Also,i'm curious about one other thing...say you have a $300k house and you have $60k equity in your home.You think you might get foreclosed on and you can't sell it and you don't want to lose the $60k you put down.Can one take a $60k home equity loan,deposit it in a bank account,which by the way is a different bank than the one that gave you the loan,and THEN let it get foreclosed on knowing you won't be losing your $60k?
A rapid price decline is precipitated by excess-supply. Today's October sales release takes me back to 2001-2002 when the auto manufacturers took many buyers out of the market with substantial incentives. When the big three announced their post 9/11 incentives the used car market got hammered big-time. Scenario 1, used private sellers were hammered because used-car buyers were turned into new buyers and taken out of the market. Scenario 2, trade-ins were hammered because dealers didn't have the cash or desire to pay-up for customer trades. The big-three celebrated sales records during this period... The laws of supply and demand played out with amazing precision in that industry; look at where the big three stand today as a result of their actions...:eek: How that relates to current housing data... "Used" or existing buyers have gone to new construction because of agressive campaigns by builders and the possibility of Fed rate increases. The economics of supply and demand will eventually run their course, the $1mm question is: when? The skybridge in Chicago is an example of a quality property in the West Loop of Chicago: Located in Greek-Town (great neighborhood), Dominicks Grocery inside, easy access to interstates, nearby public transportation... Builder almost went into foreclosure this summer because it's still 20% unsold after TWO YEARS! http://homes.wsj.com/propertyreport/residential/20050624-smith.html
I think that there will be selective busts in regions of extreme speculation: other areas will just stagnate or decline slightly. One thing there will be : fewer property management and resale related business starts.
First off Greektown is not a GREAT neighborhood. I used to live about 4 blocks north of there. If you turned down the wrong street at the wrong time of night, look out. Besides there has been so much overdevelopment in the West Loop, River West, etc, etc, who the hell needs another high end condo development.
Obviously you haven't been to Greek Town recently... the bums stay away from the Greeks! The Skybridge does in fact have a desireable location in the west loop. Come visit again! The west loop has been torn-down and is now yuppie soft-lofts. Four blocks north...they have already started tearing down those projects. :eek: Actually, the Cabrini projects started coming down in 1995...
yeah, I guess you are the proud owner of a condo in Greektown. Dont want to step on any toes. I lived in River West until mid 2000. I remember when they were in pre-construction on the property you referenced. I've lived in Chicago my whole life (with exception of 4 years in college) and MANY of these neighborhoods are like putting lipstick on a pig. Kind of reminds me of all the yuppies who were enamored with the townhomes about 3 blocks from the old Cabrini Green. Yeah, the cleared out the projects, but you still got a whole lot of problems around Larrabee and Chicago. It's one thing if you get a discount for being a pioneer, but it aint worth it if you are paying top dollar to do it.
I am actually EAST of the interstate...but looked at the Skybridge a couple years ago though....typo there
Banking system is very efficient - the second you TRY to get an equity loan against the property, even at another institution, your mortgage bank/company already know and your loan will not be approved if it is already in negative valuation.
Nope. The borrower is liable for the difference between the final fire sale amount obtained and the balance of the mortgage. Even if the lender write down its loss, it can still go after the borrower, forever - because in U.S the bankruptcy law has just been changed to make it harder to walk away from the liabilities, a coincidence? When a property does not even worth its mortgage valuation - its called negative equity for the borrower, a very well-known term in Japan, where all its major city properties go down in value at 5%+ every year, and in Hong Kong, where all its middle and middle lower class properties never get their values recovered since "the crash".