The housing market...

beachdweller · August 2007

g under p wrote:

I can tell you where it's not hurting in the playgrounds of the wealthy and rich. I work in Palm Beach, FL 6 months per year and houses/condos there are selling anywhere from 2 mil to 15 mil easy. It goes up every season they call it an investment, they hold unto property and sell it when they're ready and they make a mint of money.

Peace
Earle

though at a much cheaper investment, this is a problem in Silicon Valley. the rich buy houses at a higher price than the surrounding homes, rent them at a high price, and the whole neighborhood is a mess because of it. High rate of homes as an investment in my area.

given2fly78 · August 2007

Don't forget, a big problem is the ARMS, and Option ARMS. Clients were lured by low interest payments and Interest only payments. Interest rate stays fixed for a certain period of time and then adjusts with the market. As the market rate increases, so does their payment. And if it's an interest only, they aren't making any headway on their principal balance without putting extra each month.

And it kills me to read these articles with people boo-hooing about how their payments are increasing, they can't afford it, ect. Don't think I'm not sympathetic because it sucks, but where were you during your mortgage process? Were you not paying attention? Did you not realize it was interest only? That each month you were not paying down your principal balance? That your interest rate would change after the fixed period was up? You are given a lot of information and paperwork - do you not read it? Do you just sign blank? It's a HUGE transaction!

Rates were super low and you didn't go into a fixed rate? You were looking at the super low rate of an ARM and didn't think about the future? Just about how much home you could afford? Customers have a responsibility to know what they are getting themselves into. Just like a car loan, credit cards, warranties, ANY PURCHASE!

And don't get me wrong, there are horrible mortgage consultants out there - who are just in it to close the deal. Who are looking to please their business partners (IE Realtors, Lawyers, referral sources) and make the customers happy. But suprisingly enough, there are consultants that DO stop clients and have them THINK about what they are getting themsleves into.

Sometimes what you can afford on paper and in reality are two different things. Eating Ramen Noodles in your unfurnished McMansion isn't the way to live.

This housing issue really bugs me - where I live I don't think it's going to affect us very badly. We don't have a very high house price (taxes are out of control, but that's another issue) but it's definately becoming a buyers market. I'm still seeing people out bidding one another and homes selling within a few days of being listed. But the bigger markets will and have been directly affected. And it will hurt all of us in the end. Especially first time homebuyers who sometimes need the extra help getting into a home and it may not be available due to the tightening of guidelines.

Skitch Patterson · August 2007

Interest Only and ARM mortgages do have a place in the mortgage business. Its not that they are evil, its that they were given to people in the wrong situations. In a heavily appreciating area, in a home you arent going to stay in forever, and interest only loan is a great thing- given that you pay virtually nothing to principal in the first 3-5 years anyways. ARMs are good in that they are much cheaper to buy down the rate than a conventional 30 year mortgage is. But again, not a good idea if you plan on living in the house forever.

Option arms are bad in pretty much any and all possible situation (with very few exceptions). A couple companies have a more secure option arm program, which is a little better.

The problem is these mortgages were given to first time home buyers, depreciating areas, or people with bad credit. Its not the loans- its who they were given to. I think the Subprime issues play a much greater role in this problem than adjustable rates.

And its also been touched on in this thread a little... but ill expand a bit. I blame the builders for this mess more than anyone else. I live in the detroit area, which has been in recession for about 7 years now... The problem is, they dont build new small homes anymore. EVER. I cant remember the last 1 story, 900-1200 sq foot house i have seen built around here. Its all the 3500 2 story homes with breakfast nooks and "great rooms." that cost between 350-600K. No new homes are built for the 75-150K that most kids can afford when they get out of school, so they overextend their incomes to buy these insanely large homes, because frankly, finding a decent smaller one is a pain in the ass.

given2fly78 · August 2007

Skitch Patterson wrote:

Interest Only and ARM mortgages do have a place in the mortgage business. Its not that they are evil, its that they were given to people in the wrong situations. In a heavily appreciating area, in a home you arent going to stay in forever, and interest only loan is a great thing- given that you pay virtually nothing to principal in the first 3-5 years anyways. ARMs are good in that they are much cheaper to buy down the rate than a conventional 30 year mortgage is. But again, not a good idea if you plan on living in the house forever.

Option arms are bad in pretty much any and all possible situation (with very few exceptions). A couple companies have a more secure option arm program, which is a little better.

The problem is these mortgages were given to first time home buyers, depreciating areas, or people with bad credit. Its not the loans- its who they were given to. I think the Subprime issues play a much greater role in this problem than adjustable rates.

