oh man, thats a good one
change the sign to read, "welcome housing market collapse"
Posted on 04/19/2006 9:58:59 PM PDT by ex-Texan
The Commerce Department reported Tuesday that single-family housing starts fell 12% last month. Privately owned housing starts fell 7.8% to the lowest level since March 2005, while new building permits fell 5.5%. * * * Labor Department reported that wholesale prices rose 0.5% last month as oil and gasoline prices are approaching new record highs. * * *
New findings from the April Experian/Gallup Personal Credit Index survey suggest that many Americans believe [the housing bubble may burst] * * *
National Housing Bubble
Seventy-one percent of consumers believe it is very likely (24%) or somewhat likely (47%) that housing prices will collapse in housing markets across the nation as a whole within the next year, according to the April Experian/Gallup Personal Credit Index survey. * * *
Housing has been one of the key drivers of economic activity in the United States over the past several years. Building new homes not only creates jobs but also stimulates the purchase of a variety of consumer durables including appliances and home furnishings. More importantly, the growth of housing equity has had a pronounced wealth effect not only on consumer spending, but also on consumer borrowing.
Currently, the housing sector is under assault from the double-whammy of increasing interest rates and surging energy prices. * * *
The most significant impact, however, may involve the effect of a housing slowdown on the overall U.S. economy. A significant economic slowdown during the second half of this year could lay bare many of the housing finance excesses of the past several years. In turn, this could make the pessimism 7 in 10 consumers have about the potential for a bursting of the housing bubble seem prescient later this year.
View Gallop Poll Data and Graphs:
(Excerpt) Read more at poll.gallup.com ...
Then I think it would be fair to say that maybe 7 in 10 consumers expect California housing bubble to burst. I might believe that. Mississippi and Florida look pretty good. Louisiana is still under the fedgov thing, and will go right back to the same crap. No upside there unless one is connected to the people that run the casinos. They DO profit from misery, and I do not deal with them.
"In effect, the buyer has a negative amortizing loan. In three years, he will owe about $ 350,000 on his home."
You should KNOW that loans have a life-of-loan CAP on the amount of negative amortization. I recall 10 percent of the principle amount.
So using your example, the max neg am would be $30,000 NOT $50,000, and the $30,000 would be reduced by your principle paydown (unless it was interest only). And how rapidly that max is calculated depends on the index, the margin, the pay rate, etc. I expect it would take LONGER to max out than three years.
They also have a CAP on the year to year increase in the payment.
The reason I know is because I have used this type of loan, for twenty years. And since 1986 I have been BETTER off than had I used fixed rate mortgages.
Like I have said, you take RISKS, and if they turn out okay you reap the rewards.
Besides, most people have housing costs of some type, payments or rent. They are usually going to make their payments, or sell, or refinance if things get tight.
I will surely agree housing is slowing in many areas. In my area sales volume is down 22 percent from a year ago, but prices are NOT. It is one of the highest cost markets in the US, too. Median price is $622,000.
Buyers are shopping more carefully, but when they need a home they will buy one, to live in and enjoy with their family.
There is more to life than worrying every day about house prices. You can also worry about the stock market-high now. Or gold prices-high now.
Home ownership is at an all time high in the US. I expect the Fed will stop raising rates, lest they harm the economy.
Okay...just so I know where you are on the food chain.
