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I posted this in another thread, but even with all the market downturn, I believe that Atlanta is a buying opportunity. There are more and more people who are moving there because the housing is so cheap. I think that right now is a buying opportunity there and money can be made if you hold on for two years. I don't have numbers to back me up, but i'm going by what i'm seeing and i'm pretty confident in the market in ATL.

DaTruth

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I posted this in another thread, but even with all the market downturn, I believe that Atlanta is a buying opportunity. There are more and more people who are moving there because the housing is so cheap. I think that right now is a buying opportunity there and money can be made if you hold on for two years. I don't have numbers to back me up, but i'm going by what i'm seeing and i'm pretty confident in the market in ATL. DaTruth

:confused: RE is local, and I know friends of mine in other markets have profited recently.Glad to hear ATL is hot - I have an old friend who recently relocated from DC and bought a townhouse.
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I posted this in another thread, but even with all the market downturn, I believe that Atlanta is a buying opportunity. There are more and more people who are moving there because the housing is so cheap. I think that right now is a buying opportunity there and money can be made if you hold on for two years. I don't have numbers to back me up, but i'm going by what i'm seeing and i'm pretty confident in the market in ATL. DaTruth

Maybe a more knowledgeable person can explain this to me, but I have a hard time understanding how Atlanta (which according to the above is attractive because it's cheaper than most other places right now) is going to maintain or increase while prices drop everywhere else.
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Well folks, this is one of the big, BIG hammers that those of us on the sideline have been waiting on.

:goodposting:

S&P may downgrade $12 bln of subprime securities

Rival rating agency Moody's cuts 399 mortgage-backed securities

Why is this a BIG, BIG hammer?

Aren't "new" subprime loans hard to come by already? This to me seems like a downgrading of securities that are already on the market, i.e. the loans already exist. Not sure how this takes any more buyers out of the market than there are today. I just don't see any way to link future home sales to this security downgrade.

Again, I can see how this would make borrowing tougher, but it seems to me that that has already happened with all the subprime lender fallout.

Monday, Wells Fargo joined Countrywide Financial Corp., Washington Mutual Inc., Merrill Lynch & Co.’s First Franklin and H&R Block Inc.’s Option One Mortgage in stopping the 2/28 subprime ARMs, which accounted for 65% of Wells' 2006 subprime market. Link

This is what I meant by a hammer dropping. The credit downgrades forced these huge lenders to pull some of their most popular loans. Before the downgrades, these loans were still being offered, despite the credit crunch.

This takes a percentage of buyers out of an already struggling market. That doesn't bode well for housing in the near future.

I kind of understand what you are saying, but I honestly don't think your post was correct. I think the big hammer in sub prime has already occurred when all of those companies went out of business and lots of major players exited the business all together a few months ago.

Sure that was 65% of their 2006 business, but their 2006 business >>>>>>>>>>> 2007 business. I have no idea what the numbers are, but the lack of buyers to me has not all of a sudden changed by a large percentage because of this news. I think that already happened.

I have no idea when the housing market will turn around and to a certain degree I feel settled now, so I almost don't care. If I were single or had no kids, I would definitely be looking into foreclosures and spending free time fixing places up and selling them, but I am not so I won't.

I only hope that the economy treads water or better while this sorts out because obviously the state of the economy impacts everyone.

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Well folks, this is one of the big, BIG hammers that those of us on the sideline have been waiting on.

:lmao:

S&P may downgrade $12 bln of subprime securities

Rival rating agency Moody's cuts 399 mortgage-backed securities

Why is this a BIG, BIG hammer?

Aren't "new" subprime loans hard to come by already? This to me seems like a downgrading of securities that are already on the market, i.e. the loans already exist. Not sure how this takes any more buyers out of the market than there are today. I just don't see any way to link future home sales to this security downgrade.

Again, I can see how this would make borrowing tougher, but it seems to me that that has already happened with all the subprime lender fallout.

Monday, Wells Fargo joined Countrywide Financial Corp., Washington Mutual Inc., Merrill Lynch & Co.’s First Franklin and H&R Block Inc.’s Option One Mortgage in stopping the 2/28 subprime ARMs, which accounted for 65% of Wells' 2006 subprime market. Link

This is what I meant by a hammer dropping. The credit downgrades forced these huge lenders to pull some of their most popular loans. Before the downgrades, these loans were still being offered, despite the credit crunch.

This takes a percentage of buyers out of an already struggling market. That doesn't bode well for housing in the near future.

I kind of understand what you are saying, but I honestly don't think your post was correct. I think the big hammer in sub prime has already occurred when all of those companies went out of business and lots of major players exited the business all together a few months ago.