I completely agree with the fact that there is a time and place for an ARM. If you are being relocated or don't plan on being in the home for X amount of time than yes, a ARM is the perfect option for you. If you can be dedicated and put money towards your principal balance each month especially, it's worth while. If you are in a position where you KNOW you will be making more money in X amount of years - (residents, engineers, apprentiances) it's a great alternative to a fixed rate because the payments will be lower. But a mortgage needs to be looked at as a financial tool, not just a way to get into a home.

Of course, the subprime market has affected this badly, but so has the Interest Only/Low payment option/Option ARM stuff. It's just as bad. A lot of the subprime borrowers were put into 2 or 3 year Adjustables and NOW they are being hit with huge increases and can't afford the payments - hence the forclosure rates going through the roof.

I will say the margin of income for builders in my area is not what it used to be years ago from what I understand. I do see your point as I live in a declining market myself (Central New York). As a matter of fact, right by my house is a new development of "starter" homes for $150k and up and they are of shoddy quality and the resale is terrible for this particular builder. But again, it comes down to the buyers doing their research. They see New Construction cheap and are pumped. You pay for what you get.

I just see a lot of times people live beyond their means, push to qualify for more, get upset when they can't afford the big house of their dreams, don't think beyond the moment or take pride in their finances. Get caught up in "keeping up with the Joneses" or whatever. Whether it be the house, BMW, Vacation, ect.

Especially the refi boom, cash-out, cash-out, cash-out. I think we're going to see a lot of sellers going to closings with checks because they owe more than they can sell their house for. That's scary too!

beachdweller · August 2007

given2fly78 wrote:

And it kills me to read these articles with people boo-hooing about how their payments are increasing, they can't afford it, ect. Don't think I'm not sympathetic because it sucks, but where were you during your mortgage process? Were you not paying attention? Did you not realize it was interest only? That each month you were not paying down your principal balance? That your interest rate would change after the fixed period was up? You are given a lot of information and paperwork - do you not read it? Do you just sign blank? It's a HUGE transaction!

Rates were super low and you didn't go into a fixed rate? You were looking at the super low rate of an ARM and didn't think about the future? Just about how much home you could afford? Customers have a responsibility to know what they are getting themselves into. Just like a car loan, credit cards, warranties, ANY PURCHASE!

And don't get me wrong, there are horrible mortgage consultants out there - who are just in it to close the deal. Who are looking to please their business partners (IE Realtors, Lawyers, referral sources) and make the customers happy. But suprisingly enough, there are consultants that DO stop clients and have them THINK about what they are getting themsleves into.

I agree, but good marketing overcomes intelligence in this country far to often. Also, I think an adjustable rate situation allows many people who couldn't get a mortgage approved, get one approved with less down, lower credit etc...they don't think the whole thing out. If you can get a house, with this market the way it was, then you look at selling at 4 or 5 years before the adjustable rate kicks in, at what 5 yrs?, and then with the equity you take from the sale, you are in a better position to buy a home with a fixed rate. That's how it has been marketed to some people, and they jump at the chance.

he still stands · August 2007

I'm trying to sell my house right now and am having absolutely ZERO interest. Its been on the market two months and there hasn't been one person who expressed interest in making an offer. ALL of the houses in my area are the same way... up for sale for a year or more.

Oh, and I'm still trying to figure out what a real estate agent does to get 6%? Anyone know?

gue_barium · August 2007

I bought a house for $350.

given2fly78 · August 2007

he still stands wrote:

I'm trying to sell my house right now and am having absolutely ZERO interest. Its been on the market two months and there hasn't been one person who expressed interest in making an offer. ALL of the houses in my area are the same way... up for sale for a year or more.

Oh, and I'm still trying to figure out what a real estate agent does to get 6%? Anyone know?

LOL, 6% is sick, isn't it? It's usually about 7% here. See if your agent will do broker opens (sponsor a luncheon where just agents come to look at the house to show their clients).

Open Houses on weekends? Ads in the paper? Showcase on their website? Do an open house and throw a BBQ.

Offer some creative stuff. Like a seller credit? Say $2,000 towards closing costs. Or get a home inspection done for a potential buyer to save them the money & time. (plus, you will see what a home inspector may call out on your home and you can avoid haggling price or things to fix)

See what comparable homes are in your area and look for "special" perks sellers are offering. Maybe they aren't offering anything and that will make your home or offer stand out more!

know1 · August 2007

he still stands wrote:

IOh, and I'm still trying to figure out what a real estate agent does to get 6%? Anyone know?

They sign the contract along with the seller who agrees to give them that much. If you don't want to give them 6%, don't.

mookie9999 · August 2007

he still stands wrote:

I'm trying to sell my house right now and am having absolutely ZERO interest. Its been on the market two months and there hasn't been one person who expressed interest in making an offer. ALL of the houses in my area are the same way... up for sale for a year or more.

