Posted on 09/14/2007 5:37:16 AM PDT by Hydroshock
NEW YORK (Money Magazine) -- Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled. The bad news about the housing market seems never ending: Foreclosures have more than doubled over the past year.
Sales of existing homes are off 11 percent from this time last year. At that rate, it will take at least nine months to work off the inventory of unsold homes. And median home prices in July (the most recent figure available) dropped for the 12th month in a row.
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Worse yet, all that happened before problems in subprime lending expanded throughout the mortgage market and beyond, creating what's popularly being referred to as the credit crunch.
While it's too soon to see the impact reflected in the numbers, the immediate future is clear: As lenders tighten their borrowing standards, fewer people will qualify for mortgages.
Fewer qualified buyers can only mean that housing prices will slump further. Worst of all, economists don't see much chance for a turnaround until mid- 2008 and possibly into 2009.
(Excerpt) Read more at money.cnn.com ...
Nearly a perfect storm of excessive optimism - a hot, unpleasant-looking Central Valley city full of gang violence and meth labs where new home developers overbuilt and thought they could con people into moving because it's "only" a two hour commute to San Francisco. And still, I'll bet most of the foreclosures there are on bent-rules sales to illegals...
I've come to the conclusion that the desire to live a semi-rural lifestyle is the root of all evil for borrowers. If you want to live in the country, live in the country. If you need to work in the city, live in the city. Living in the suburbs - especially distant suburbs - is the worst of both worlds. You overpay for all of the same noise and traffic and bad schools and youth crime you'll find in the city without any of the convenience and cultural amenities.
My wife and I are talking about moving in a year or two, but we have a lot of equity.
Do you two still have your leftover batteries and supplies saved up from Y2K?
http://salem-news.com/articles/july192006/food_prices_71906.php
USDA’s Economic Research Service (ERS) has recently released food expenditure statistics for 2005. They show that Americans are spending, on average, 9.9 percent of their disposable income on food.
That’s up slightly from 9.7 percent in 2004 but very consistent with figures over the past five years. The percentage dropped to single digits for the first time in recorded U.S. history in 2000.
Twenty years ago, American consumers spent 11.7 percent of their disposable income on food. Thirty years ago, that figure was 15.1 percent. Going back in history, Americans spent about 20 percent of their income on food about the time today’s baby boomers were born. In 1933, the figure was more than 25 percent.
I had five employees this time last year, plus myself. right now it is self only and my income is way down to the point I am seriously considering folding. it is really discouraging.
I disagree...in a sense that home ownership will continue to bring equity profits as in the past.
Speaking as a Realtor for 30 years, the prices had gone too high to sustain.
Unless they start offering 200 year amortization schedules, buyers won't qualify for mortgages...and nobody is able to save for a downpayment to meet FNMA guidelines.
And we haven't even begun to discuss the fact that today's 6.5% 30 year fixed rate is historically low and not guaranteed to be there indefinitely.
Carolyn
This article is about foreclosures.
I'm living in a rather large house with acreage--A FORECLOSURE--no mortgage, no payments, just taxes and insurance.
So, instead of fear stories on the eeeeeeeeevil America, go out and take advantage of the opportunities I sacrificed for you to have.
If I had enough cash to buy a home outright, I'd make the smallest down payment I'd need to avoid having to buy mortgage insurance (I believe it's 20%), then spread the rest of the cash in a diversified group of investments that can be liquidated relatively easily if necessary.
Rex, I bought my house in 1991, not far away from Alexandria. Even if it loses three quarters of its value, if I sold it I’d still make a killing relative to what I could have made in the stock market or any other investment instrument over those years.
Partly, this means that many illegals have already left. they were living somewhere, and those properties are now empty. The ones who were cramming 10 people in one house and the like were pushing housing prices up beyond what normal families could afford by pooling their resources. There are only a few stories about this and many more to be written.
What a load of bull crap this entire sub-prime market talk is!
For the first time in my life I own my home and car. No payments. It is a wonderfully secure feeling.
Tell me about it. I tried to pay for gas earlier this week and they no longer accepted credit cards. I had to give the guy my last 10 head of cattle.
Still waiting for sellers to FINALLY start dropping prices in Central New Jersey. Prices have plateued, but not fallen.
Well, you’re in the biz and you know your stuff.
But prices, I think, will come down further and that should help. Yep, prices are stil mighty high, but the marketplace ought to take care of that. It always has.
BTW, according to Bankrate.com the APR on a 30-year conventional mortgage is a 6.15%. Pretty good number there.
Thanks for the post!
I had to use all my gold.
Many sellers have so little or no equity they can not drop the price unless they want to bring a check to closing.
The great fallacy of mortgages: the "tax advantage".
Put simply, you're throwing away $7 to save $3.
Get a $100,000 mortgage.
On top of principal, you'll pay somewhere around $100,000 in interest - money that doesn't actually get you anything.
The mortgage deduction means you don't pay income tax on that extra $100,000, saving you maybe $30,000.
Upshot: you just threw away $70,000 so you wouldn't have to throw away $30,000.
Yeah, that's smart. You just turned $100,000 into $30,000 and got zippo for it.
Better to take that $100,000, pay the $30,000 tax, invest the $70,000 at 10%, and come out somewhere well over $150,000.
(The exact numbers probably vary, but you get the idea. I hope.)
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