August 07, 2007

Now that stated income, liar's loan, no-doc, no-down, teaser rate, negative am (etc) mortgages are no more, how far have home prices just crashed?

Homedebtors might not realize it yet, but with the disappearance of all these "creative" loan products, and the lenders who used to make them, home values across the United States have just crashed.


Mark to Market.
Mark to Market.
Mark to Market.

You add it up, these types of loans made up 40%+ of the multi-trillion dollar mortgage market these past few years, and now they're gone. Poof. Overnight.

That's a lot of folks who can no longer buy a home (at these stupid fake prices). That's a lot of people who can no longer refinance, who will now lose their homes when their ARM resets. That's a lot of housing ATM loot that is not only gone, but won't be able to be repaid.

The collapse of the financial system is at hand. The Grand Housing Ponzi Scheme is over.

So - answer this question. If American homedebtors had to "Mark to Market" and sell their home today, how far have home values legitimately just dropped?

Ready? Here's my number:

30%. And many markets will be more than that.

It's called regression to the mean. It's called supply and demand. And it's called a bitch.

59 comments:

Agent #777 said...

I think more in terms of Rollback.

Like rollback to 2001 - THEN take off 20%, and you will be about right.

This hits the CAs, the FLs, the AZs, and Vegas pretty hard, but is relatively light on your Indiana and Ohio properties.

Anonymous said...

Thats alot of speculators who can't speculate

50%

Anonymous said...

1-3% in KY,TN,MO,WY,ID,TX,SC,VA,NC
25-40% in FL,NY,CA,AZ,NV,HI
5-10% in WA,OR, and others

Anonymous said...

I feel 1990 prices are not out of the question by the time all is said and done. To many people went all in with 2 incomes and one will likely lose their job in the downturn.

Anonymous said...

Something came out in the press yesterday about some governing body looking into rules changes for accounting so banks don't have to realize drastic prices in houses. I kid not.

But hey, the stock market loves short squeezes like Monday's, and it's the only time the HP troll develops enough courage to show his hide. If the Fed doesn't cut interest rates today, yesterday's gain will rapidly unwind.

Anonymous said...

I recently read a report that predicts that the peak to trough drop will be 27% over 5 years and that we are nearing the 2 year point off peak. Thus we have 3 years to go and about another 20% nationally. This does not factor in inflation. If you factor in 5 years worth of inflation at ~3%, combined that comes out about the 50% many people are saying as their gut feeling #.

Anonymous said...

In Texas fannie mae re brokers claim their listings cannot be sold for less than 10% off their asking price. Cash offers of a 1/3 of the asking price do not even receive call backs to the agent presenting the contract!

bearzilla said...

In Dallas, TX fannie mae brokers do not even respond to my brokers presentation of 1/3 cash offer. i am told by another countrywide broker that they do not accept bids over 10% away from their asking price.

My offer was cash and not even a response was received for it.

Anonymous said...

On avg 33%
In bubble areas 50%

stocksystm said...

I hope you're wrong, because my girlfriend is trying to sell her house. After a month she marked it down 1.5%. Probably not enough.

wildhalcyon said...

Anon,

Its going to take a while for some people to get the hint - both buyers and sellers. There's still some folks getting sucked into the game by real estate agents who tell them "We're in a real buyers market here! Get in, because we've seen 7% increases over the past 20 years!" Unfortunately, it really doesn't paint the whole picture. As long as there are suckers willing to buy, there are sharks willing to sell above value.

Paul E. Math said...

Lawrence Yun talks about a lot of 'pent up demand' waiting for prices to stabilize before buying. And there may be some truth to that, sort of.

But demand isn't real if they don't have the money to buy. There are millions of people out there without homes who would love to have one but very few of them have the money, they borrow. And now they won't be able to borrow either.

When demand drops we get a new, lower equilibrium price at the intersection of the demand curve and the supply curve. This is econ 101.

Inflation-adjusted decline of around 20% average across the country right now, expected to hit 40% average. Obviously some places will be worse than others - I'm talking to you Miami, Vegas, San Diego, Phoenix, Detroit, Denver...

But its different in Seattle said...

When seattle market starts correcting, let me know.

Housing prices defy logic, keep climbing
Seattle Times business reporter

Economics 101 teaches that prices should drop when the supply increases dramatically, but the Seattle area's housing market keeps confounding that conventional wisdom.

Prices of King County houses and condominiums last month increased 9 percent compared to a year earlier -- even while the number of available properties grew 51 percent.