Sure that was 65% of their 2006 business, but their 2006 business >>>>>>>>>>> 2007 business. I have no idea what the numbers are, but the lack of buyers to me has not all of a sudden changed by a large percentage because of this news. I think that already happened.

I have no idea when the housing market will turn around and to a certain degree I feel settled now, so I almost don't care. If I were single or had no kids, I would definitely be looking into foreclosures and spending free time fixing places up and selling them, but I am not so I won't.

I only hope that the economy treads water or better while this sorts out because obviously the state of the economy impacts everyone.

I hear you. Again, I'm just posting news I find relevant, and my amateur observations. I'm wrong as often as I'm right, so my post could very well prove to be incorrect.

I don't know when the market will turn around either, but I know RE is a slow moving ship, so it doesn't correct in 6-8 months after the biggest 5-7 year run in history, and then suddenly begin to climb again. Prices are a lagging indicator, so even when you think we've reached the bottom in terms of sales, foreclosures, etc, you have to wait months for prices to reflect those factors.

That's why I strongly disagree with those who suggest now is a great time to buy in SD. Prices are just barely beginning to reflect the subprime mess, and statistics indicate foreclosures and defaults will continue to rise for another 8-12 months from even their current record totals. It may be a much better time to buy now than it was at this time in '06, but even a good buy today may look foolish 12 months from now as things get worse.

:popcorn:

Edited by tommyGunZ
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St. Louis has slowed down considerably.  The pendulum has swung more towards the middle now, actually favoring buyers more.  Good thing, because I'm starting to get sick of the mom n' pop real estate places that are popping up everywhere in my area.

If you're looking to move to St. Louis, it's looking pretty favorable for you.  Lots of homes for sale, very saturated market, and lots of realtors looking for business.  My mom's trying to sell her house and she's had to whack $6k off the listing price because the damn thing just won't sell.  Too many tire-kickers.  Never seen it before in my life.

Construction still booming on NW side (IL) where I live. Folks in StL sick of overpaying for 1/2 the house they'd get over here for an extra 20 minute drive. Used to live on the fringes of civilization and now I'm the little guy in the middle of suburban sprawl. :goodposting:
I'm 15 miles south of downtown St. Louis in Imperial. Plenty of nice new homes for about half of what you'd pay in the South County area. Edited by Commish77
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And those that thought mortgage problems were limited to subprime, think again.

It's gonna get u-l-g-y folks. Hold on to your hats!

And to think some doofus on this board just recently said he was planning on buying a house and flipping it for profit. I laughed so hard at that one. I guess he has a time machine also so he can buy the house, go back 2 years and flip it to some clueless tard. I've known for well over a year that we are going to meltdown like never before. Sure you can buy some house in forclusure, but who are you going to sell it to? Most of the brainless are no longer candidates for a mtg and those with a clue already own. The prospects to sell to have dwindled.
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I kind of understand what you are saying, but I honestly don't think your post was correct. I think the big hammer in sub prime has already occurred when all of those companies went out of business and lots of major players exited the business all together a few months ago.Sure that was 65% of their 2006 business, but their 2006 business >>>>>>>>>>> 2007 business. I have no idea what the numbers are, but the lack of buyers to me has not all of a sudden changed by a large percentage because of this news. I think that already happened.I have no idea when the housing market will turn around and to a certain degree I feel settled now, so I almost don't care. If I were single or had no kids, I would definitely be looking into foreclosures and spending free time fixing places up and selling them, but I am not so I won't.I only hope that the economy treads water or better while this sorts out because obviously the state of the economy impacts everyone.

Housing and financials are pretty far from my area of expertise, but I think I could lend a few observations here.First off, you have to consider all of the ARM activity that has happened over the past three years. ARM loans as a % of total home loans have increased massively over that time period. So there are a lot of people with low teaser rates that are going to expire over the next couple of years. That is going to put a lot of homeowners who might now be teetering near distress right over the edge.Home affordability, while improved from where it was just a few months ago, is still pretty bad by historical standards. Obviously this varies a lot by specific market, but it is still a big deal.Inventories are also super-elevated, especially in the condo and townhome segments.Taken as a whole, there is still plenty of room for the picture to get meaningfully worse. And I don't think it will just be isolated to sup-prime.
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Well folks, this is one of the big, BIG hammers that those of us on the sideline have been waiting on.

:bye:

S&P may downgrade $12 bln of subprime securities

Rival rating agency Moody's cuts 399 mortgage-backed securities

Why is this a BIG, BIG hammer?

