In a word, yes. The government interventions may delay this until 2011 IMHO. We have more pain in the housing market IMHO. But in either case, it doesn't affect my trading. It will affect the country though. Good trading TM
Still more room to fall. WASHINGTON â Sales of previously occupied homes took the largest monthly drop in more than 40 years last month, sinking more dramatically than expected after lawmakers gave buyers additional time to use a tax credit. The report reflects a sharp drop in demand after buyers stopped scrambling to qualify for a tax credit of up to $8,000 for first-time homeowners. It had been due to expire on Nov. 30. But Congress extended the deadline until April 30 and expanded it with a new $6,500 credit for existing homeowners who move. "It's 'exit stage left' for first-time homebuyers," wrote Guy LeBas, an analyst with Janney Montgomery Scott. December's sales fell 16.7 percent to a seasonally adjusted annual rate of 5.45 million, from an unchanged pace of 6.54 million in November, the National Association of Realtors said Monday. Sales had been expected to fall by about 10 percent, according to economists surveyed by Thomson Reuters. The report "places a large question mark over whether the recovery can be sustained when the extended tax credit expires," wrote Paul Dales, U.S. economist with Capital Economics.
Agreed. ARMs have been around for decades. Aside from the facts you stated the chart does not account for the people with those mortgages that are not in trouble.
does the chart represent any of the made up ponsi scheme paper(cdo's, cds's) sitting on aig,fannie and freddie books that dwarfs the actual subprime paper
Option ARMS aren't all bad. I've got an option arm on one of my investment props. The rate has been going down steadily and dropped below 4% this month. I'm paying $2,000/mo. less in interest than I was paying 2 years ago. Of course there's the risk that short rates could go up significantly, taking my mortgage rate with it, but by the time that happens, I'll have paid down so much principal that it probably won't matter that much. I could also lock in at somewhere around 5% on a fixed note right now, but I think rates are staying low for a long time, so I'm going to chance it w/the ARM.
Down 16%, see how that $8000 tax credit has propped up the entire housing market, without this credit housing prices would be down another 10-20%. Once the tax credit is totally taken out of the picture you will see what the real housing market looks like. They will do anything to keep housing up, I can almost guarantee you that they will extend it well beyond the April 30th 2010 date. I think they will push it to 2011.