Likewise, the number of homes for sale was up 57 percent in neighboring Snohomish County and 47 percent in Pierce County, according to July numbers released Monday by the Northwest Multiple Listing Service.

This continues a trend that has persisted for several months.

westwest888 said...

Let's say you're ready to buy in bubble city, like Washington, DC. Maybe you're pretty secure so you've got $45,000 allocated for a down payment and a little extra for closing. Last week you were looking at 90% LTV, so $495k purchase price. Now that product isn't offered any more for Alt-A trash such as yourself with your inferior down payment. Two scenarios. You wait until this product comes back on the market. New Yorkers know that everything has a price. Your 30 year fixed at 6.875 from two weeks ago is going to come back at 8.9%, as of the latest estimates. Repriced for risk, which keeps going up. 9.9% is not unreasonable for the level of risk, but let's just keep it at 8.9%. Now your affordability hasn't changed, and you really can't go above $3000 a month because of your DTI. Let's hold DTI constant for now, even though that ratio will creep too when the new terms come out. All else equal, with the higher rate you can now only afford a $415,000 house. BAM instant repricing based on your rate.

Scenario two is that these products don't come back this year and you're held to a 80% LTV. Maybe you wait six months and come up with $60,000 down. Now you can buy a $300,000 house in the "A" credit quality loan product, around 7%. BAM instant repricing. If you still only had your original $45k down, you can only afford a $225,000 house.

It's funny how doubling the down payment requirement halves the loan. The reverse is HOW WE GOT IN THIS MESS.

Anonymous said...

dude you say "today is the official end of the ponzi" every week. Every week can't be **the** week.

I think taking 2000 prices and adding 35% is about where we will end up by late 2008. That means 4% a year appreciation.

In many parts of the country that's where we are now. Midwest, Texas, most of the South had 0% and even negative appreciation during some years this decade. You can still buy a home for $150K in Dallas, Atlanta, Cleveland, Pittsburgh, etc. 30% off means $105K. Not gonna happen.

Las Vegas, Phoenix, most of Flordia and the Inland Empire...toast. Everywhere else, a non-event for the most part. I still say Los Angeles will be OK. Lots of money there and more importantly lots of illegals willing to live 10 to a house to make it work.

To the people who think prices are coming back to 1990 levels: seriously you need to get back on the meds, for you safety and mine.

Columbo said...

Checking in from Columbus, OH this morning. Finally, some "drama" pricing:

http://tinyurl.com/28sksg

~26% price cut overnight.

Probably just got laid off from Columbus' "premier" employer, Limited Brands. NOTE TO CURRENT EMPLOYEES: Loyalty means nothing to that company! Stop busting your ass for that place - it ain't worth it!

I smell desperation, but not panic (yet).

Note to any Columbus realtors who may be reading this: pretty much EVERYTHING for sale is overpriced. Please tell your sellers that, I, as a buyer:

1. Don't care about YOUR asking price.

2. Don't care what YOU think your house is worth.

3. Don't care what YOU paid for it x year(s) ago.

4. Don't care what YOU need to sell it for just to break even.

5. Will make an offer based on your comps. It's too bad for YOU that your neighbor just sold their identical home for 20% less than what YOU'RE asking.

6. Will NOT pay a "premium" for upgrades. Comps and $/sqft is ALL that matters.

REALTORS, TELL YOUR SELLERS TO DROP THE DAMN PRICE *NOW* BY AT LEAST 25%! IT TRULY IS WIN-WIN FOR EVERYBODY!

I've spoken to a few realtors and home sellers in the last few weeks, and it's unbelievable the level of complete denial about the collapsing housing market. GET A CLUE FOLKS!

P.S. Yeah, I'm on a one-man mission from God to single-handedly bring down the Columbus housing market!

james dean said...

Fannie Mae chairman was talking yesterday about increasing the breakpoint of 412K? for jumbo loans according to the area of the country.

Anonymous said...

Why do some of you talk about inflation adjusted declinesbut ignore inflaion when talking about increases in pricing?

Adjusted for inflation home prices aren't up THAT much over the past 10 years. If your claims are inflation is running at 10% a year then appreciation at 10% a year is in line with historical numbers.

I'm not saying ignore inflation. But if you use real depreciation percentages you have to use real appreciation as well.

Anonymous said...

I listen to Shiller talk about a 50% reversion to the mean...

But here is where my mind may be malfunctioning.

