U.S. CitiesCity-Data Forum Index
Go Back   City-Data Forum > General Forums > Real Estate
 [Register]
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.
View detailed profile (Advanced) or search
site with Google Custom Search

Search Forums  (Advanced)
 
Old 07-23-2010, 07:18 PM
 
16,807 posts, read 15,092,069 times
Reputation: 10242

Advertisements

I remember reading this / saving it in 2005/06 on my computer. Every so often I read it again :

This man knew so much . I remember reading it back then and saying " How does he know all of this is going to happen ? "

Warning signs of the housing bubble crash (part two)
Rate this post positively Reply With Quote Quick reply to this message

 
Old 07-24-2010, 11:03 AM
 
Location: Hobart, IN
157 posts, read 405,492 times
Reputation: 101
Interesting. Thanks for posting. Joyce
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-24-2010, 01:42 PM
 
Location: TX
1,096 posts, read 1,703,805 times
Reputation: 593
The domino effect of rising interest rates
The first thing that will happen in this country when interest rates go up,
Spoiler
as they eventually will, is that a huge percentage of homeowners won't be able to make the payments on their home. Their credit card payments are due, and those are higher, too (thanks to higher interest rates). Then their house payment comes due. They were paying $500 a month. Now they have to pay $1,000 a month because interest rates are 12 percent. What happens? They can't make the payment. What do they do?


I've been wondering about this, even before reading this article, and hopefully someone with more business/economics/real estate smarts than me can help me understand. Interest rates did not go up, in fact they are lower now than they've ever been. (I realize this is artificial, but that's a separate issue)

I bought a house in 2001 at 7%, refinanced in 2003 at 6%, refinanced again in 2005 for 5%. Last year I sold that house and purchased another one basically still at 5% - this year I'm refinancing at just over 4%. a friend of mine bought his house in 2000 at about 6% for 3 years with ARM after that. His interest rate has steadily dropped since his ARM kicked in 7 years ago - right now he's paying about 3.5%. Besides his ARM we have only used 30 year or less mortgages - nothing fancy.

So what exactly happened? interest rates never came remotely close to 12% as in the example in the article. The resetting of ARMs should have at least helped out some people right? What am I missing? help!
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 01:19 PM
 
Location: Barrington
60,371 posts, read 41,283,215 times
Reputation: 19477
Quote:
Originally Posted by WannaliveinGreenville View Post

I remember reading it back then and saying " How does he know all of this is going to happen ? "
Most folk get caught up in it and forget all bubbles eventually burst. If most folks don't get caught up in it, it's not a bubble.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 01:29 PM
 
Location: Las Flores, Orange County, CA
26,343 posts, read 88,426,133 times
Reputation: 17667
Why did some places like Los Angeles, Las Vegas, Florida bubble so much more than places like Denver, Houston, St.Louis?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 01:49 PM
 
Location: Barrington
60,371 posts, read 41,283,215 times
Reputation: 19477
More people want to live in areas with milder climates/winters.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 03:26 PM
 
16,807 posts, read 15,092,069 times
Reputation: 10242
Interestingly enough :

From 2004 to 2007 over $1 trillion in proceeds either from selling or refinancing went into purchasing rental or vacant homes (including vacation properties).

Without a doubt many California homeowners tapped their equity to purchase homes in Arizona and Nevada and pushed prices to absurd levels. At the height of the boom in Las Vegas 4 out of 10 home sales were investment properties.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 03:35 PM
 
Location: Las Flores, Orange County, CA
26,343 posts, read 88,426,133 times
Reputation: 17667
Quote:
Originally Posted by middle-aged mom View Post
More people want to live in areas with milder climates/winters.
Then why weren't those places disproportionately higher before the bubble? Why "all of a sudden" did everyone want to live in milder weather?
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 03:47 PM
 
Location: NW Las Vegas - Lone Mountain
15,756 posts, read 35,670,918 times
Reputation: 2661
Some truth...but not the full story.

The CA equity funded a very large portion of the NV/AZ bubble. But it was no place near 40%. It was almost exclusively new homes...and ran square into a brick wall in August of 2006 in Las Vegas. The rest of it was the rise in the new build carrying everything else with it and the inertia holding up the prices through 2007.

Note that the speculators pretty much got two turns and out leaving almost exclusively locals holding the bag. The AZ up trailed the NV by about six months.

The result of course was that anyone who bought from 2003 to 2008 was underwater by 2009 by anything from 35 to 50%. In general the number was so high that none of the programs applied.
Rate this post positively Reply With Quote Quick reply to this message
 
Old 07-25-2010, 10:24 PM
 
Location: Kingwood/Porter
262 posts, read 609,196 times
Reputation: 224
Thanks for the post Enlightening reading. As a lay person, I now understand what the whole housing crisis was about. I learned something today!!!!
Rate this post positively Reply With Quote Quick reply to this message
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.


Reply
Please update this thread with any new information or opinions. This open thread is still read by thousands of people, so we encourage all additional points of view.

Quick Reply
Message:

Over $104,000 in prizes was already given out to active posters on our forum and additional giveaways are planned!

Go Back   City-Data Forum > General Forums > Real Estate
Similar Threads

All times are GMT -6.

© 2005-2021, Advameg, Inc. · Please obey Forum Rules · Terms of Use and Privacy Policy · Bug Bounty

City-Data.com - Contact Us - Archive 1, 2, 3, 4, 5, 6, 7, 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32, 33, 34, 35, 36, 37 - Top