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Trapped by the mortgage meltdown
http://money.cnn.com/2007/09/13/real_estate/mortgage_meltdown.moneymag/index.htm?postversion=2007091 ^ | 9-14-07 | Les Christie

Posted on 09/14/2007 5:37:16 AM PDT by Hydroshock

NEW YORK (Money Magazine) -- Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled. The bad news about the housing market seems never ending: Foreclosures have more than doubled over the past year.

Sales of existing homes are off 11 percent from this time last year. At that rate, it will take at least nine months to work off the inventory of unsold homes. And median home prices in July (the most recent figure available) dropped for the 12th month in a row.

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Worse yet, all that happened before problems in subprime lending expanded throughout the mortgage market and beyond, creating what's popularly being referred to as the credit crunch.

While it's too soon to see the impact reflected in the numbers, the immediate future is clear: As lenders tighten their borrowing standards, fewer people will qualify for mortgages.

Fewer qualified buyers can only mean that housing prices will slump further. Worst of all, economists don't see much chance for a turnaround until mid- 2008 and possibly into 2009.

(Excerpt) Read more at money.cnn.com ...


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1 posted on 09/14/2007 5:37:19 AM PDT by Hydroshock
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To: Hydroshock

They had a story in the paper here in S. Florida about houses and condos that had been on the market for over a year. There were hundreds and hundreds in W. Palm Beach. It’s fugly.


2 posted on 09/14/2007 5:39:21 AM PDT by Greg F (Duncan Hunter is a good man.)
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To: Hydroshock

Not only are sales down and construction down, the prices sub contractors are making now are also down to the point of pressuring wages lower and many people out of work.

We are talking about recession here. There will soon be no money available for anything because the circulation and availability of money has literally stopped.


3 posted on 09/14/2007 5:42:09 AM PDT by o_zarkman44 (No Bull in 08!)
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To: Greg F

Check out Stockton Ca. They have the booby prize of the most foreclosures per capita in the US.


4 posted on 09/14/2007 5:42:37 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: o_zarkman44

I know.


5 posted on 09/14/2007 5:43:10 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Greg F

http://globaleconomicanalysis.blogspot.com/2007/09/commercial-real-estate-abyss.html

It’s not just residential, and not just Florida.


6 posted on 09/14/2007 5:45:09 AM PDT by Blue_Ridge_Mtn_Geek
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To: Hydroshock

Well, this is what happened in the last housing recession.

I bought my beautiful little townhouse in Alexandria, VA in 1989. It went down in value for the next seven years before the prices began turning around in 1997 or so.

I remember saying to my mother, after several years of home ownership, “so, what’s all this talk about building equity?”

This, too, shall pass.


7 posted on 09/14/2007 5:45:50 AM PDT by RexBeach ("Americans never quit." Douglas MacArthur)
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To: Hydroshock

This is a little concerning for me, but also a positive sign.

We’re looking to buy our first home within the next 6-9 months. Certainly having lower, more sane prices will help.

However, we’ve had credit issues in the past, and while we’ve resolved them our “good credit” score is not where I’d like it to be. My concern is that tighter lending practices will hinder us.

But at the end of the day, I’m not overly fretting. Just saving more for a larger down-payment.


8 posted on 09/14/2007 5:46:56 AM PDT by ItsOurTimeNow (FR Member ItsOurTimeNow: Declared Anathema by the Council of Trent)
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To: Hydroshock

Does this mean that the illegals will be going home?


9 posted on 09/14/2007 5:47:49 AM PDT by 4yearlurker (Sorry Mr. BOR.)
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To: RexBeach

I for one would not buy a house unless I could afford 120% of the total monthly cost, putting 10% down on a 30 fixed note. And I buy a house to make it a home, so if it goes up, good, if not oh well I have to pay to live somewhere.


10 posted on 09/14/2007 5:48:32 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Hydroshock

I agree! I put down 22 1/2%, and never regretted that.