All the points you brought up in your post (no doc, zero down, neg am etc) to me are "demand" factors that are going away and I accept the 50% reversion to the mean for the simple reason that the phony demand caused housing prices to be out or proportion to rents.

But now my point is what will be the effect of the excess supply we now have, the new housing supply we are currently in the process of completing and all the foreclosures going forward.

To me the equation is:

The Numerator is "Houses that must be sold"

The Denominator is "People who want to by and can buy housing"

I believe the quotient in the above equation will be higher than at any time since the Great Depression.

Muttley said...

I keep hearing people talk about how the Florida market is toast but I'm not seeing it yet. There hasn't been much of a correction here even though the MSM in the state insists there has been and that the worst is already behind us. House prices here, on average statewide, went up 93% since 2002. I would say overall they have only dropped about 5%. A few counties like Brevard and Charlotte have probably dropped more like 10%. Still, it's not much compared to the run up. There are still a lot of foreigners buying houses and condos in the resort areas.

People who do have their houses for sale are refusing to lower their prices even though they aren't getting any offers. We have some acquaintances who have had their house on the market since November without a single offer. They didn't lower their price once. They just took it off of the market and said they would relist it in the spring when the "market picks up". I asked if they were going to lower their price and they said no, their realtor was confident they would get their price in the spring.

They bought the house in 2003 for 135,800 and they had it listed for 280,000. A house in their subdivision hasn't sold that high since 2005. Their house is on the worst lot in the subdivision. It is half a block from a trailer park, across the street from a police impound yard, and a large highway is two blocks away and you hear all the traffic from their yard. They are a perfect representative of the average Florida seller right now.

Stuck in So Pa said...

Had a talk with our local accessor who I found is very up to date on the housing bubble. He tells me that the assessed value for existing housing has gone up 3-5% in the last five years or so, but is now dropping that 3-5% or more even though we have no bubble here,just normal ups and downs. (Not helping us much since the tax bastards have doubled the mileage every year for the last three years.) But, that’s not including new homes built by our local little independent builders, or our one big development in town, all sold to Balt/DC and other outsiders. He says that new homes are overpriced by 75-80% for this area.
That big selling price locks in your property taxes (for three years) since you are assessed at the selling price. He also informed me that those out-of-whack selling prices do not affect existing assessments. The fact that the new 1200 sq.ft. sh#tbox down the road sold for $400,000 to an out-of-state dimwit, doesn’t raise me a penny. But my assessment WILL lower when dimwit walks away and it becomes a blighted property.
So, no bubble here, and no crash, yet, but I'm hopeful. Seeing those overpriced crapboxes
sitting vacant for a couple of years will be satisfying enough!

Groceries doubled said...

The inflation blast has only been on for a couple of years and unfortunately, wages have not kept up.

Orlando Home Owner said...

There were some new home ads in the Orlando Sentinel where the Home Builders are now not just offerring to throw in a bunch of 'free' upgrades, they are actually discounting the price of the house. The one ad I looked at cut the price of their houses 25%. If they are already cutting that deep I wouldn't be surprised if it reaches 40%.

hedonic bastard said...

"This does not factor in inflation. If you factor in 5 years worth of inflation at ~3%"

What planet are you from? Price inflation in the real world is easily 5%-12%, not the bogus, culinary-accounting numbers we get from the government. Five years at even 7% will boost house prices 40%. A good chunk of the appreciation we've seen in house prices is the result of inflation running at rates much higher than the "official" numbers.

That said, I just don't see any huge decline in prices because inflation will soften the crash from lower demand.

Muttley said...

"...he Home Builders are now not just offerring to throw in a bunch of 'free' upgrades, they are actually discounting the price of the house."

I read an article recently in the St. Pete Times that talked about all these incentives in Florida are causing major tax problems because they are artificially increasing the property taxes.

http://tinyurl.com/2zudsb

Sales incentives add value to property, fuel tax debate

...But these [incentives] are causing headaches in Tallahassee and a debate over how they may be artificially increasing property taxes at a time when taxes are supposed to be going down.

The problem is the value of these incentives is added to the sales price recorded in county records.

And because the government calculates property taxes based on those very county records, those incentives can have a notable impact.

area 51 said...

Nationally 30% is about right.

Plot national median homes prices less inflation and you'll see the peak is about 30% higher than the long-term average.

Anonymous said...

pkk(grandma here)

Stock market must go first.

Then unemployment has to drastically
rise.

Some banks will fold.

Then drastic drops in housing prices.

