example. My parents lives in a very well established middle class area. Out their immediate 8 neighbors, 4 bought in the last 7 years. 2 of those families put 6 figures down on their home. 3 of those homes have been lost. 1 is in the process owner trying to do a SS. 2 lost to f/c. The 2 that put down 6 figures were the ones lost to f/c. So far, the only homes not impacted are those where there owners have been there a minimum of 15 years.
AGain, Charlotte may be different. I don't really know, haven't been here long enough. I just point out the opposite side because there really is a train of thought that runs along the lines that certain buyers were "dumb" or a bad risk or bought more than they could afford. I think a little more empathy is due to a large number of folks.
The market started showing signs of a break down 10 years ago. People were seeing the big increase in values up till then and figured that they could buy one and in 5 years sell for a profit or build alot of equity...You could up till then but slowly homes being built were overpriced for true value and people were stuck. It has got worse and worse until the mess right now. People took a bad gamble and it didnt pay off.
I can find homes that sold new in 1999 and today they arent worth much more than what they sold for in 1999. What does that tell you? The market is flooded with homes made as cheap as possible and now after 10 years they are falling apart.This is just one factor that has helped bust the bubble on inflated prices and a market driven by hype. I know a guy that bought for 350k 3 years ago . Today the market says its worth no more than 260.
I can find homes that sold new in 1999 and today they arent worth much more than what they sold for in 1999. What does that tell you? The market is flooded with homes made as cheap as possible and now after 10 years they are falling apart.
I don't know that tells you, but it certainly doesn't tell me that the market started falling apart in 1999.
It also doesn't tell me that they were cheaply made(although that's probably true) or that they are falling apart.
Again, you are so wrong. I know a LOT of people who have lost who were making smart moves as well. Another example. My parents lives in a very well established middle class area. Out their immediate 8 neighbors, 4 bought in the last 7 years. 2 of those families put 6 figures down on their home. 3 of those homes have been lost. 1 is in the process owner trying to do a SS. 2 lost to f/c. The 2 that put down 6 figures were the ones lost to f/c. So far, the only homes not impacted are those where there owners have been there a minimum of 15 years.
Sir you must not have read my post because this has nothing to do with what I posted in that quote. You keep using a few personnel anecdotes to make general statements about the market and calling people wrong and incorrect because of it. This is where you are making your error. Just because your "uncle joe" had a bad experience, doesn't make it a general proof this is what is happening to everyone. Nobody has said that house prices won't go down. In fact if you read my post you would have concluded they have to go down. This has nothing to do with a person's ability to pay the loan they originally committed to.
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