Buyers waiting for Sub Prime Mortgage Failures?

[Tony1790]

Originally Posted by Condorll

Think again.

Seattle has the lowest amount of Subprime mortgages in the Nation. This is one of the many reasons why home prices are holding well (flat to up year over year) even though Buyers have gone on "strike" and the "closed sales" month to month are down.

In any market, when Buyers go on strike and sellers have no urgency to sell, the Buyer pool simply increases to the point where it will become a sellers market again, probably early this Spring.

Yes I have a home for sale, not because I want to sell, I have to sell due to a job relocation to the east coast. However, my mortage is only 20% of the asking price of the home, and the home is "priced right" according to my agent. I own a fabulous, low maintenance (good condo alternative) fully detached tri level contemporary house with views, perfect for a Professional or Professional couple and only 12 minutes from downtown! I can wait for Spring, when the mad dash to buy a house starts again.

Cheers!

From a recent article in the Seattle Times:

The Seattle area is in the bottom 20 percent for subprime mortgages among 331 major metropolitan areas — far below other parts of the country, particularly parts of Texas and California's Central Valley where subprime accounts for nearly a fifth or more of all mortgages. At the top of the list was McAllen, Texas, where some 26 percent of loans are subprime.

By comparison, only 7.9 percent of all Seattle-area mortgages were subprime at the end of 2006 (ranking 278th out of 331), down from 8.7 percent the previous year.

And only a fraction of those loans were in trouble — some 7.6 percent at the end of 2006 were 60 days late or more, a sign foreclosure is looming. This put Seattle in the bottom 10 percent.

Wow,

You need to get out more, do you actually talk with real live people about what kind of mortgages they have? I do, it's my hobby. This term Sub-prime loan is such a misnomer.

Sub-prime borrowers are people with low credit who got raped by mortgage brokers and put into really, really bad loans that are almost designed to fail. With variable rate ARM's, Option ARM's, etc

Having said that many, many PRIME borrowers were talked into adjustable rate ARM's and Option ARM's to lower their house payment on the ridiculously overly priced homes in Seattle.

And many, many established homeowners were convinced to "unlock" all of that pent up equity in their homes to take that fabulous trip to Europe or buy that hummer or big screen TV.

So what we now have is a whole lot of people with very high priced homes with very little equity in them, in a generally declining price environment. Yes, Seattle proper has yet to decline significantly, but as the bubble spread outward from Seattle to the outlying area's, the implosion is already effecting home prices on the outskirts and will soon have an unpleasant adjustment on home prices in Seattle.

So, good luck with your sale, but if you truly believe that the prices are going to shoot up this spring, why I'd recommend going out and buying several homes right now just to take advantage of the "sales" that are going on right now. I'm not kidding, that's what I did, in 2005, I bought 10 homes in the greater Seattle area, and soon came to the realization that we were in a bubble area and started selling them in later 2006 and early 2007. Glad I did, as the home values that shot up 20 - 30 % in less than a year, are now back down to 2004/2005 prices. In other words, I should be able to go and purchase the same homes that I sold at a profit in less than a year, for less than I paid in 2005. Cool huh?

Take care,

Tony (currently homeless - but in a good way)

[ysabella]

I'm hardly an expert on this, but I read today that there was a burst of foreclosures in Seattle - 767 in November:

http://seattlepi.nwsource.com/business/344127_foreclosure19.html (broken link)

Real estate web site Trulia has a map showing foreclosure activity:

http://www.trulia.com/for_sale/Seatt...25689_xy/12_zm

So I think it is happening here, too.

I may be buying in the south end or somewhere in a few months, so I'm watching the market. But my waiting has more to do with my own money - it's not so easy to qualify for mortgages now, so I have to have a real down payment.

[70Ford]

Originally Posted by Tony1790

A. The Fed short rate does not have a direct impact on mortgage rates, the 10 yr bond does. Take the bond rate and add 1 to 1.5 and usually that is where you'll find the fixed mortgage rates coming out to.

B. The Fed will continue to lower rates as the credit crunch continues to impact wider segments of the economy.

C. And if the Fed did raise rates and if the mortgage rates did go up, what do you think will happen to prices?? They surely would not go up, as if a buyer qualifies for $500k at 5%, how much home could they buy at 7%, I'd say less home, thus downward price pressures.

Those were some good points.