There isn't enough desperation
and fear.

This situation right now has the
feel of an addicted person, who
just wants to get back to what
they were doing; and has no real
intention of living differently or
deeply examining what lead them to
where they are.

westwest888 said...

Some of you posters are so far off the mark. Do you think three months of mortgage turmoil on Wall Street is not going to ever affect consumers? That's the hand that feeds you all, literally. Without it you're begging a local banker to lend you a few grand for your house based on family name. And paying for everything in cash because you have no credit.

I don't care if someone in Atlanta sold a house for $462k in July - it's irrelevant. Last month is not this month and the mortgage products aren't there for first time buyers or anyone with less than 20% down payment. See my math above on how doubling the down payment requirement halves what you can borrow, all else equal. That's the unraveling of a ponzi scheme, when more people can't get in on the bottom. And then people can't refinance. And then people with homes can't sell them to trade up to bigger homes. And then landlords negative net cash flow can't sell a property to raise cash and lose them all.

About 5M homes will foreclose over the next two years. 4M of these will be irreconcilable, meaning the people will not receive rescue financing or renegotiation and will have to move out. Add that to the 4.1M existing homes for sale right now. Add that to the 800,000 new homes for sale right now. Then multiply the last two numbers by 1.2x to account for more homes that go up. Then start subtracting at 60% the rate of sales we have now (6.1M used houses and 800k new homes a year). 60% because 40% of the mortgage products disappered.

Yeah, it's years and years supply of homes.

Vandal said...

Impac (IMH) just announced no more Alt-A and get this...CNNMoney titled their news release on this using the terminology "liar loan". The MSM is finally starting "wake up".

HappyRenter said...

Anon said:"I feel 1990 prices are not out of the question by the time all is said and done. To many people went all in with 2 incomes and one will likely lose their job in the downturn".

------

Agree. Not much of a US economy with our manufacturing base bit by bit placed in other countries over the last 20 years, not to mention the high cost of living, and stagnant incomes.

1990 prices are very realistic.

HappyRenter said...

Bearzilla said:"My offer was cash and not even a response was received for it".


By the end of this week the're going to wish they had accepted your cash offer.

k.w. - southern ca. said...

Now that credit has dried up, potential house debters will need to start putting in more and more of *their own money*.

Due to this fact, prices will drop more and more nation-wide, until there are enough buyers to create sufficient demand to start making a noticable dent in the excess housing supply.

Anonymous said...

1990 prices, offers at 1/3 of asking

you people are nuttier than I ever suspected

Anonymous said...

About 5M homes will foreclose over the next two years. 4M of these will be irreconcilable, meaning the people will not receive rescue financing or renegotiation and will have to move out. Add that to the 4.1M existing homes for sale right now. Add that to the 800,000 new homes for sale right now. Then multiply the last two numbers by 1.2x to account for more homes that go up. Then start subtracting at 60% the rate of sales we have now (6.1M used houses and 800k new homes a year). 60% because 40% of the mortgage products disappered.

Yeah, it's years and years supply of homes.

==================================

Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.

Next.

j-dog said...

30% sounds about right. There are two different 3br2ba duplexes across the street from me in Ventura, CA which had last sales around 550K in early 06. One became an REO earlier this year, and the other is listed as shortsale. The REO recently sold for 400K and the shortsale is listed at 415K. So yes, we are looking at about 30% off already. Also, in my condo complex, similar units 3br2ba (identical in size) that sold between 540K and 560K in late 05 are now being listed at about 450K and dropping price over 6 months eventually selling for about 400K. The newest one on the market just listed at 398K (identical layout).

It is starting to get tempting, but then I realize that they were only worth 250K 7 years ago, and they only rent for 1800/month. Because it is coastal it might be worth a premium P/E ratio of maybe 150x rent, but not 220x rent. So for now I will continue to sit on the sidelines and wait. The time to buy will be when I am competing for housing only with people who have good credit and can put down at least 20% on a 30yr fixed with PITI no more than 30% of net income . . . all you have to do is read the news to see that eventually the mortgage industry will return to those standards

Anonymous said...

Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.

Next.


No ass munch!! When credit tightens, as it is - and will continue, very few people will qualify (20% or more down in CASH!). Not to mention that most construction jobs will be gone (hmmm, what will illegals do? Pick lettuce at $4.00 an hour and buy a 300K house). Please pull your head out, asshat.

k.w. - southern ca. said...

It is neither a buyer or sellers market - the whole housing scenario is so much bullox.

