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The Shifting Calculus of Buying a House
AP/ Yahoooo ^ | 10/13/2006 | James R. Hagerty and Anjali Athavaley

Posted on 10/13/2006 8:25:22 PM PDT by ex-Texan

Report Predicts Price Declines In 100 U.S. Cities Over Next Few Years . . .

Home buyers have another reason to sit on their hands.

In the latest news from the slumping U.S. housing market, a report released this week says that median house prices are likely to decline more than 10% over the next few years in 20 metro areas, including Las Vegas, Tucson, Ariz., and Washington, D.C.

The report, by Moody's Economy.com Inc., a research firm in West Chester, Pa., also says that the slump won't end quickly. Indeed, according to the report, prices may keep falling until 2008 or even 2009 in some areas. In all, prices are falling or likely to decline soon in about 100 metro areas, the firm says.

* * * The study comes on the heels of a survey from the U.S. Census Bureau showing that 35% of American homeowners with mortgages last year spent 30% or more of their household income on housing costs, including loan payments, real-estate taxes, insurance and utilities.

In 2003, a similar survey found that 30% of such homeowners were spending that much on housing. The new survey illustrates the strain on household budgets that has already helped slow house-price increases in some areas and push them modestly lower in others.

(Excerpt) Read more at biz.yahoo.com ...


TOPICS:
KEYWORDS: bogosity; bubblebrigade; bubbles; depression; despair; doom; dustbowl; eeyore; grapesofwrath; housing; iluvwilliegreen; joebtfsplk; mortgages; realestate
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To: ex-Texan
The report, by Moody's Economy.com Inc., a research firm in West Chester, Pa., also says that the slump won't end quickly. Indeed, according to the report, prices may keep falling until 2008 or even 2009 in some areas. In all, prices are falling or likely to decline soon in about 100 metro areas, the firm says.

So how often is Moody's wrong? If Moody's downgrades a company or an industry, that means it's already toast. Look out below!

21 posted on 10/14/2006 6:33:24 PM PDT by Concentrate
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To: goldstategop

Yes, but what happens when the loan has been sold and packaged as an MBS(Mortgage backed security)to your pension fund? Or your mutual fund? What happens then? :)


22 posted on 10/14/2006 7:04:34 PM PDT by Concentrate
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To: Concentrate

"What happens then? :)"

Since you asked...

The hedge fund that bought the risky "C" strip of that MBS will probably NOT make the 25% yield its managers hoped for. MBSs are sold to investors in "strips" that offer higher yields for accepting higher risk. This means that defaults will hit the "C" strip first. Since hedge funds have been voracious buyers of "C" strips, some hedge funds may lose some of the principal they have "invested" in such "C" strips. But really, who cares?

Meanwhile, your pension fund, which has been limited by "the prudent man rule" to buying only "A" strips, will receive its interest and principal exactly as scheduled.

I gather you didn't learn about these financial details from the scare-mongering MSM...


23 posted on 10/19/2006 6:33:12 AM PDT by pfony1
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