Posted on 10/16/2007 7:15:41 AM PDT by 2banana
Not in EVERY market, however. California, Washington DC area, Boston, etc.......markets that were obscenely overpriced for so long are taking the major hits. Where I live (north Raleigh, NC)? Properties are doing JUST fine, tyvm.
Isn’t that a question that varies according to age, income and net worth (i.e., ability to absorb risk)? Sounds like a better question for a personal financial analyst rather than someone posting on a web site.
It’s the mentality these days. Everybody thinks they are entitled to half a million if their Big Mac has too much cheese.
Except for folks like me and sender, who you admit will be "more than fine." That's not exactly doomsday.
The so-called "tidal wave" will just mean lots of lenders stuck with lots of real estate that will have to be auctioned off. And some folks will have to move to smaller homes while they get their finances back in order.
Maybe - ask yourself these questions
Can the average wage earner afford the average house (at about 3x wages)?
Can you buy a rental house and have a postive cash flow from day 1?
Is the price/(Rent-Expenses) of housing stock at around 12?
I am not sure why fixed mortgages do not have prepayment penalties. Corporate bonds often have prepayment penalties. I am not sure why fixed rate mortgages are offered at such favorable terms if there is so much exposure on changing interest rates.
In a larger sense, it is easy to criticize in hindsight. The movement of interest rates and the collapse of the energy industry were not expected. Even with more prudent policies, there would have been much pain.
I walked away from about 500k (appraised value) of houses, because they were worth less than I owed. I’m a statistic too! Went from 170k appraisal to 115k appraisal in a year.
Carolyn
Builders have been shutting down in my area as well.
Most sellers are selling below cost here in AZ. You take cost+10% you're awfully generous.
My cost was ~135k to build the houses, they sold at auction for 115. That’s in Casa Grande, though, things are a little better up in Phoenix, but not by too much. I ended up doing much of the work myself in order to “pay” myself the labor cost to keep food on the table. It wasn’t greedy/get rich, it was simply markets tumbling by 40 percent or more in response to interest rates climbing. The numbers made sense when I purchased, but nobody predicted a 40% plunge except perhaps the “gloom and doomers”. They were completely correct here.
Hence the "points" and "fees" charged by the bank when issuing the loan in the first place.
Companies like Linux Financial and a few others have been “changing the game” (their words) by doing no-fee-no-point refis. Probably just to perfect creditors though, so it doesn’t change the B-paper and Alt-A loans that shouldn’t have been made in the first place.
That's because y'all buncha idiots worked the market like a Ponzi scheme!!!
Knuckleheads.
Oops, I mean “credit SCORERS” not creditors.
Having a hard time garnering much sympathy unless there was fraud (greed and foolishness don’t count). Definition of a fair price is one on which a willing buyer and a willing seller agree.
Personally, I’m putting all my money into tulips.
Waaaahhhh... It's a matter of common sense. If one has any, they could have easily asked themselves--- Hmmm.. Housing prices have doubled here in 5 yrs, has my salary doubled during the same time?? Stupid people do stupid things. The smarter ones learn from their mistakes.
Speculators don't think like that. Look at the stock markets in China and India. Doubling begets doubling again. At some point the bubble bursts, but they all think they are smart enough to get out ahead of time.
I may be wrong about this, but I believe Federal banking laws prohibit prepayment penalties of this sort. Banks would love to be able to impose charges like this.
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