Prices *will* drop much lower nationally, and most sellers are stuck with loan payments exceeding the market value of their homes.

Refinancing, and "moving up" to a bigger house debt won't be as easy without some cash to back it up.

The coming ARM resets this year will only add in compounding the problems we see now in residential housing even further.

stuckinthecity said...

Lots of money there and more importantly lots of illegals willing to live 10 to a house to make it work.
--

Illegals will not get loans without verifying who they are.

Banks will not loan to someone that is not supposed to be here and could flee at a drop of a sombrero.

LoansNOmore! said...

Anon said:"Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.
Next".
-------

This might have been the case 2 years ago...even 2 weeks ago. But not anymore.

How many "illegals" have correct and accurate documents, including at least a 5% DP for today's house prices?

Next!

Anonymous said...

We go through these bubbles and panics on a regular basis. Amazing how people can beleive that the current bubble is somehow different from all that came before

Anonymous said...

The availability of credit has driven the prices in the residential real estate market ever since the modern 30 year amortizing mortgage was created. Before that time the price of real estate was fairly stable and low.

Mike Mosieur said...

Paul E. Math;

Good summary of the situation!

One little twist. The post following yours from "it's different in Seattle".

Seattle; there are two factors that would keep house prices staying artificially high:

1- Skewed reporting by the media/realtors/ government. Actually no one really knows where prices are…and

2- The psychological effect of “my neighbor sold the identical house for 400K in 2005! Why should I take less? My house has heated toilet seats and a doggie door!!”

Prices are “sticky” presently due in part to psychological reasons, herd mentality.

RTM, return to the mean. Never fails. Paul is absolutely correct, factoring in the psychological (stupidity) factor.

Daniel (the other one) said...

Housing prices have so far not really dropped much. But they will. Right now the housing market is exactly like Wile E. Coyote right after he's run off a cliff and just before he looks down. He hasn't yet started to fall, but it's inevitable that he will.

People trying to sell their homes are still in denial about the reality of the market. But financing for all but prime loans is evaporating by the day. And the big foreclosure wave hasn't even started yet. Once it does, it will force down all the comps, and all those sellers trying to wait out the slump in 2007 will be left high and dry.

Widespread foreclosures + tight financing for buyers = much lower prices in 2008 and 2009, as surely as Wile E. Coyote running off a cliff ends with him plummeting into a chasm.

How much lower? Robert Schiller's index suggests about 50%. But given the tendency of these things to overshoot equilibrium, it might be more. Inventory is high and still growing, and if the economy is thrown into recession while inflation picks up....yikes.

Agent #777 said...

I was interpreting the "1/3 of" as a typo, which was meant to be "1/3 OFF" instead.

Surely someone would not be surprised by not getting a 1/3 list price offer accepted, but I could see a 2/3 list price offer as being somewhat reasonable, depending on the scenario.

Anonymous said...

Anonymous said:

Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.

Next.

August 07, 2007 5:10 PM

Too bad that those extra 6 million US citizens won't be ready to buy for another quarter century and those illegals won't have access to easy financing (that they couldn't afford before anyway).

Excess inventory still on the market. Next.

Anonymous said...

"Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of."

Yep, because as we all know, by this time next year there will be a bunch of new mortgage products on the market that will allow 0- and 1- year olds to buy starter homes. Problem solved!!!!

Anonymous said...

1990 prices is a pipe dream. Unless there's a nuke dropped in your hood those prices are not even remotely likely to be seen again. Now 1/3 of asking....around here most home probably are worth about 1/3 or what people are asking. They've gone up 300% in the last 6 or 7 years so offering 1/3 is about what they sold for in 2001. As much as I would like to see that happen, I doubt it will but I'm keeping my fingers crossed. There's a 1.2M Mcmansion I would love if I could get it for around 500~600K.

turdly said...

Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.

So.... babies and illegals are the plan? Babies gotta be 18 to buy, and illegals need some time to get the cash, and they're probably way too smart to buy in a bad market.
Some people think the illegals will be the firs t to fail. They're not the first to fail, they are the first to BAIL!

Anonymous said...

awfully quiet today.

LOSERRRRRS

Shakster said...

Those HILF(house I'd Like to Flip) Hunters are having a bad year.
The next ten will suck as bad.

RednecksAreDumb said...

bearzilla said...
In Dallas, TX fannie mae brokers do not even respond to my brokers presentation of 1/3 cash offer. i am told by another countrywide broker that they do not accept bids over 10% away from their asking price.