11 posted on 09/14/2007 5:49:59 AM PDT by RexBeach ("Americans never quit." Douglas MacArthur)
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To: 4yearlurker
Does this mean that the illegals will be going home?

No, it means they'll need to go on welfare.

12 posted on 09/14/2007 5:50:38 AM PDT by ChildOfThe60s (If you can remember the 60s........you weren't really there)
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To: ItsOurTimeNow

A little advice for someone who has seen down tight markets before. Cash is king. If you can bring a far bit of cash, say over 10% down or better yet over 20% they are more likely to be forgiving on a few nicks on your credit.


13 posted on 09/14/2007 5:50:51 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: ItsOurTimeNow

Cash.

Save up, buy a house with cash.

Swallow your pride, look for something nice yet inexpensive, and buy it outright.

Stay the he11 out of debt.

The whole “mortgage meltdown” thing is the result of people buying more than they could afford, in an area that was overpriced because everyone bought into the “I’ll pay later” BS of loans.


14 posted on 09/14/2007 5:51:19 AM PDT by ctdonath2 (The color blue tastes like the square root of 0?)
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To: 4yearlurker

Probably not. It will make housing more affordable for them.


15 posted on 09/14/2007 5:51:36 AM PDT by pilipo
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To: RexBeach
Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled.

Actually, I feel just fine. The economy seems to be doing just fine.

16 posted on 09/14/2007 5:52:10 AM PDT by ALPAPilot
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To: ChildOfThe60s

Sadly,you are probably right. *sigh*


17 posted on 09/14/2007 5:52:54 AM PDT by 4yearlurker (Sorry Mr. BOR.)
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To: Hydroshock
Worst of all, economists don't see much chance for a turnaround until mid- 2008 and possibly into 2009.

Woopdidoo. I'm concerned that the financial idiocy of others with trigger a recession, but that's life. Recession's happen. But as a homeowner, I'm not feeling rattled at all. I live in my home and intend to stay for a while. We bought at a good price. Life is good.

Prices might not turn around for two whole years? Oh the horror. Hell, two years is a blink of an eye. But hey, news writers need to fill all the blank space around the advertisments with something.

18 posted on 09/14/2007 5:54:24 AM PDT by Huck (Soylent Green is People.)
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To: ALPAPilot

I can see you haven’t been to the grocery store lately.


19 posted on 09/14/2007 5:56:24 AM PDT by Antique Gal (Build the Damn Fence !!!!)
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To: ItsOurTimeNow

A less than perfect credit score is a big excuse by lenders to ream you on higher interest rates, if you are so lucky to even find a lender. And they will nitpick the littlest item on a credit report.
No matter if you have always been on time on a mortgage or auto loan for the past 3 years. A 50.00 doctor bill not covered by insurance and misplaced by the billing company is all it takes.

Good luck.


20 posted on 09/14/2007 5:56:54 AM PDT by o_zarkman44 (No Bull in 08!)
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To: Hydroshock
Check out Stockton Ca. They have the booby prize of the most foreclosures per capita in the US.

Nearly a perfect storm of excessive optimism - a hot, unpleasant-looking Central Valley city full of gang violence and meth labs where new home developers overbuilt and thought they could con people into moving because it's "only" a two hour commute to San Francisco. And still, I'll bet most of the foreclosures there are on bent-rules sales to illegals...

I've come to the conclusion that the desire to live a semi-rural lifestyle is the root of all evil for borrowers. If you want to live in the country, live in the country. If you need to work in the city, live in the city. Living in the suburbs - especially distant suburbs - is the worst of both worlds. You overpay for all of the same noise and traffic and bad schools and youth crime you'll find in the city without any of the convenience and cultural amenities.

21 posted on 09/14/2007 5:59:08 AM PDT by Mr. Jeeves ("Wise men don't need to debate; men who need to debate are not wise." -- Tao Te Ching)
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To: Huck

My wife and I are talking about moving in a year or two, but we have a lot of equity.


