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Whats this other silly stuff about front and back end ratios and debt to income? They keep telling me that I can't get a mortgage if it exceeds 28% of my gross income and 36% of my gross income with ALL my debts combined!!!
Great post, PD517! I got a good laugh out of it this morning. You summed up the stupidity very well!
Rate of decline looks pretty solid in NY metro with the index ticking down close to 3 points (previously each downtick was more like 1-2 pts).
I just ran the numbers in the spreadsheet downloaded from S&P's website, and it looks like this decline is a record (as were the previous 3)
Exactly. For NY metro, the decline is a record for Feb 2009. This market just begins to pick up speed falling.
New Jersey Real Estate Report
" NY Metro Area Aggregate Year over Year Changes
Feb 08 -6.69%
Mar 08 -7.48%
Apr 08 -7.98%
May 08 -7.74%
Jun 08-7.04%
Jul 08 -7.04%
Aug 08-6.61%
Sep 08 -7.13%
Oct 08 -7.71%
Nov 08 -8.71%
Dec 08 -9.15%
Jan 09 -9.70%
Feb 09 -10.15%
Unlike the broader market, which showed a slowing pace of price declines in February, the NY Metro Area saw price declines continue to accelerate to the fastest pace yet this cycle."
I know that the health of the overall economy is inextricably linked to the health of the housing market, so I cheer the good news because I want our country to be strong again.
the super-bears are comprised of two groups: renters who wish they could own a home; and the general malcontents who just love any variety of bad news, but since housing is the topic du jour, they've co-opted it as their own. (same people who complain about property taxes, traffic, tolls, etc., but do nothing about it)
which group are you in ?
Funny that you said this. However a housing market that hasn't been fully corrected is far from a HEALTHY housing market.
all i know is yet another house in my town, 7 yrs old, mcmansion, just came on the market for a price lower than originally purchased for when built....so, to do the math for you...a price lower than year 2002.
a bottle of milk cost $5
you borrow $100, you buy 20 bottles
inflation sets in, a bottle of milk cost $10
you return the $100, the lender can only buy 10 bottles of milk now.
So even though you returned $100, you really only returned him $50 due to inflation. Basically in simplest terms, if inflation increases faster than the interest you are paying you win.
Of course in the housing market nothing is that simple, lets assume hyperinflation sets in, of course now the house prices should increase right? but wait if hyperinflation is here, the feds will be guarenteed to increase the interest rates, so now all of the sudden the rate is gapping up, which is very bad for the real estate market. So what does this all mean? i have no clue and will leave the guessing to the so-called economist.
All i know is from the practical sense, the NJ/NY metro prices are not affordable as i showed earlier with real numbers. Also i have been gettnig constant emails from different agents on some of the properties i looked at, all of them are price reductions. A 400k 1br just went to 350k, a 320k just went to 300k, etc... That tells me we are not there yet.
Inflation is good for debtors for the same reason that it's bad for creditors.
If you're a creditor, you receive X dollars in the future.
If you're a debtor, you pay X dollars in the future.
Inflation reduces the present value of X dollars.
In some sense, an inflationary policy is a kind of across-the-board debt forgiveness -- because if inflation is high enough, those future cash flows aren't worth anything any more.
This is why China gets cranky about inflationary policy from the US -- it's tantamount to default (e.g. they're effective forgiving their own debt obligations)
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