what about these fannie maes and freddie macs? i don't know what share of mortgage value ends up sitting on the bank's book nowadays, i am guessing not much.. - i think the mortgage derivatives market is quite massive.. - so, technically you may even end up indirectly "owning" a tiny chunk of your own mortgage through your pension fund if it invests in a mortgage-backed fixed-income portfolio - whatever residual amount, if any, ends up on the bank's book, is bound to be insured in some way against default.
You need to be proactive and see a lawyer or do the research yourself. You have short sales, foreclosures, bankruptcies, workouts with the banks, and irs bills for the forgivness of debt to consider just for starters.
http://dallasfed.org/news/speeches/fisher/2006/fs061102.cfm "In retrospect, the real fed funds rate turned out to be lower than what was deemed appropriate at the time and was held lower longer that it should have been. In this case, poor data led to a policy action that amplified speculative activity in the housing and other markets. Today, as anybody not from the former planet of Pluto knows, the housing market is undergoing a substantial correction and inflicting real costs to millions of homeowners across the country. It is complicating the task of achieving our monetary objective of creating the conditions for sustainable non-inflationary growth." If the Fed knows in hindsight that they've messed up, can they undo what they've done while "creating the conditions for sustainable non-inflationary growth"? My suspicion is no.
I don't know about that? My neighbor works for the largest furniture retail outlet in the area and they have 2-5 people a day come in trying to return furniture purchased in the last 12 months. Not the same people everyday either. Their 100% ARM/IO loan reset and basically butsed them out. House can't be refinanced, because values haven't increased or worse contracted. These folks live in areas ranging from 300K homes to 1 million+. It a wide range being affected.. IMHO, this is only the tip of the iceberg, particularly in the hot areas. Next year I expect foreclosures to rise 3 fold over current levels in my area, as any home purchased since Jan 05 won't have any appreciation. 60% of the homes are ARM/IO loans. If you have the 1 year teaser with Neg Am, watch out. Numbers for Y/Y price change will begin to show negative and further the declines and erode any positive psychology in the marklet. There is a reason the hot areas have a disproportionate percentage of hybrid loans. It's because people couldn't afford the home in the first place and bit off more than they could chew. Our inventory levels of homes/condos for sale just exceeded a 12 month supply this month. Oh, SFR are at a 18 month supply. Plenty of vacant homes for sale just in my neighborhood. Here's some food for thought as well. If I buy a base home last year from a builder for 400K and the builder sells the same home this year for 400K with 10K in granite, 10K in landscaping, 30K pool, 10 in tile... is the house I bought last year worth 400K like the one that just sold? Of coarse not. The median price numbers are just the sales $ numbers which have been inflated by unreported upgrades. It's not apples to apples when comping. just my 2 cents
We are relocating from NJ to Ct w/in 3 months. I put my house up for sale by owner at a price of $565K. In 1 day someone bid 530 for it with a quick close since they sold their house already. After 2 emails, we are up to 540 bid. I don't mind selling it to them in the 550's since my own analysis coupled with tax records, zillow.com, electronicappraiser.com have my house around 550-560k. My only concern is once I sell it, housing in the northeast will resume its roaring trend up screwing up my plans to buy a house. All I've been hearing about is that housing is going to fall off a cliff. My suspicion is that most of these "bloggers"are like traders who talk up their position. i.e. renters who want to get in and at this point...can't. Frankly I don't care if my house sells for 300k as long as I can buy a house in CT (80 miles north) for the same. Can anyone envision a scenario in the next 1.5 years when housing stops its downtrend and reverses sharply up? Thanks
I've never seen a market break when every participant is bearish. Just because something rises astronomically doesn't portend mean reversion. Look at the Dow. We've never "re-tested" 4k, 5k, 6k or even seven thousand after running 800% in the 90's. If someone is bullish gold then they should own their home. If someone is bearish on the dollar they should own a home. If you live in San Diego or L.A. or NYC and you can't afford a home than I suggest MOVE. Those places are for high wage earners. One need not live in Solana Beach to trade 100 shares of INTC from a laptop at the coffee house. IMO, there's enough inventory that prices will be sideways for perhaps years. But a wholesale crash? I put the odds at 10%.
You should stake your reputation on this... Start a thread entitled " Housing will not crash or Pa(b)st Prime will leave ET forever". LOL....
One does not need to live in solana beach to trade 100 shares of intel. classic. Actually having just been to San Diego for two weeks, hoping to help my brother put in some vulture bids on homes -- I have to say the Panera Bread in Carlsbad is a very nice spot to check the account on the wireless network. By the way we did not put in any bids, most of the sellers were still on drugs. My take. There are houses there for 3 quarters of a mill that are not fit to live in. so the only people that would buy them are speculators. There are no speculators so the houses will have to come down 30-40 percent unless san diegos business climate grows very rapidly. Now would I make that bet, no. But will I tell a first time home buyer with significant cash to hold off. Yes. As you mentioned before pabst it really looks like the buyers are on strike - serious strike and the sellers are going to have to feel some serious pain before the adjustment will be over. At the very least they are going back to 2003 prices imho. Outside bet 2000 prices. They still have an overwhelming supply of milliion dollar tract homes coming on the market or on the market that will eventually be REO. That will pressure the whole market.