Nope, didn't think so. (Man, it's not easy finding a halfway decent graph of this).
Posted on 11/11/2007 11:58:53 AM PST by Enterprise
A frantic two-hour auction Saturday in downtown Fresno was a sign of the times as bidders snapped up 48 new houses -- most for thousands of dollars below the builder's original list price.
(Excerpt) Read more at fresnobee.com ...
It's as other FReepers have noted. Housing is in a slump, but not necessarily everywhere and a lot depends on the price and location.
why not? money is still very cheap, and let’s see, is the population of the US declining?
Nope, didn't think so. (Man, it's not easy finding a halfway decent graph of this).
The media has been driving this in their usual herd mentality way of doing things. As might be expected the market above $600,000 has remained strong because sophisticated buyers and successful people aren't normally swayed or intimidated by the dead tree media.
The picture I have in my mind is for one of these new homeowners moving in, and upon meeting a neighbor who paid $250K more for the same house, asking “Hey, did you hear about the great deal I got on this house? And by the way, could I borrow your lawnmower?”
Whether the the asset is going up or going down, there is always money to be made. It may be different people doing the buying and selling, but no matter what, there is an opportunity if you want to take it.
Oh, that reminds me - I need to buy another house.
40 to 60% off the previous listing prices is a tad more than a “slump.”
This kind of fire-sale auction is going to depress the valuations of all the properties in the development/neighborhood, which is going to lead to further problems for people who have little to no equity in their homes.
Most homes looked like they went for about 20% of the original ask price. One example in the article was a $375K house going for $325K.
The population is growing, the economy is strong, interest rates are at a 45 year low - so why the “housing slump”?
The other reason is home builders not making entry level homes that are affordable. I know there isn’t as much profit as building the larger homes.
Economy/Credit/Housing Issues Ping list
If you want on or off this list let me know.
I believe folks who bought their homes to live in should be fine, provided they didn’t lie on their application.
It's four bedrooms. The clients are moving from a nearby city which is not very good. Their 2 Bdr there appraised for 320,000. It will become their rental property.
Talk about moving on up.
There are many such values in socal.
We're seeing a lot of investors at auctions and even some buying bulk from lenders at 65-75 cents on the dollar (current appraised market value.
Lost or gained equity has no value and no rate of return unless you do something with it.
People who are losing value have lost an opportunity to make money off the bank's money. But they're not necessarily in trouble.
If you don't have to sell, you don't have a problem. Just wait it out.
I’ll be back for Q&A later.
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One would think so but Newsday (I know) ran a front page scare story today that listed the number of houses facing foreclosure and the % of sub-prime loans by town. Every town on both lists in both LI counties is a 'minority' town.
It does appear that certain less than scrupulous lenders or brokers targeted these areas, which are populate with folks who are less sophisticated and educated in financial realities, with offers of 'great deals' on cheap money over the past three years. As a result a lot of these blue-collar people will lose their house.
Newsday is, of course, trying to create an aura of Island-wide danger and fear.
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Tax deductions on the interest are offset by the tax on gainsand the cost of execution so, with rate @ 6% one would need a guaranteed return of 8% to even consider this. Know where I can get a guaranteed return of 8%?
I understand your premise yet were less or ill-informed people thinking they could afford a house 8 times their salary? I see greed on both sides and let scripture deal with it.
In this market, if you have a ARM, it is very risky to not have equity in your home.
If you’re in a ARM with little to no equity in the house, and the ARM resets, and your house appraisal has gone down below your loan value (ie, your mortgage is now “upside-down,” as many will in these areas where comparable houses are marked down in price), the bank may start foreclosure on you.
If, however, you had some equity in the home when you bought it, you may have enough of a cushion to preserve a positive LTV ratio and the bank may be content to ride it out.
It is the myth of a “guaranteed” 8% return that created the sub-prime disaster in the first place. The mortgage industry, hedge funds, money center banks and the ratings agency bought into the fantasy that while sub-prime ABS’ would return a higher yield, they were every bit as safe as AAA bonds.
As we are all finding out, this was a stupid assumption. If they really want the guarantee of a safe return, they’re going to get only about what a T-bill or Treasury will pay (right now, about 4.4%) — not 8%.
How many people who took out “no doc” loans didn’t lie?
Sounds like an everyday risk to me.
(I guess I should pay for that also.)
You have the ability or you don't, If you lose your income then shake them trees.
As a builder, I can offer that "affordable" is a very hard term to define. I have done business in five western states and can tell you that to a person the people who have found their way into community planning and building departments are misguided do-gooders who think they are saving Algore's environment by making capricious and burdensome rules against new development and construction.
The fact that entry level home prices are unreachable for many folks of modest incomes or just starting out is due 100% to the agendas put forth by local bureaucrats. Believe me, if builders could deliver a product at 40% less than they are doing today it would happen in a heart beat.
In many markets as much of 30% of the cost of a new home is eaten up by the permitting process.
That changes your entire scenario.
Generally, if you're in a 1/3 marginal tax bracket, and borrow money for 6.6% you're actual cost is 4.4%. You hardly need a guaranteed 8% to make more than the cost.
Yes I know payoffs from 12-20% invested with A and above insurance companies. However, the dividend is taxable. And you have to qualify financially.
The risk is not the ARM and no equity. The risk is no equity, dropping market and having to sell. Trifecta. Or having an ARM and not being able to make the increasing payment.
Has nothing to do with equity. If fact the less equity you have when the prices go down and you're in default, the more likely the lender will renegotiate the loan. Easier to sell a foreclosure with a lot of equity in it.
Leaving significant equity in a house is just piss poor asset management.
“Auction bidders snap up homes (Yes - there is still some demand for housing.)”
No shock here.
About a month or so ago, even “ABC NightLine”’s show on the housing market
included a segment on how investors were snapping up repossessed properties
at auction.
That’s what seems to be happening. The initial frenzy is over and now it’s a market which where “strong hands” enter and buy and hold for the future. I think most of us have seen this before.
We’re having the busiest two months since we started our own company. I think the investors will continue and I think we’re in for some more foreclosures through 2008. As late as early 2007 some 2 and 3 year ARM loans were still being written.
This is the reason. The increases on the right side of the chart cannot be sustained. The "slump" is simply the market returning the excesses of the bubble to the mean.
If they bought a house with no money down, interest only payments, with no verification of income -- as a lot of these "sub-prime" mortages were, then what exactly will they lose? They will not lose a down payment. It's just as if they were renting one place and now will have to move to another with smaller payments.
The US ecconomy is too big to be totally down like other nations.
Many here have no perspective on the nature of the sheer size of our ecconomy. Other nations have just ONE time zone and quite often one to two significant industries.
France for example is akin to the bottom 20% of our states in GDP.
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