All this talk of collapse is funny, A 20 percent drop in prices would be considered a collapse by many, but houses have been increasing by 20 percent per year in my area for the past five years, it means very little, except if you buy the year before the collapse. I have been involved in real estate for 10 years and have Financed thousands of people in all types of loans, the bottom line is the vast majority of those people can afford their loans even if the rates increase. What usually causes foreclosure which I see a ton of also, is not rate hikes it is mismanagement of debt, lousy life management and speculative buying. Areas of high danger are any area that is a high percentage of investment property. If you live in this kind of area, then be wary. If you have lots of rental properties that are not penciling out and you are counting on flipping them to make a profit then beware. If you are living in the house you own you can ride out any bumps in the market just ask anyone in orange county California who sat out the last out the crash and made a killing within 5-10 years on their properties. Over leveraged people trying to flip properties are losing their butts right and left as are some banks that actually own the properties. Or did everyone think that the individual that was on title owned the property? Nah the lender owns the property when the brown stuff hits the fan, and they are the one that takes the fall. For example I was in Palm Springs for a home improvement show a month ago, when a local Realtor informed me that foreclosures in the area were up by five or ten times in the last year. I did not verify it, it seems obvious by property values and rising rates that it didn't need verification. The point of all of this is that now is not the time to INVEST in real estate flipping unless you know what you are doing and are not over-leveraged. For the average home owner nothing has changed, make smart choices, pay your bills. In time your property will be worth alot more than it is today, no matter what temporary things the market does.
Tonight my husband said that the neighbor across the street was taking real estate type pics of her house. This is a 40 year resident of the tract I live in. Even she is realizing that there is so much to cash in on that she would be wise to sell.
Even if the market dropped 50% she would do quite well and so would we (even though we bought in 1989).
Gallop is MSM times 3. Enough said for me.
Well! What the liberals want is an absolute collapse of the economy. If they take over you bet the tax exemption on home ownership will be repealed.
Any peivate property will be declared state property of Hillary, Oprah , Durbin , Nadler, Levin, Phil, Kennedy and any other hard leftist. Yes , then the bubble bursts.
Alot of people are talking like this, the bottom line is you have to live somewhere. If this person if going to now buy an rv and travel the country in retirement then it might be a great idea gas prices aside. The problem most people have with selling their primary residence is that they then have to buy something somewhere else for a equally high price or rent and lose the tax benefit. I am sure they have thought through all of this and are making an informed decision, but it bears repeating in case anyone else is thinking the same thing that hasn't really done their homework on the tax consequences of not having a mortgage but still having to pay for housing ie rent.
"Bloggasms?"
I love it. LOL
Ah, but what if there's a gold bubble AND a housing bubble?
The lady across from us is in her late 70's or early 80's. She has several children with their families, I am sure there is pressure for her to 'cash in', but sadly it's not always about money. Her day to day life is not with these 'children', it is with her neighbors, who actually talk to her, walk with her around the block and show a daily interest in her. Her quality of life will most likely decrease once she sells and tries to establish this same daily relationship with her kids. I am absolutely sure they have too many other irons in the fire to worry themselves about entertaining her. Money isn't everything... the quality of your life is more important.
I couldnt agree more, uprooting your life for money is rarely a good idea.
"You seem to be wringing your hands and jumping up and down, just waiting for the misery of others!"
Maybe he isn't but I sure am!
Employment = Housing Prices.
Don't know if what your are saying is necessarily true. We have 2.3% unemployment where I live and the prices for the homes are dropping fast. It is nothing to panic about, just a correction that will sort it self out in the long run, but it is happening. See below: Zillow.com estimate of my house's value. The value of the houses in my area have dropped about 10% over the last couple of months, they have mine down over $20,000, not 10% but... the trend is still going down.
1 week change: -$5,293
Last updated: 03/25/2006
Blogpimping itself can be profitable.
--Those people should immediately sell their homes for whatever they can get, if they really believe what the poll purports to show they believe.
Why should I sell? I kind of like my house and I hate to move.
Nobody worries about housing until they go out and buy. 7 in 10, my ass.
Now imagine what happens when many people are in this situation ... desparately trying to sell to get out from under debt. Supply and demand my friend, prices will have to drop as excess inventory comes flooding onto the market.
I am always open to more land on the cheap, though.
I live on seven and one half acres within about two miles of the site of a huge QVC warehouse project which is supposed to be finished in January of 07. I am wondering just how much demand there might be for property that close to the job. With gas prices going up I might want to sell out and move to a retirement spot. I am thinking that proximity to jobs is going to become much more important.
oh man, thats a good one
change the sign to read, "welcome housing market collapse"
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