Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Yeah, but that is something we can probably survive. Notice how low car prices have held for the past 5 years?
The crisis that is staring us down is debt that won't go away: student loan debt. If Dems take the White House, look for a TARP-like bill coming to a student near you.
Yes we are at historic lows. And we are not seeing the feeding frenzy we had before the top of the market. But healthy? I can't agree with that one as healthy interest rates would collapse the economy and with that there wouldn't be any buyers for the houses.
LOL, OK So I will change it to read that we have people buying and we have people selling. Maybe not a totally healthy market as I have no idea where interest rates should be or where they are heading and how that will change the game.
The housing bubble is localized to specific areas, not national. Areas in CA, TX, Seattle.. These are areas that are now up over their 2007 highs. Plenty of areas in the North East are still only 5-8% off their lows. Our house sold as new construction in 2003 for $350k it sold in 2007 for $520k and we bought it last year needing nothing for $400k.. hasn't even kept up with inflation since 2003, hardly bubble territory.
Lending has also changed. You're not gonna find the ever popular 80/15/5 loans and people have wised up to ARM loans that seem cheap now but could catch up with you later. You still have the FHA loans, but I imagine they have strict qualifiers.
Yeah, but that is something we can probably survive. Notice how low car prices have held for the past 5 years?
The crisis that is staring us down is debt that won't go away: student loan debt. If Dems take the White House, look for a TARP-like bill coming to a student near you.
That would be a good thing. Student debt is like leukemia on the economy.
I'd LOVE to buy a home in Sacramento for 150k that's in good shape! Most of your doom and gloom predictions about the stock market make me giddy too since I spend 90-95% of my after tax income on investing/saving! It's better than shopping at the thrift store.
During the last "crash" , IIRC what we saw was a big decline in the areas where giant luxury homes were built in remote areas. Places like the Phoenix exurbs and South Florida, where homebuilding pretty much IS the economy.
The desirable urban areas, with strong economies, barely measured a blip in their housing prices. Where I live, Charleston, SC, it was almost as if there was no crash at all. Living in Wilmington, NC at the time, it was only the beachfront houses that took a beating. And it only lasted until the bailouts enriched the bankers, and they started coming south and buying all the best real estate to rent out.
I expect Sacramento, SF, etc., will be just like that. Even if demand bottoms out, there's no compelling reason for homeowners to start unloading houses at very cheap levels.
It's all about affordability.
Underwriting guidelines by FNMA are normally used to underwrite loans and dictate debt to income ratios.
When the basic plug and pay numbers don't match up, and creative financing is done to hide debt to income ratios like it was in the pre 2008 housing markets, the process starts to lean towards a bubble.
If something happens to the Real Estate market and house prices go down, the loans become underwater as more is owned on the house then the house is worth.
People then have no vested interest in the property and say screw it because they can rent cheaper.
A bubble only serves the banks as they are dealing with other people's money and can then repo the house and sell it again or like the last time, let the government take them and sell them to the hedge funds for pennies on the dollar who then turn them into rental properties. It kind of makes one think that the purpose is to go to a economic model where citizens don't own anything but rent or lease for their entire lifespan so that a small percentage of people don't have to do physical work but get incomes for perpetuity because that are land barons
You can tell by looking at the Real Estate prices in your area and tell if the normal family living in that area can afford to buy or will be stretched to make their monthly payments.
If only a small percentage can make their monthly bills, we're in a housing bubble.
Debt To Income ratio
The DTI ratio consists of two components:
total monthly obligations, which includes the qualifying payment for the subject mortgage loan and other long-term and significant short-term monthly debts (see Calculating Total Monthly Obligation below); and
total monthly income of all borrowers, to the extent the income is used to qualify for the mortgage (see Chapter B3–3, Income Assessment).
For manually underwritten loans, Fannie Mae’s maximum total DTI ratio is 36% of the borrower’s stable monthly income. The maximum can be exceeded up to 45% if the borrower meets the credit score and reserve requirements reflected in the Eligibility Matrix.
The housing bubble is localized to specific areas, not national. Areas in CA, TX, Seattle.. These are areas that are now up over their 2007 highs. Plenty of areas in the North East are still only 5-8% off their lows. Our house sold as new construction in 2003 for $350k it sold in 2007 for $520k and we bought it last year needing nothing for $400k.. hasn't even kept up with inflation since 2003, hardly bubble territory.
Lending has also changed. You're not gonna find the ever popular 80/15/5 loans and people have wised up to ARM loans that seem cheap now but could catch up with you later. You still have the FHA loans, but I imagine they have strict qualifiers.
Localized overpricing can have national implications. Oh no prices are falling!!! No new loans here. Defaults are up no new loans. A bubble isn't done popping until the prices fall below there starting point. Think 1980's prices. Some places have done that.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
