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This is what I've found out, so it's not really a buyer's market.
There are a heck of a lot of sellers with equity in their homes ( at least in my area) who want their price more so than getting sold. I suspect they will eventually tire and stay put, reducing the inventory of homes and allowing recovery to begin.
The walking away from mortgages I think is the BIG fear especially with all the OPTIONS resetting in 2010-2011.
This assumes massive unemployment and/or they have some place to go.
If so many revert back to or stay put in rentals, demand could exceed supply in some areas causing rents to increase which helps the market to recover.
true... but IMHO you better hope you have a solid landlord that will pay those taxes and do maintenance and repairs to HIS property.
This scares me a lot. Currently we are renting a nice house with responsible landlords, but they can always raise the rent or put the house on the market or move in when our lease ends this spring. I worry about moving into another rental if I had to- not just foreclosures and getting evicted but also having to deal with house showings since many rentals are simply unsold houses with involuntary landlords. Plus, moving is expensive!
This assumes massive unemployment and/or they have some place to go.
If so many revert back to or stay put in rentals, demand could exceed supply in some areas causing rents to increase which helps the market to recover.
No it doesn't. The reports I read reference people who bought in 2005-2006 (THE PEAK in most areas) with ARMS and little or NO money down.
Their payments are low still since they are locked into the intro rates, etc...
Well the problem is going to occur when their rates jump a LOT. When this happens they owner will have to decide to sell the house or refi. Guess what? The house can't be refi'd since it is worth $100K less than what they paid for it. So refinacing is not feasible.
Sell it then. Guess what? Can't. It is worth $100k less than what they paid for i. So selling isn't an option.
They can pay the new mortgage or go rent the same house across the street for much cheaper. So their best option is to walk away. Even the people who put down a small % will walk since they are so upside down that walking away makes the most sense EVEN if they can afford to keep the house.
Would you continue to pay on a $500k mortgage (even if you could afford it) when your house is worth $350k and losing value monthly? Most people won't.
And if you haven't looked lately unemployment is massive and growing. Expected to be in the 9-10% range by years end.
Well the problem is going to occur when their rates jump a LOT. When this happens they owner will have to decide to sell the house or refi. Guess what? The house can't be refi'd since it is worth $100K less than what they paid for it. So refinacing is not feasible..
Isn't that what the Obama money is for? Helping underwater mortgage owners refi?
Isn't that what the Obama money is for? Helping underwater mortgage owners refi?
Nope. If you are value to loan is greater than 105% then no help for you. At least that was what was initially mentioned a week or so ago...
And you still have to be able to pay for the home with the new rates. And you being able to pay must fit in some formula of income/debt ratio.
AND you have to be under Fannie Mae type backed loans.
LOTS OF IF's.... And doesn't help the underwater people unless you are close to the surface.
Nope. If you are value to loan is greater than 105% then no help for you. At least that was what was initially mentioned a week or so ago...
And you still have to be able to pay for the home with the new rates. And you being able to pay must fit in some formula of income/debt ratio.
AND you have to be under Fannie Mae type backed loans.
LOTS OF IF's.... And doesn't help the underwater people unless you are close to the surface.
Would you continue to pay on a $500k mortgage (even if you could afford it) when your house is worth $350k and losing value monthly? Most people won't.
Agreed. It will become more socially acceptable to walk away, esp. with banks & big business getting bailed out by taxpayers (only to throw lavish parties!).
This scares me a lot. Currently we are renting a nice house with responsible landlords, but they can always raise the rent or put the house on the market or move in when our lease ends this spring. I worry about moving into another rental if I had to- not just foreclosures and getting evicted but also having to deal with house showings since many rentals are simply unsold houses with involuntary landlords. Plus, moving is expensive!
I've moved twice in the last year, so I can relate. I wouldn't worry too much about rent increases; rents will go down for a couple years probably as more potential sellers decide to rent rather than sell at a deep discount. Your landlord will have the same incentive to keep renting out. Rents are down at least 5% in the last year in my area. Many landlords have a very long term view of the housing market--they think it'll come roaring back eventually, as it always has before.
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