Aren't "new" subprime loans hard to come by already? This to me seems like a downgrading of securities that are already on the market, i.e. the loans already exist. Not sure how this takes any more buyers out of the market than there are today. I just don't see any way to link future home sales to this security downgrade.

Again, I can see how this would make borrowing tougher, but it seems to me that that has already happened with all the subprime lender fallout.

Monday, Wells Fargo joined Countrywide Financial Corp., Washington Mutual Inc., Merrill Lynch & Co.’s First Franklin and H&R Block Inc.’s Option One Mortgage in stopping the 2/28 subprime ARMs, which accounted for 65% of Wells' 2006 subprime market. Link

This is what I meant by a hammer dropping. The credit downgrades forced these huge lenders to pull some of their most popular loans. Before the downgrades, these loans were still being offered, despite the credit crunch.

This takes a percentage of buyers out of an already struggling market. That doesn't bode well for housing in the near future.

I kind of understand what you are saying, but I honestly don't think your post was correct. I think the big hammer in sub prime has already occurred when all of those companies went out of business and lots of major players exited the business all together a few months ago.

Sure that was 65% of their 2006 business, but their 2006 business >>>>>>>>>>> 2007 business. I have no idea what the numbers are, but the lack of buyers to me has not all of a sudden changed by a large percentage because of this news. I think that already happened.

I have no idea when the housing market will turn around and to a certain degree I feel settled now, so I almost don't care. If I were single or had no kids, I would definitely be looking into foreclosures and spending free time fixing places up and selling them, but I am not so I won't.

I only hope that the economy treads water or better while this sorts out because obviously the state of the economy impacts everyone.

I hear you. Again, I'm just posting news I find relevant, and my amateur observations. I'm wrong as often as I'm right, so my post could very well prove to be incorrect.

I don't know when the market will turn around either, but I know RE is a slow moving ship, so it doesn't correct in 6-8 months after the biggest 5-7 year run in history, and then suddenly begin to climb again. Prices are a lagging indicator, so even when you think we've reached the bottom in terms of sales, foreclosures, etc, you have to wait months for prices to reflect those factors.

That's why I strongly disagree with those who suggest now is a great time to buy in SD. Prices are just barely beginning to reflect the subprime mess, and statistics indicate foreclosures and defaults will continue to rise for another 8-12 months from even their current record totals. It may be a much better time to buy now than it was at this time in '06, but even a good buy today may look foolish 12 months from now as things get worse.

:goodposting:

I understand what you are saying, I just think the big hammer has fallen already and you are just continuing to see the fallout. I think your article is one of the straws on the camel's back and we already have the 2 ton weight on there.

To be honest, I think foreclosures are up more because people are lazy. What I mean by that is that people who are in the red now on their house are basically not paying their mortgages and then just going to foreclosure. What is the worst that happens to someone in foreclosure? A ding on their credit rating. If you were underwater by 50-100k+ on my house, you just decide to dump it and buy another one in 7 years. More and more people are going to take the easy way out and worry about the mess later. That is exactly what the lady who bought my home did. She probably could afford the payment, but she had some disputes over trying to run a daycare from her home (legal) and my old neighbors. She decided to sell and I think she realized she would lose money and just gave the keys to the bank.

With the amount of foreclosures happening now, no lender is going to think twice about lending you $$$ if you have cleaned up your credit by then. That is why I, once again and calling the housing boom of 2014-2019. You heard it hear first. :)

By the way TGunz, you are without kids and since you can't pass the bar, you probably have a ton of free time. You might not realize it, but have kids and you will realize how much free time you had. With all of the foreclosures in SD, have you thought about scooping up a property and doing your own fixup? You aren't going to flip it, but if you can get a huge discount, why not do it when all the doom and gloom is being forecast. At worst the rest of the RE prices come down to your level, at best you have a lot of built in equity and you got in at as close to the bottom as you could.

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By the way TGunz, you are without kids and since you can't pass the bar, you probably have a ton of free time. You might not realize it, but have kids and you will realize how much free time you had. With all of the foreclosures in SD, have you thought about scooping up a property and doing your own fixup? You aren't going to flip it, but if you can get a huge discount, why not do it when all the doom and gloom is being forecast. At worst the rest of the RE prices come down to your level, at best you have a lot of built in equity and you got in at as close to the bottom as you could.

