Posted on 11/10/2010 7:22:34 AM PST by WebFocus
Zillow just released a devastating third quarter housing report. Basically every major indicator is crashing:
* The decline in home values accelerated in September, dropping 0.4% month-over-month
* Foreclosures reached an all-time high
* A record 23.2% of mortgages are now underwater
The double dip -- already a rare phenomenon -- is now entering an unprecedented free-fall. Zillow economist Stan Humphries says prices won't hit bottom until next summer at the earliest, as foreclosure activity grows.
Humphries warns: While not unexpected, the unceasing declines in home values signal that were in for a long, bleak winter of continued troubles for the housing market. The length and depth of the current housing recession is rivaling the Great Depressions real estate downturn, and, with encouraging signs fading, will easily eclipse it in the coming months."
(Excerpt) Read more at businessinsider.com ...
Been there, done that in a small camper (Toyota Chinook) when I was a contract programmer. Landlords wouldn't go for a six month lease (the usual contract) so I got this little gem and stayed at KOAs or other RV parks throughout the country. Since I could move at the drop of a hat, and was willing to relocate, I was always employed. Not something for a guy with kids, but it was an alternative that worked well for me.
Wrong. The Republicans are in this up to their necks. Phil Gramm and Jim Leach, Republicans both, were the ones who created the monster and sent Clinton the repeal of Glass-Steagal, without which the banks could never have securities the CDOs in the first place and the boom could never have gotten so out of control.
All of the pigmen are to blame at every level - not one party. This was avarice writ large across the board.
It is all about maintenance and upkeep.
Homes keep their values the same way that Mercedes do - owners pump huge dollars into maintenance and upkeep. Homeowners do not allow paint to fail, wood to rot, roofs to leak, foundations to crack, electrical fires to break out. It is only the massive reinvestment for maintenance and repair, that makes houses keep their value.
This is why houses always go up with the rate of inflation. A well-kept old home that has been maintained in good condition will always cost about the same as a similarly sized and featured new home. There is nothing magic about either home that makes it more valuable. It is walls and roofs and carpet and appliances, etc. When it comes to finding a "home", you can choose a new or old dwelling. If the old dwelling has wood that is dry and strong, has a newer roof, was built with a strong foundation, etc - who cares if the building is old or new.
That is why homes keep their value. You pour money in to them. You don't pour money into your Toyota Camry. That is why Toyota Camry's depreciate.
Can you document the claim that a lot of Option ARMS will reset the next 2 years.
Option ARMS adjust 2 ways. One way is by duration - 5 years and it automatically resets. The other way is by loan amount - people who constantly pay the minimu have an increasing loan balance. If the loan balance goes too high, the Option ARM automatically resets.
In this way, many of the Option ARMs scheduled to reset at 5 years were reset much earlier because the home owner let the loan balance get too high. This is why there was a flood of Option ARM resets over the past 4 years.
If there is still a huge pool of Option ARMs ready to reset, I would appreciate some current documentation on that, and not famous bar chart of resets that is now about 3 years out of date.
Thanks.
You may be right that there are a huge number of Option ARMs ready to reset soon. My understanding is that the lions share already blew up because almost all of those owners paid only the Optional minimums, and ran their loan balances up to the trigger that caused rates to reset.
I’m not aware, in general, of any aircraft, boats, cars that even with vast maintenance, often well excess of their new purchase price that increase in value. ( Icons excepted ).
I work on a lot of old houses. Deep in them, their structure, frame, masonry are often just standing.
There are a near hundred city, with near a million houses from New Jersey, up to Maine, sweeping that same distance wide to Chicago where houses are near worthless, with hundreds of thousands abandoned. In fact, I’d say there are ten times more abandoned houses then cars. Cars have a ready cash value, houses don’t.
Aprez moi, le deluge!
In a way, you ‘shorted’ your own house, and made out.
The thing about all this is the bailouts. It’s one thing for buyers and sellers, borrowers and lenders to take their lumps. It’s another to drag others into it with the force of government taxation.
‘In a way, you shorted your own house, and made out.’
I guess I am a financial genius, but I have to say it wasn’t intentional.
you know more about this than me.
mine was taken in 06, has 5 year fixed, and then converts to 20 yr fixed fully amortized.
this happens in Sept 2011.
i have recollections of reading about the option ARM wave of foreclosures and i have not read any contrary opinion
until now.
i sincerely hope you are right. that a lot of the option ARM’s have already been converted or refinanced or foreclosed and the balance remaining will not cause another depression in the housing market
i hope you are right.
According to Zillow, my house is worth 5k less than when I bought it in 1998. Pfft.
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