My offer was cash and not even a response was received for it.

++++++++++++

Why should they care if your offer is in cash? Nobody cares. Only an uneducated redneck thinks a "cash offer" is a big deal. How else would you pay, with earthworms? If you get a mortgage for your purchase, the seller is just as happy, THEY are the ones who get the cash, they don't care if you borrow it or have it in the bank; you can't understand that?

panicearly said...

butthat excess inventory wont move
without crazy financing..which is drying up fast..cuts the prices down by half or more...and just what kind of jobs are these newly borns and illegals have to help save up for a traditional loan?

Paul E. Math said...

"Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of."

Newborns and illegals don't have down payments and credit histories.

Next.

Anonymous said...

No ass munch!! When credit tightens, as it is - and will continue, very few people will qualify (20% or more down in CASH!). Not to mention that most construction jobs will be gone (hmmm, what will illegals do? Pick lettuce at $4.00 an hour and buy a 300K house). Please pull your head out, asshat.

August 07, 2007 6:27 PM

===============================

Asshole,

Read the post again. $4 X 10 people in the house =$40 an hour. Get in now el retardo?

Anonymous said...

turdly said...

Population grows at 1% a year that's 6 million over 2 years. Add in a few million illegals who don't get counted and there you have your excess inventory taken care of.

So.... babies and illegals are the plan? Babies gotta be 18 to buy, and illegals need some time to get the cash, and they're probably way too smart to buy in a bad market.

==============

Babies? Ugh is that what population growth means to you moron? No wonder you rent, you can't understand simple demographics.

Anonymous said...

rednecksaredumb:

It makes a difference. A cash offer means there will be no issues to worry about at closing. Just because someone qualifies for a mortgage doesn't mean they will actually get that loan. Unless you've been under a rock the last few weeks you'd know that lots of loans are falling apart last minute. I have read of cases where literally on closing day the lender is saying no, we cannot fund your loan anymore.

Cash transactions take this risk out of the equation.

Obviously you are as dumb as a redneck if you can't figure that out.

Anonymous said...

UneducatedRedneck wrote:

"Why should they care if your offer is in cash? Nobody cares. Only an uneducated redneck thinks a "cash offer" is a big deal. How else would you pay, with earthworms? If you get a mortgage for your purchase, the seller is just as happy, THEY are the ones who get the cash, they don't care if you borrow it or have it in the bank; you can't understand that?

August 08, 2007 3:51"

Rednecksaredumb, you must be the uneducated redbeck who has been hiding in a cave for the past two months. There is huge difference today between an all-cash offer, and an offer to buy a home with cash contingent on financing actually going through successfully. Have you not heard that thousands of home purchase transactions have fallen through at the 11th hour due to funding problems with troubled lenders over the past few weeks? A discounted cash offer these days may be worth more than a higher offer subject to financing going through.

Daphne64 said...

to the anonymous poster of August 08, 2007 1:04 PM:

I understand demographics.
The population will be growing, but if you look at the expected age pyramid you will find there won't be much growth in the 30-50 age groups -and if you are looking at 30- 50 year olds that actually make 50K a year or more, it's actually going to be less.

A lot of good jobs are going overseas, and a lot of good jobs are turning into less good jobs that only go to H1B visa holders.

The days of 6 illegals pooling their wages to get a loan are gone - thank goodness. If only we can outlaw illegals - oh wait - they already are illegal...

El Dong said...

West888 said:
Let's say you're ready to buy in bubble city, like Washington, DC. Maybe you're pretty secure so you've got $45,000 allocated for a down payment and a little extra for closing. Last week you were looking at 90% LTV, so $495k purchase price. Now that product isn't offered any more for Alt-A trash such as yourself with your inferior down payment.

Man, I smell a bitter boy who makes enough to afford his BMW but not a house. :O

You're all mixing #s to make yourselves feel better. 27% off is when factored for inflation - That is, prices will slide slowly for awhile, and then stagnate/grow slower than the pace of inflation. Effectively, you will see 27% drop over the course of 5 years, but with inflation spiraling out of control, that'll turn out to be a very small appreciation from today of maybe 0-5%. Rates will jump though, so you still won't be able to afford that house for 5-10 years at a minimum. At that point, we'll be in roughly the same place equity-wise (MBA student ftw so my assets/income will continue to jump)...except I'll have been living in and enjoying my own home those 5-10, while you were bitter and hating me and all other homeowners, and life in general the entire time.