Foreclosures not discounted enough right now to make it fiscally wise to buy right now. A 10-15% clip may be washed away a year from now, and the RE fever still isn't quite dead as there are folks in line at the foreclosure auctions.Gotta wait until the masses sour. Despite the obvious signs that RE is a piss pour investment right now, there are still clowns anxious to buy who haven't had the message beaten through their thick skulls yet.Next fall may be time to jump. By that time, hopefully I'll get a significant discount and be able to fix it up myself. Oh, and I'll be barred at that time too. :coffee: Edited by tommyGunZ
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[With the amount of foreclosures happening now, no lender is going to think twice about lending you $$$ if you have cleaned up your credit by then. That is why I, once again and calling the housing boom of 2014-2019. You heard it hear first. :kicksrock:

My thinking exactly. Those of us who have been in these cycles before know that it doesn't turn around in 2 years after the levels of appreciation we've had. Speculators are gone. It's back to the stock market. Stay in the stock market for another 5-6 years or so, then it'll be time for the next big run up in RE. It ain't all that complicated - the lemming mentality...
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[With the amount of foreclosures happening now, no lender is going to think twice about lending you $$$ if you have cleaned up your credit by then. That is why I, once again and calling the housing boom of 2014-2019. You heard it hear first. :goodposting:

My thinking exactly. Those of us who have been in these cycles before know that it doesn't turn around in 2 years after the levels of appreciation we've had. Speculators are gone. It's back to the stock market. Stay in the stock market for another 5-6 years or so, then it'll be time for the next big run up in RE. It ain't all that complicated - the lemming mentality...
Exactly what my pops says. He's been in RE for 30+ years, and begs me not to think about buying for at least another year.
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To be honest, I think foreclosures are up more because people are lazy. What I mean by that is that people who are in the red now on their house are basically not paying their mortgages and then just going to foreclosure. What is the worst that happens to someone in foreclosure? A ding on their credit rating.

They're not lazy; they're just too poor to afford the house.If they were lazy, they would have foreclosed sooner. If they weren't poor, they wouldn't have foreclosed at all.
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I have seen this thread, but haven't been in it until now, and haven't read very much of it. My area is among the cheapest to live in the country. How much would this house/property go for in your area?

Depends on exactly where in San Diego that would be. In my zip code, with 3 acres, proabably ~4-5 million?

Prices holding in AZ, and inventory is shrinking.

What happened to that crash TGunz?

I have to think that Arizona is one of the most stable markets in the country right now. The population is growing at a rate greater than the rest of the country and once retired, people are moving west from the North East to avoid the cold winters & brutal property taxes & insurrance costs in NJ, NY, Conn etc.
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I have seen this thread, but haven't been in it until now, and haven't read very much of it. My area is among the cheapest to live in the country. How much would this house/property go for in your area?

Depends on exactly where in San Diego that would be. In my zip code, with 3 acres, proabably ~4-5 million?

Prices holding in AZ, and inventory is shrinking.

What happened to that crash TGunz?

I have to think that Arizona is one of the most stable markets in the country right now. The population is growing at a rate greater than the rest of the country and once retired, people are moving west from the North East to avoid the cold winters & brutal property taxes & insurrance costs in NJ, NY, Conn etc.
Haven't people been moving to AZ from the North East for decades?

There are 60k+ homes on the market in greater Phoenix right now. That's not stable.

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What's the average # of homes on the market at any given time in Phoenix?

My point was that more people are moving to Arizona than are leaving it. I don't have a link but a cllegue of mine just bought some land in Arizona and said that the growth rate in Zona was 2nd only to Las Vegas last year. I have to think that an area that's #2 in growth in the entire United States (unverified) would be more stable than an area whose population dropped 15% in the past 5 years. If anywhere is going to be stable it's the area where everyone is moving to, no?

Edited by Penguin
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To be honest, I think foreclosures are up more because people are lazy. What I mean by that is that people who are in the red now on their house are basically not paying their mortgages and then just going to foreclosure. What is the worst that happens to someone in foreclosure? A ding on their credit rating.

They're not lazy; they're just too poor to afford the house.

If they were lazy, they would have foreclosed sooner. If they weren't poor, they wouldn't have foreclosed at all.

See, I think this is where you are wrong. By the way, lazy was a bad word. I couldn't think of a better one, maybe taking the easy way out.

Anyway, where I think you are wrong is that I think a lot of people are foreclosing because even if they have the cash on hand or coule afford the mortgage, that they are dumping the house because they are so far underwater. Anyone that bought in 2005 or 2006 (depends on the area) could be down as much as 15-20% or more. Most of the foreclosures (outside of Detroit :lmao: ) are in areas where prices ran up, so I could easily see a lot of people at 100k underwater without a whole lot of effort.

The lady who bought my house drove a nice SUV and if it weren't for the dispute with the neighbors, she might have stayed there for a while. Once she realized she was going to move and that she wasn't going to get what she paid for it, she went into foreclosure.

