housing crash

Discussion in 'Economics' started by silk, Dec 30, 2004.

  1. Prove it. BTW, I did read all the "fine print" on my mortgage and there is no such provision.
    #41     Jan 3, 2005
  2. SteveD


    It is amazing to me that so many of you simply do not understand home ownership.

    Please do not quote California prices. It makes you sound silly. Use Sioux City, Shreveport and Knoxville as your basis.

    You keep trying to compare the housing market to the Nasdaq.

    In the mid 80's the Greater Houston area lost 250,000 jobs!!!

    Just in case anyone does not understand the difference. A car is a depreciating asset!!! It is a tool!! A piece of machinery!! If you overpay it is a lifestyle choice. Houston has a lot of Mercedes, Lexus etc because the cost of housing is lower so a person has the extra money to spend on the automobile of his/her choice. You are both stuck in traffic on the freeway, LOL.

    A house will last for over 100 years, for God's sake. It is, in most cases, an appreciating asset. Once the loan is paid off you have something of value.

    Everyone needs a place to live. Everyone does not need a car.

    How many times have you seen Widow Jones dies and the house is sold for $500,000 that was bought by her and husband in 1957 for $23,000. They had a nice lifestyle for over 40 years.

    Even if you buy a condo for $100,000, live in it for 10 years and sell it for $100,000 you made out OK.

    Some people will get hurt, no doubt about it.

    Why would Greenspan raise rates?? We have slow economy, growing, but still slow. High gas prices serve as moderating influence.

    New housing getting a little slow. In Houston the median price of home fell by .2% from last year. Number of days on MLS increased from 84 days to 85 days to sell average house. Not exactly barn burning numbers, but chugging along.

    #42     Jan 3, 2005
  3. are we doomed yet?
    #43     Jan 3, 2005
  4. well that last post just amazed me....

    let's see why would greencrap raise rates....hmmmmmmmmm... might have something to do with the chinese/japanese and the dollar.
    #44     Jan 3, 2005
  5. Cutten


    The situation appears similar in other countries with economies in line with the US e.g. the UK, Australia, Canada. IMO the best case scenario is a slow 10% bleed over the next 3 years, and the worst case is a 30%-40% fall in the more speculative areas.

    For the first time in a long time, I am considering selling my house for fear of a meaningful price deterioration. A 20% fall on a decent house in a city centre is a lot of money to piss away, not to mention the opportunity cost of holding on instead of deploying the cash elsewhere. I want to be the guy scouring deals from desperate sellers and foreclosures in 2-3 years time, not having to hold on for another 5 years to make back the money. Where I live, rental yields are about 4%. I would rather pay 16k per annum on a 400k house to rent there, rather than put 400k at risk and potentially drop 60k+ on capital depreciation, plus 15-20k a year on the interest payments. The new year is generally a good time to sell, with a flurry of new interest. I have a feeling that in 2005 it will not last long, and by the 2nd half of the year the year the market may be in serious trouble.

    I've spoken to some agents and my house goes up for sale next week.
    #45     Jan 3, 2005
  6. Where do you plan to deploy the cash proceeds that is not at LEAST as speculative as the house itself, if not more?

    #46     Jan 3, 2005
  7. moo


    Is this really true? Can someone else confirm that it is indeed typical in America that the borrower can just give his house to the bank and escape his mortgage without a loss?

    THEN it would be entirely understandable that people want to take 100% interest-only loans for housing speculation.
    #47     Jan 3, 2005
  8. Every state has their own set of rules. But California for example is what the call a "one-action state", meaning that if the bank takes the house back by foreclosing on it's deed of trust, they cannot sue the homeowner for any deficiency resulting from the later sale of the house ie one action.

    A lender in CA could sue, and thereby collect a deficiency, but in order to do that they cannot foreclose under the deed of trust, and therefore as a practical matter in CA a homeowner can walk from a house, mail the keys back, and not be pursued for a deficiency, if any.

    Not all states have this "one-action rule".

    #48     Jan 3, 2005
  9. moo


    It's the extreme bubble in California that is silly. Even you don't seem to deny it?

    Yeah, in America everyone does not need "a" car, he "needs" two.

    Everyone has always needed a place to live. But why does everyone suddenly need to overpay for his house? So he can brag about it to friends and relatives?

    You can thank the Fed for the inflation that has caused this illusionary increase in wealth.

    Whatever the reason, but he just is raising them 25 bps per meeting (= 2% per year), and showing every intention of continuing this also in the future.

    And in any case, bubbles can, and usually do, collapse regardless of any interest rate changes.
    #49     Jan 3, 2005
  10. moo


    A-ha... this is very interesting. No wonder the bubble is the worst in California then. I thought home speculators were taking huge risks, but they seem to have very little risk in this kind of system.

    Then why do the banks want to give out these highly risky loans? Even they are unable to spot the bubble?
    #50     Jan 3, 2005