22 posted on 09/14/2007 6:00:27 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: o_zarkman44; Hydroshock; Petronski

Do you two still have your leftover batteries and supplies saved up from Y2K?


23 posted on 09/14/2007 6:00:46 AM PDT by Larry Lucido (Hunter 2008)
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To: Antique Gal

http://salem-news.com/articles/july192006/food_prices_71906.php

USDA’s Economic Research Service (ERS) has recently released food expenditure statistics for 2005. They show that Americans are spending, on average, 9.9 percent of their disposable income on food.

That’s up slightly from 9.7 percent in 2004 but very consistent with figures over the past five years. The percentage dropped to single digits for the first time in recorded U.S. history in 2000.

Twenty years ago, American consumers spent 11.7 percent of their disposable income on food. Thirty years ago, that figure was 15.1 percent. Going back in history, Americans spent about 20 percent of their income on food about the time today’s baby boomers were born. In 1933, the figure was more than 25 percent.


24 posted on 09/14/2007 6:04:18 AM PDT by listenhillary (millions crippled by the war on poverty....but we won't pull out)
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To: Hydroshock

I had five employees this time last year, plus myself. right now it is self only and my income is way down to the point I am seriously considering folding. it is really discouraging.


25 posted on 09/14/2007 6:04:55 AM PDT by o_zarkman44 (No Bull in 08!)
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To: RexBeach
This, too, shall pass.

I disagree...in a sense that home ownership will continue to bring equity profits as in the past.

Speaking as a Realtor for 30 years, the prices had gone too high to sustain.

Unless they start offering 200 year amortization schedules, buyers won't qualify for mortgages...and nobody is able to save for a downpayment to meet FNMA guidelines.

And we haven't even begun to discuss the fact that today's 6.5% 30 year fixed rate is historically low and not guaranteed to be there indefinitely.

26 posted on 09/14/2007 6:07:07 AM PDT by DCPatriot ("It aint what you don't know that kills you. It's what you know that aint so" Theodore Sturgeon))
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To: Larry Lucido
Believe it or not, I do still have flashlight batteries that I haven't used and canned food and MREs. I keep thinking I ought to get rid of them as they're probably not good anymore. But I'm a pack rat.

Carolyn

27 posted on 09/14/2007 6:09:29 AM PDT by CDHart ("It's too late to work within the system and too early to shoot the b@#$%^&s."--Claire Wolfe)
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To: Hydroshock
Cash is king. If you can bring a far bit of cash, say over 10% down or better yet over 20% they are more likely to be forgiving on a few nicks on your credit.

This article is about foreclosures.

I'm living in a rather large house with acreage--A FORECLOSURE--no mortgage, no payments, just taxes and insurance.

So, instead of fear stories on the eeeeeeeeevil America, go out and take advantage of the opportunities I sacrificed for you to have.

28 posted on 09/14/2007 6:10:32 AM PDT by BlabItGrabIt
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To: ctdonath2
I would never pay cash for a home. The tax advantage of carrying a mortgage is too attractive for that.

If I had enough cash to buy a home outright, I'd make the smallest down payment I'd need to avoid having to buy mortgage insurance (I believe it's 20%), then spread the rest of the cash in a diversified group of investments that can be liquidated relatively easily if necessary.

29 posted on 09/14/2007 6:11:21 AM PDT by Alberta's Child (I'm out on the outskirts of nowhere . . . with ghosts on my trail, chasing me there.)
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To: listenhillary
How can you bring facts to the thread? Don’t you know we’re dooooomed?
30 posted on 09/14/2007 6:15:36 AM PDT by Toddsterpatriot (Ignorance of the laws of economics is no excuse.)
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To: RexBeach

Rex, I bought my house in 1991, not far away from Alexandria. Even if it loses three quarters of its value, if I sold it I’d still make a killing relative to what I could have made in the stock market or any other investment instrument over those years.


