escalade and plasma,, i thought those were are God given rights...lol. But seriously, I did some investigating. If you contact a savvy lender or banker for that matter and work some numbers out, there are still 95% LTV value loans out there and surpsrisingly low rates, very low rates actually. All I know is I bought my home 5 years ago here in florida and there is no way in the world me nor any of my neighbors would sell our houses now at 2003 prices. That alone becomes self-fulling and helps keep the prices up. It will be region specific downturns and recoveries in my humble opinion Eddiefl
ARMS are exotic????.. Hmm they have been around since the early 70's. FHA has had 3-year ARMS since 1979. Just because you dont hear about it, doesnt make it exotic. Most commercial loan have a type of adjustable rate feature or have ballons attached... And I aint talking about pretty little yellow ballons either. have a good weekend guys,, time to hit the Beer garden.. EddieFl
But that's providing that within a year or two they do come down. What if they don't? What's your exit plan then? Do you know what the fuck you're talking about?
Dude you're fucking retarded.....when interest rates are 15% real estate will plummeted. Your mortgage will still be the same. Say you have a 150,000 house at a 5.5% mortgage. rates go to 15%. The value of the house will go down to meet the mortgage. 150k house at 5.5% is $900 mortgage at 15% it's $1900. The value of the house will drop to meet the mortgage. At 15% mortgage rate that 150,000 house has to drop to about $80,000 to be a $900. When mortgage hit that 15% it's a perfect time to buy.....eventually they lower and you refinance. But then again maybe people are retarded enough to spend $1900 for a $150,000 house
Seeing as you're the self-declared leading authority on the housing market and interest rates why don't you build into a property portfolio and offset it with positions in the STIRs? As you previously posted,you actually "work in sales". Sounds to me like you NEED this property market to tank,maybe then you'll be able to buy that studio apartment you've dreamt about.
It will go down even worse than the 'theory' would predict in an environment of high interest rates because high interest rates would put a lot of additional supply on the market by way of foreclosures that would not exist when interest rates are low. Just like there was valuation overshoot to the upside when interest rates went down, I think its fairly likely there will be overshoot to the downside when rates go up. That is to say, essentially, that RE will be a tremendously good deal when interest rates are high. Especially for people with excellent credit ratings and access to reasonable downpayments.
Interest rates and housing prices are directly tied to one another as previously stated. Rocketing interest rates means plummeting house prices. The inverse is true too, which is what we saw in this housing bubble. If you have a ton of cash on hand, then you are begging for high interest rates. But high interest rates now will kill whatever is left of the housing market because everyone with a heart beat who wanted to buy a home already has. Many of them have been foreclosed on or will foreclose shortly. THESE BUYERS will be out of the market for a decade since no one will loan them money now so the buyer pool just got a lot smaller. Couple that with higher interest rates and record breaking debt in the US, and housing is in huge trouble. You have a large population of people with horrible credit now, heavily in debt coupled with tight credit markets, and high interest rates = no home buyers for a long long time. I think prices have a good chance of crashing below market value.
If you lived in Texas in the mid-late 1980s, or in many parts of Canada that had high prices during the resource booms of the 1970s and early 1980s -- you could easily buy houses for less than their construction and material costs for most of the 80s and a good chunk of the 90s. Building new houses was pretty much an exercise in insanity, or something reserved for the quite wealthy who could afford to pay top dollar for something 'new'. Illiquidity is usually a sign of a market top or a declining market -- whether it be the stock market, or the RE market -- and since home sales keep falling, that's a sign that things have considerably further to fall.