Posted on 10/31/2005 11:28:13 AM PST by ex-Texan
Already, some regions of California have suffered 15% price declines. Is this economist aware of these facts? I am suggesting that he well aware of the bubble and is softening the blow for his employers. What is going to happen to all those new real estate related jobs across the nation? (Real estate accounts for 45% of all the jobs created in the past two years). Nada por nada.
But what do I know, anyway. After all, I'm just a geezer living the Sheeples Republic of Oregon.
The lumber restrictions aren't helping either.
"We are looking at probably a 10 to 15 percent drop in home prices" if the proposals become reality.
Lets see, the price is up 50% over three years since I bought, and we are looking at a 15% drop? OK
Mike
In southern california construction has not kept up with demand. I am seeing multiple offers on properties under 450,000. Tell me again what's making the market go down.
q: How can you tell a realtor is lying?
a: Their lips are moving.
None of them will ever admit that prices are going down. For them its always, "Buy now! They aren't making anymore land!! Buy now or be priced out forever!!"
I have watched as condos in Seattle that were going for 280K at the begining of the year now being sold for 380K in October. I hope the whole house of cards comes crashing down on the speculators heads as soon as possible.
The worst-case speculation regarding adjustable rate mortgages always assumes an increase much greater than the less-than-7% rate cited here. They'll just refi into another 3/1 ARM at about 5.5%. Not a huge hit to the bottom line in the majority of households.
Capping the mortgage interest deduction won't get any further than similar proposals got in 1993. That sacred cow ain't getting slaughtered any time soon, so speculating upon the effects of such a cap is highly premature.
Yes, markets will soften. But it doesn't look like a doom and gloom scenario.
Even the chief economist says the market is fundamentally sound.
You are absolutely correct. I've spent over 80% of the last thirty years in title insurance, and that's what they always say. I lost a title insurance job in mid-August, the bloom was off the rose at that point, as far as new title orders were concerned. Figures that you read in today's paper are from September closings, where the deals were inked back in June or July.
It's all downhill for real estate from here. Sure glad I found a job outside of that industry.
Exactly. Most economists are predicting a 15%-20% downturn in the Central California housing market when interest rates go back up. Since I'm up 40% since I bought it, I'll still come out ahead.
The people who will get burned are those who either just bought, or who cashed out all of their equity. A good friend of my wife are living examples of the kind of idiots who will get burned. They bought a house in a new development before any of the houses were built. The home was far beyond anything they could hope to afford, but by the time it was built it's value was up over $100,000. They cashed out that equity, dumped it into an interest bearing bond, and now use it to pay their mortgage. In their minds, they'll simply sell the house and move when that money runs out, and they'll have spent nearly five years in a gorgeous mini-mansion at no cost to them. They're assuming, of course, that they can get everything they owe out of it AND have enough additional appreciation to buy another house and do it all over again...an assumption that's looking extremely unlikly at this point.
That's assuming that interest rates will stay at the point where you can get a 5.5% ARM. That's also assuming that you can get an appraisal that covers the existing loan balance, and the closing costs to do the refinance. Nobody's going to come up with 3 to 4% of a $200K-plus loan out of their own pockets just to keep the balls juggling in the air for a few more years.
A couple of pretty big assumptions there.
q: How can you tell a realtor is lying?
a: Their lips are moving.
None of them will ever admit that prices are going down. For them its always, "Buy now! They aren't making anymore land!! Buy now or be priced out forever!!"
I have watched as condos in Seattle that were going for 280K at the begining of the year now being sold for 380K in October. I hope the whole house of cards comes crashing down on the speculators heads as soon as possible.
whoops.
You'll be fine as long as you don't have to move, and can hold on to the income stream that makes the payments on that house. Should you find yourself in a position of having to sell, you'll be up against lenders trying to unload foreclosed homes with all kinds of sweet deals for buyers willing to take them off their hands. During the last housing decline of the early 80's, they were even paying moving costs for people who would take these white elephants off of their hands.
There's a heck of a lot more constructed housing stock out there than there was 25 years ago. Much of it is financed to the hilt.
"That's assuming that interest rates will stay at the point where you can get a 5.5% ARM."
Referring back to the article that is the subject of this thread, it wasn't my assumption that interest rates will settle in somewhere lower than 7%, but the authors. That's what the 5.5% was roughly based upon. If rates go higher than the author posits here, then ARM loans go with it, at a proportionally lower rate.
I so hope you are wrong. My husband and I are just about to buy, we live in Fresno.
Man, you sure do like posting "sky is falling" articles about real estate.
I can only surmise that you missed the great surge in appreciation these last few years and you're pissed.
bigsigh, broker
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