31 posted on 09/14/2007 6:17:25 AM PDT by Fairview ( Everybody is somebody else's weirdo.)
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To: 4yearlurker

Partly, this means that many illegals have already left. they were living somewhere, and those properties are now empty. The ones who were cramming 10 people in one house and the like were pushing housing prices up beyond what normal families could afford by pooling their resources. There are only a few stories about this and many more to be written.


32 posted on 09/14/2007 6:19:39 AM PDT by ClaireSolt (Have you have gotten mixed up in a mish-masher?)
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To: Hydroshock
Funny, after 9/11 and DFW suffered from so many American Airlines employees being fired, nobody on the coasts bitched about our housing market. I had a house on the market for almost 18 months and nobody offered me a bailout. Every time I lowered my house, another neighbor that worked for AA got their papers and under priced me. But where were the liberal medial talking about liquidity problems and me. Now DFW is doing well and the over priced house are suffering. Oh, and most of that over priced housing is in LIBERAL AREAS -- SOUND the ALARMS!!! LIBERALS are being effected. it is now officially a crisis!!!!!!!

What a load of bull crap this entire sub-prime market talk is!

33 posted on 09/14/2007 6:21:43 AM PDT by pikachu (Be alert -- we need more lerts!)
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To: Alberta's Child

For the first time in my life I own my home and car. No payments. It is a wonderfully secure feeling.


34 posted on 09/14/2007 6:25:48 AM PDT by ClaireSolt (Have you have gotten mixed up in a mish-masher?)
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To: o_zarkman44; Toddsterpatriot; 1rudeboy
"There will soon be no money available for anything because the circulation and availability of money has literally stopped."

Tell me about it. I tried to pay for gas earlier this week and they no longer accepted credit cards. I had to give the guy my last 10 head of cattle.

35 posted on 09/14/2007 6:26:34 AM PDT by Sam's Army
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To: Hydroshock

Still waiting for sellers to FINALLY start dropping prices in Central New Jersey. Prices have plateued, but not fallen.


36 posted on 09/14/2007 6:28:25 AM PDT by Clemenza (Rudy Giuliani, like Pesto and Seattle, belongs in the scrap heap of '90s Culture)
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To: DCPatriot

Well, you’re in the biz and you know your stuff.

But prices, I think, will come down further and that should help. Yep, prices are stil mighty high, but the marketplace ought to take care of that. It always has.

BTW, according to Bankrate.com the APR on a 30-year conventional mortgage is a 6.15%. Pretty good number there.

Thanks for the post!


37 posted on 09/14/2007 6:29:12 AM PDT by RexBeach ("Americans never quit." Douglas MacArthur)
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To: Sam's Army
I had to give the guy my last 10 head of cattle.

I had to use all my gold.

38 posted on 09/14/2007 6:30:14 AM PDT by Toddsterpatriot (Ignorance of the laws of economics is no excuse.)
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To: Clemenza

Many sellers have so little or no equity they can not drop the price unless they want to bring a check to closing.


39 posted on 09/14/2007 6:30:27 AM PDT by Hydroshock ("The Constitution should be taken like mountain whiskey -- undiluted and untaxed." - Sam Ervin)
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To: Alberta's Child
The tax advantage of carrying a mortgage is too attractive for that.

The great fallacy of mortgages: the "tax advantage".

Put simply, you're throwing away $7 to save $3.

Get a $100,000 mortgage.
On top of principal, you'll pay somewhere around $100,000 in interest - money that doesn't actually get you anything.
The mortgage deduction means you don't pay income tax on that extra $100,000, saving you maybe $30,000.
Upshot: you just threw away $70,000 so you wouldn't have to throw away $30,000.

Yeah, that's smart. You just turned $100,000 into $30,000 and got zippo for it.

