news is getting worser and worser http://www.marketwatch.com/News/Sto...4A56-AFB5-A53A916DF126}&siteid=yhoo&dist=yhoo Chief Executive Robert Toll said the U.S. housing market got ahead of itself due to greed on the part of buyers and sellers, and that it now likely faces the highest level of speculative inventory ever. Toll said the current downturn is unique in his experience because it wasn't driven by a "macro-event" although interest rates have risen steadily. "Every day there's an article about how lousy housing is now and how dumb you have to be to buy a house now," the CEO said Tuesday at the Credit Suisse Homebuilders Symposium. "I don't know what it will take to turn this market -- it could take two years, or it could take someone getting quoted in the New York Times saying the market has hit bottom." http://www.marketwatch.com/News/Sto...t=newsfinder&siteid=mktw&link=&keyword=horton Don Tomnitz, chief executive of D.R. Horton Inc. Tuesday said the company is preparing itself for a tougher housing market in 2007 compared to 2006, with prices finally stabilizing in 2008. "We have never seen housing prices and demand slow as quickly as they have during this downcycle," said the CEO of the nation's largest home builder when measured by 2005 deliveries. "Demand has evaporated to the extent of about 20% to 30% for the industry, and in a tighter timeframe than we've seen before." Least we forget how quickly this market has changed, this article from one year ago....OWP http://msnbc.msn.com/id/8422350/ We decided to offer $81,000 over the asking price, not because we had money to throw away but because we wanted to be competitive. At our agent's suggestion, we also enclosed a short letter about ourselves accompanied by a darling photo of our baby with pleading eyes. My first reaction was that writing this letter was a little, well, third grade. But apparently it's not that uncommon to try to sway sellers this way. The next evening our agent called and said we should sit down. There were 50 other offers. But the good news was that seven potential buyers were being given a chance to offer even more money with a second and final offer â and we were among the Chosen Ones. So again, the guessing game. What would other buyers offer? How much was just too much for a 1,319-square-foot house? We raised our bid several thousand dollars more. The call we did not want came on a Sunday night. Well, our agent said, we gave it a very good shot. We came in second â out of 51. The house went for $670,000 â $121,000 over asking. We were in backup status on the house â in case the other deal fell through, which of course we hoped it would. Still searching... It didnât, and we kept looking. (fast forward to the next POS house) This time the house was priced better, so we bid only $16,000 over the asking price. We included the lovely letter about ourselves and another baby photo......... .......I applied just the right shade of pink lipstick and put on a skirt, sensible heels and a sweater set. I dressed my little darling in his best bug shirt (heâs a future scientist, of course). And when my husband came home from work, I dressed him, too. Off came the jeans and Bruce Springsteen T-shirt, and on went khakis and a button-down shirt. We looked like we were trying too hard, which seemed to be the point. It felt very "Desperate Housewives." Perfect. Then my husband and I paraded ourselves and our 8-month-old into what would hopefully be his elementary school in about five years. As planned, we ran into the agent in the sixth-grade classroom, next to an impressive papier-mâché replica of Stonehenge. The agent seemed like a nice guy, and we chatted for a few minutes about the school and the wonderful principal. (No, we did not plead and beg for the house). We bought some cookies at the bake sale and went home. Was it worth it? Maybe. The next afternoon our agent called to say that if we raised our offer another $7,000, the house was ours. The sellers were debating between us and another couple, but they liked us! So we raised our bid, because if you want to play in this market, you play by the sellerâs rules. Game over. Thank god.
Maybe they can pawn the kid's toys to help keep their dream alive at least one more mortgage payment. RoughTrader
I am sure that if that they were able to afford ther mortgage payment in 2005, they can still afford it now. You should probably realize that just because their house may have dropped in value since they've bought it, that has not affected their cashflow at all.
Assuming they have a FR note. You would be correct. However, a great number of loans in these areas have been hybrids the last 2-3 years. No appreciation + rising rates = bad news
look, its okay to have a 95% LTV when prices are rising... the mortgage payments is a forced savings plan... the psychology completely shifts when you are paying interest on something that is going down in value... invariably some other issue crops up - mama gets put on PT, or there are rumors of cutbacks at the aerospace job. most (alot?) of these folks just totally maxed-out on the house, so they dont have a buffer. i think alot of these folks had mams paycheck going to the house with dad's check to live off of. this downturn has started w/o any real impetus from increasing unemployment?
Q, My comment was directed at the cash flow situation all things remaining equal. We all know that teaser ARMs with no apprecation or worse a drop in pricing = no chance to refi to a fixed and avoid the reset payment shock. And yes, people feel poor when their home is valued less than purchase price and you are making payments... DAMHIK!!! I agree with most all your points. I look at the situation similar to what the US automakers have done. When you bait people with cheap loans, people will tend to buy the product. When the cheap loan party ends, people don't want your product anymore, unless they absolutely must buy. I see the same thing with housing now. Rates have shot up and those that didn't get a 4.5% fixed are not going for a home priced much higher and an interest rate 50% greater. Herd mentality plays a huge role in real estate pricing/sales. Once that shifts, and it appears it has, even dropping interest rates won't save the industry.