Posted on 11/20/2005 12:23:42 PM PST by ex-Texan
I have been warning FReepers for about 8 months. I think you have as well.
While the economy will affect me, the good news is after next month we own our home outright. ;) So we may be in for a rough ride, but my husband & I have got a seat belt.
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That's what we thought - but then we added up the monthly cost of our insurance, property taxes, HOA dues, and "barebones" utilities. It costs a lot just to open the front door, even if you "own" your house.
My husband and I have been very skeptical of how some of our friends are buying their homes. Many are doing $0 down/interest only. We always figured this would come back and bite them in the butt. Looks like it might be happening very soon.
Our decision - in order to own a home in less risky manner - is to relocate our family. My husband has a good job in Reno and next month we will begin looking for a house. We also are ready to leave the California liberals and the schools.
Is it possible that some people, those who purchased with ARM's and such, will panic and sell? Will they be more willing to deal? Being first time home buyers we have questions. Being a Freeper - I know I can count on y'all for good advice. Thanks!
At the same time, a boom in real estate in the already developed municipal areas is expected to amount to $trillions of new construction in the next 20 years.
Are financial institutions getting too loose with their lending/underwriting practices? Yes.
Are there new and dangerous mortgage products that allow borrowers to qualfy for loan that they cannot afford if interest rates go up? Yes.
Are Fannie Mae and Freddie Mac evil? Yes, if you listen to FMWatch and that dink from Oklahoma, JC Watts.
Who is behind FMWatch? Ex-Citibank people among others. That's right - the very commercial banks that stand to benefit if Fannie Mae and Freddie Mac leave the market. Does the Federal Reserve know this? Of course. This Fannie and Freddie hysteria is fanned by the commercial banks and THEIR lobbyists.
It always stuns me that conservatives get confused on this issue. In a free market, you cannot have protected enterprises like commercial banks trying to eliminate competition through legislation. Unless you are a RINO.
Is there a bubble? Well, we will see. Maybe in vacation areas and places like San Diego, LA and SF. Bubbles simply mean that demand has exceeded supply - so in areas with supply constraints and growing demand, prices rise. What kills the "bubble" is either declining demand or increases in supply. Period.
Hate to bust your bubble but you will NEVER own your own home. Don't believe it, just don't pay your taxes and the REAL OWNER will come to get it back.
You are merely leasing it from the government.
I have been warning FReepers for about 8 months. I think you have as well.
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I have been warning Freepers for 8 years that the RE marked will slump.
Buying an interest only house is "renting" under a new guise. Renters don't have the money to buy a house, so someone with wherewithal buys a house and "loans" the use of the house for a fee. The traditional problem with renters is property maintenance. This system solves that. The "renter" has a stake.
He (interest only loan holder) pays hundreds of dollars more a month and maintains the property. The "renter" no more "owns" the house than the old style renter.
Based on what happened in Texas (primarily in Houston) in the early '80s, which was the first residential housing collapse following the price appreciation of the '70s, it will take at least 1 to 2 years for people who are being squeezed by increasing interest rates to throw in the towel, and either walk away, or sell for their existing mortgage principal. Prices may soften by 5 to 10%, but no significant drop will occur immediately. When it does happen, look for 20 to 25% decreases from the peak, maybe more, depending on the locale and economic conditions. The 1980's Texas price depreciation was caused by a downturn in the petroleum industry. People lost their jobs, and thousands of homes came on the market, overwhelming the demand.
If some homeowners panic, and put their homes on the market cheap, the real estate agents will know it first, and grab the good deals. This is happening here in Kauai, where many agents are actively speculating. A house across the street from us, built as a spec home by a contractor, sold to an agent for $1.7 million, who then flipped it in 2 or 3 months for $2.3 million. Obviously, the last speculator before prices drop will get burned.
It's a good thing. Read post #11
These 'renters' do own in the sense that they can sell the property whether they have actual equity or not. If the price is up 15% at the time, they are shrewd indeed. If prices stabilize or decline, they might not be considered shrewd any longer. Roll the dice.
save
"The three (time worn) legs of the Anti-USA stool. Bad war (W lied), Bad environment (Kyoto), Bad economy (housing bubble)."
Are you saying that if you agree with the premise of the article, that housing prices are, indeed, broadly inflated for a variety of reasons documented therein that you are Anti-USA?
Are you further saying that if you believe that a housing price bubble exists, that you by association (using your three-legged stool as the model) also believe in global warming and are against the Iraq war, and also presumably, the US military which is fighting the war?
Just curious.
This would appear to be a fairly comprehensive analysis of the worst-case, doomsday scenario for residential real estate. If every negative thing falls into place, this might happen. Then again, it's more likely that this will not happen.
I also have a great deal of difficulty taking this person seriously, when he doesn't know the difference between "then" and "than," and spells "cheap" as "cheep"... doesn't do much to enhance that all-important, authoritative tone, when trying to shill gold futures or what-have-you, know what I mean?
Knew he was shilling SOMETHING, but it's not gold futures, it's "foreign currency denominate" (sic) futures:
"In the mean time, ride out the housing collapse in the safety of foreign currency denominate assets. Download my free research report “The Collapsing Dollar: The Powerful Case for Investing in Foreign Equities” available at www.researchreport1.com. You will likely be amazed at just home much house your foreign assets will enable you to buy."
Riddled with typos, misspellings and misused words ... this Peter Shiff or whoever really pounded this one out in a hurry, or he's simply not too terribly literate. "Just home much," lol.
I've come to like the responses to your posts more than your actual posts...
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