Better to take that $100,000, pay the $30,000 tax, invest the $70,000 at 10%, and come out somewhere well over $150,000.

(The exact numbers probably vary, but you get the idea. I hope.)

40 posted on 09/14/2007 6:32:10 AM PDT by ctdonath2 (The color blue tastes like the square root of 0?)
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To: o_zarkman44

Try telling that to the vultures here hoping for a housing plunge.

It DOES affect ALL OF US. Things don’t happen in a vaccuum.


41 posted on 09/14/2007 6:33:16 AM PDT by RockinRight (Moderation in temper is always a virtue; but moderation in principle is always a vice. -Thomas Paine)
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To: Fairview

Good to know!

As for the stock markets, it all depends how you were invested over that time.

You know, with houses, you really have to take out insurance and taxes and such, and minor repairs made over time to keep up the property, to get a real idea of your profit or likely profit.

I’m sure you enjoy your home! I do, too!


42 posted on 09/14/2007 6:33:21 AM PDT by RexBeach ("Americans never quit." Douglas MacArthur)
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To: ClaireSolt

A huge part of the demand was speculative buying of houses. In some markets in California, I’d heard that 60% of the buying was purely speculative buyers looking to flip houses for a quick profit. 60% of the demand gone. Poof!

While it will hurt many, returning to sane housing prices a good thing. Many will benefit being able to buy houses they can afford.


43 posted on 09/14/2007 6:34:09 AM PDT by listenhillary (millions crippled by the war on poverty....but we won't pull out)
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To: ctdonath2

Yes but you’re forgetting that it’s not that simple. You’re failing to realize that you have to have a place to live. If you either pay the mortgage or pay the rent on something, you ARE better off in your exact scenario to pay a mortgage than rent.


44 posted on 09/14/2007 6:34:21 AM PDT by RockinRight (Moderation in temper is always a virtue; but moderation in principle is always a vice. -Thomas Paine)
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To: ctdonath2

You also forget that the $100,000 cash that could have been used for the home purchase instead is also sitting there earning money, putting you ahead.


45 posted on 09/14/2007 6:35:05 AM PDT by RockinRight (Moderation in temper is always a virtue; but moderation in principle is always a vice. -Thomas Paine)
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To: RockinRight

Vultures = first time home buyers?


46 posted on 09/14/2007 6:36:13 AM PDT by listenhillary (millions crippled by the war on poverty....but we won't pull out)
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To: Fairview

Good to know!

As for the stock markets, it all depends how you were invested over that time.

You know, with houses, you really have to take out insurance and taxes and such, and minor repairs made over time to keep up the property, to get a real idea of your profit or likely profit.

I’m sure you enjoy your home! I do, too!


47 posted on 09/14/2007 6:36:42 AM PDT by RexBeach ("Americans never quit." Douglas MacArthur)
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To: ItsOurTimeNow

All good till you find out you don’t have a job due to the recession lower prices could cause!

Seriously, good luck to you. Although as someone who works in the lending business...my income is directly affected by lowering prices...and while lower priced homes are easier to buy I also make less money when that happens...so it’s a negative for me.


48 posted on 09/14/2007 6:37:08 AM PDT by RockinRight (Moderation in temper is always a virtue; but moderation in principle is always a vice. -Thomas Paine)
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To: Hydroshock
Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled.

I'm 8 years into a 30 year fixed and plan to stay in the house another 10-15 years. Even now, it's worth over 50% more than I paid for it, and I've not taken a nickel of equity out of it.

Yeah, I'm rattled for sure ... NOT!!

49 posted on 09/14/2007 6:37:22 AM PDT by TheRightGuy (ERROR CODE 018974523: Random Tagline Compiler Failure)
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To: RexBeach

Why 22 1/2? Is there a significance to that number?


50 posted on 09/14/2007 6:37:44 AM PDT by RockinRight (Moderation in temper is always a virtue; but moderation in principle is always a vice. -Thomas Paine)
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