Oh, and I'm still trying to figure out what a real estate agent does to get 6%? Anyone know?

If the market was different and they sold your house in a weekend you would be saying the same thing. Someone else already pointed out if you don't believe in the services don't use them. As a real estate agent I have no problem turning down listings of people who cannot see the value in using a broker. Fortunately, here in NYC I don't have to worry about the market (now or anytime in the near future) as it is as strong as ever even with the recent mortgage crisis. I could list why I'm worth 6% to you and what I do for the money, but it would be best for you to ask your own agent if you're having trouble understanding the value of their services. BTW I sometimes charge 8%

so you got a bargain!

Hartydog · August 2007

Jumbo loan info.

http://biz.yahoo.com/cnnm/070810/080707_jumbo_jam.html?.v=5&.pf=loans

Trailer · August 2007

Pacomc79 wrote:

I am loving the overinflated housing market coming back just before I'm ready to buy a house.

I'm ready to buy a house too, but I don't want to buy one and then have the value plummet. Is this market going to drop relatively soon? Obviously no one knows the exact answer, but I'm assuming you guys are more educated on this matter than I am.

mammasan · August 2007

I for one couldn't be happier that the real estate market is finally correcting itself. I'm a couple of years from being able to afford a home again and I'm loving the fact that houses that once cost $600,000 can't even sell for $400,000. Homes are still ridiculously priced in NJ put the prices are starting to drop significantly. Hopefully by the time I am ready to buy the housing market will still be on it's downward trend.

JOEJOEJOE · August 2007

he still stands wrote:

I'm trying to sell my house right now and am having absolutely ZERO interest. Its been on the market two months and there hasn't been one person who expressed interest in making an offer. ALL of the houses in my area are the same way... up for sale for a year or more.

Oh, and I'm still trying to figure out what a real estate agent does to get 6%? Anyone know?

Don't they teach economics at Millerville (Division II football powerhouse!) ?......if people started lowering the asking prices, they would sell!

blackredyellow · August 2007

mammasan wrote:

I for one couldn't be happier that the real estate market is finally correcting itself. I'm a couple of years from being able to afford a home again and I'm loving the fact that houses that once cost $600,000 can't even sell for $400,000. Homes are still ridiculously priced in NJ put the prices are starting to drop significantly. Hopefully by the time I am ready to buy the housing market will still be on it's downward trend.

Yeah, we are talking about buying a house in a year or two, and this downturn has come at a great time. Even if it's over in a couple of years, the prices should still be lower than they are now. Home prices were getting out of control for most people.

Cosmo · August 2007

Too bad there isn't a High School Class that teaches kids how Credit Cards and Home Mortgages and Escrow and Interest Rates work. That way, when they grow up to become adults, they might have a better handle on that whole 'Live Within Your Means' thing going. And that if you are making $22,000.00 a year... you won't be able to afford that $350,000.00 home unless you plan on cutting out everything else in your life and just work and sleep and eat Top Ramen for a few years.
They should make it a Pass or do not Graduate Curriculum, too.

macgyver06 · August 2007

THC wrote:

There has been some discussion about the economy in the cramer thread. But what i wanted to talk about is the falling housing market. its hurting the economy...and my own take on it is that it is too inflated. The price of homes has gone up excessively high the last several years...and I think the market is just adjusting to that. A home that was $200,000 5 years ago is now $450,000. I just don't think these homes are really worth that. And I think it is beginning to show. People are defaulting on their massive mortgages...and banks are being left w/ a house they don't know what to do with. I think this is really the basis for a lot of the scare...and the market going into somewhat of a downturn.

I'm not an expert by any means...but it is clear the housing market is hurting...what are people's thoughts?

ive been telling people...when you let corporations in your neigborhoods..that arent even located anywere near your state...when you allow these people to buy up land...put hundreds upon hundreds of cookie cutter houses, all selling for well over 250,000 dollars in an area that will eventually be the suburbs or poorer part of town..wellll they build these homes movei n people who cant afford them and get the fuck out... wait for 10 years... a 250,000 dollar house built in a former florida swamp is not a good investment suckers....hahahaha also.... its easy for republicans to say the percentage of americans who own a home has increased dramatically...of course it has...when you turn your local apartment complex into 'condos' and call them homes... they are tricksters...the number of manufacturing jobs has nearly doubled also under bush the genius..how is this possible... mcdonalds employees are now know as manufacturers of food product.

laughable man

enjoy the rip off stucco...cuz your stuck ho.. sorry that was lame

but seriously... can you blame miranda homes? there are so many suckers here.

The housing market...

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