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Housing Market

Discussion in 'Sports and News' started by HeinekenMan, Aug 19, 2007.

  1. HeinekenMan

    HeinekenMan Active Member

    The foreclosure numbers are staggering right now. I'm hearing about people who have so little invested in their homes that they're just chucking the keys to the mortgage company and driving off for greener pastures. It hasn't helped that the Fed pushed interest rates so low two years ago that scads of people refinanced their homes. Of course, the sub-prime lenders are hardest hit, and they only have themselves to blame.

    What are you hearing in your part of the country? It's a bad situation here in Florida. But I have to wonder how prices for homes became so inflated in the first place. There's a direct relationship between supply and demand, but it appears to me that the real estate market took advantage and pushed prices higher than they should have been because they knew that the market was hot. They surely knew that demand would drop and prices for homes would fall.

    I've been home-shopping for a year, and prices have fallen 25 percent since January, and there's no end in sight. There are lots of available homes, and there are thousands more foreclosures in the works.
  2. crimsonace

    crimsonace Active Member

    Foreclosures are great if you're looking to buy, though ... that's how I got my home (and got it cheap). Terrible if you're trying to sell, because neighborhoods are full of abandoned homes with low price tags, and that helps determine the market.

    You see a lot of them in the cheap, starter-home vinyl village neighborhoods. I chalk it up more to a lack of education and active brain cells on the buyers -- who have been trained to look at monthly payments instead of the principal. When you get into an ARM with a low 3-year trial interest rate (as many starter-home buyers do), you think you can afford the house until you get to the "adjustment" at 3 years. Then, the payment skyrockets and buyers are more willing to abandon ship than try to sell. And therefore, people are expecting a higher standard of living than they can afford, buying more house than they can afford, and getting into more debt than they can afford.

    Advice from the crack economics teacher: When you buy a home, try to hit the rate at a low point and get (or refi to) a 30 (or less)-year fixed, and *know* what your payments will be, know that they're within your means, and don't set yourself up for sticker shock.

    Drive around your community and find all of the neighborhoods that are 3-4 years old. There will be a ton of foreclosures, because that's generally when the ARM rate adjustment kicks in. We've had 5-8 foreclosures in our neighborhood every year since then.
  3. HeinekenMan

    HeinekenMan Active Member

    Good advise. What I can't conceive of is why the lender would give someone a loan they know the borrower can't repay once the interest rate kicks in. That has to mean that the borrower is hiding some of his monthly bills or has lost income.
  4. BYH

    BYH Active Member

    Never underestimate the stupidity of the American public.

    Someday, I will enjoy buying your house, Mr. My Eyes Were Bigger Than My Bank Account. (Not sure when that will be, given my own thin bank account)
  5. pallister

    pallister Guest

    The last house I bought, I was told I would be approved for a $1,600/month mortgage (I had already figured what I could afford and it sure as hell wasn't that). It would have been great had I wanted to buy a really nice house and never eat -- or leave it.
  6. imjustagirl2

    imjustagirl2 New Member

    Where's Almost_Famous? He loved talking about the housing market.

    That, gambling and underage girls were his trifecta.
  7. HeinekenMan

    HeinekenMan Active Member

    When I moved here two years ago, a double-wide trailer would cost you $700 a month and a reasonably new 3/2 home with 1,200 square feet and a small yard would run you $200,000, which equates to about $1,600 a month after taxes and insurance.

    Fortunately, I couldn't afford to buy two years ago. So now I'm going to save myself about $50,000 plus interest. Those $200,000 homes are now down to almost $150,000. I have no idea what the trailers cost. Hell, I'd live in one if I didn't fear being sent airborne.
  8. Sam Mills 51

    Sam Mills 51 Active Member

    There was that ignorance of enough sports issues, which never stopped him from acting omnipotent.
  9. joe

    joe Active Member

    From being the defacto biz editor here for the last couple week, I can relay this: Subprime loans account for about 13 percent of all mortgages right now. Of that, about 13 percent cannot make their payments. The problem is that many banks and other financial institutions bought these loans and are now fucked when their percent of a percent defaults -- and they can't make their payments to JP Morgan and others. Thus, it ripples through the whole market. Already, 50 subprime-heavy lenders have bit the dust. And no matter what the Fed does, it's going to get worse before it gets better.
    When a 1,000-square-foot house in a shitty neighborhood in SoCal cost at least $250,000 or more -- and they're selling right and left -- you know it can't be sustained.
    But don't worry. The rich will keep getting richer, and the rest of us will work until we're 70 and then try to pay our health-care bills. God bless America.
  10. Wow, I guess those SoCal neighborhoods are so shitty I haven't seen them yet in my house hunt. Or maybe I've been looking at bigger houses.

    The lowest I've seen so far (non-forclosure) have been 3/2 for $350K. That's unattached houses - not condos or townhomes.

    Thank god we've only just begun our search and can let the market fall a little further. Everybody keeps telling us that this is a great time to buy because of the market.
  11. joe

    joe Active Member

    Should have made clear that that was two years ago, when the housing market was completely fucking crazy in SoCal. You could still get a 3/2 for that price in Washington and Oregon around Portland, but prices were going up damn near every week. A market like that is unsustainable.
    The sad thing is, even with prices coming down now, homeownership is a goal many Americans will never reach. Unless you're making $50,000-plus, you need two incomes to even think about buying a house. Not to get all class-war about it, but the inequal distribution of wealth in this country is a bigger cause for concern than most are willing to acknowledge. The top 10 percent holding 90 percent of the wealth is a recipe for disaster.
  12. buckweaver

    buckweaver Active Member

    A little bit more on what joe's talking about in SoCal: http://www.latimes.com/business/la-fi-countrywide17aug17,0,1835165.story

    Seems there was a rush to withdraw at Countrywide Bank branches this week, like the one on <a href="http://www.sbsun.com/search/ci_6655315?IADID=Search-www.sbsun.com-www.sbsun.com">George Bailey's Savings and Loan</a>:

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