When you have as many foreclosures as you have now, it probably isn't as mentally a black mark as it may have been back in 1998. In 1998, getting your home foreclosed on meant that you lost your job, etc., so it was probably a big hit to your pride. In 2007, getting your home foreclosed just meant that you got a bad loan or the housing prices crashed, etc. Everyone is doing it now, so no big deal. I can think of a million lines I could give to a future loan agent in 2014 about why my house was foreclosed that they would gobble up just to give me a new loan.

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[With the amount of foreclosures happening now, no lender is going to think twice about lending you $$$ if you have cleaned up your credit by then. That is why I, once again and calling the housing boom of 2014-2019. You heard it hear first. :)

My thinking exactly. Those of us who have been in these cycles before know that it doesn't turn around in 2 years after the levels of appreciation we've had. Speculators are gone. It's back to the stock market. Stay in the stock market for another 5-6 years or so, then it'll be time for the next big run up in RE. It ain't all that complicated - the lemming mentality...
Exactly what my pops says. He's been in RE for 30+ years, and begs me not to think about buying for at least another year.
Look at the hustler. Blah, blah, blah, I know nothing about RE, but here are some articles, blah, blah, blah.Well, it looks like the hustler just slipped up and admitted he has a source, his father no less, who has been in RE his whole career. You probably are taking the bar to become a real estate attorney aren't you? You have probably worked in RE your whole career as well, haven't you? It would explain your inability to pass the bar.:lmao:
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The Worst Is Yet to Come

By Rich Greifner July 26, 2007

Remember the subprime meltdown last winter? Low-credit borrowers defaulted on their home loan payments in increasing numbers when their adjustable-rate mortgage interest rates reset. Shares of major subprime lenders like Countrywide Financial (NYSE: CFC) plummeted, while the most egregious offenders filed for bankruptcy.

Investors were pretty panicked -- for about a week. The market fell 5%, but quickly rebounded. Within a month, those losses were erased, and the major indexes were setting all-time highs by summer.

You call that a meltdown?

The market's resurgence was impressive, but let's not pat ourselves on the back just yet. The subprime episode wasn't a meltdown, a crisis, or a disaster. It was a warning, and we failed to heed it. The real meltdown is coming ... and its name is Alt-A.

No one knows for sure when the Alt-A implosion will happen, or how much damage it will ultimately cause. But the experts do agree on one thing: The Alt-A fallout will make the subprime situation seem like a minor chimney fire.

I have a few suggestions on how you can protect your portfolio, but first, let's get to know the enemy.

Pants on fire

If you aren't familiar with Alt-A mortgages, perhaps you know them by another name: These products also go by the charming moniker "Liar Loans," because many Alt-A borrowers overstate their income and/or assets and provide little or no documentation to secure their mortgages. Historically, lenders reserved Alt-A mortgages for borrowers with blemished but not irreparable credit. Accordingly, these loans carry an interest rate somewhere between prime and subprime.

However, in recent years, the Alt-A segment has evolved. Now it reflects the type of mortgage product rather than the credit quality of the borrower. Mortgage lenders have devised ever more risky "exotic" mortgage products, most of which fall under the Alt-A label. Interest-only loans were a particularly devious innovation. Worse still are "negative amortization" loans, where the monthly mortgage payment is based on a below-market interest rate for an initial period (think of a minimum payment on a credit card).

These exotic mortgage products aren't dangerous in and of themselves. The problem occurs when a borrower uses these products' lower initial monthly payments to qualify for a home that he or she otherwise could not afford. According to a recent Credit Suisse report, surging home prices and record-low interest rates over the past five years tempted many borrowers: In 2001, interest-only and negative amortization loans comprised 1% of total mortgage purchase originations. By 2005, that figure was 29%.

Prediction: pain

The recent influx of exotic mortgage products wouldn't be troublesome as long as mortgage lenders maintained disciplined underwriting standards (they didn't) and home prices continued to rise (they haven't). When those artificially low initial rates reset, the damage will likely be severe. But because these new mortgage products have never been tested in a stress scenario, it's difficult to quantify the potential impact.

Consider the dire prediction of Lou Ranieri, widely considered the father of the mortgage-backed securities industry: The subprime meltdown "is the leading edge of the storm," he said last March. "If you think this is bad, imagine what it's going to be like in the middle of the crisis." Between subprime and Alt-A, Ranieri estimates that more than $100 billion of home loans are likely to default.

Ranieri's forecast may turn out to be accurate, or it could be exaggerated. Either way, this much is clear: Many Alt-A borrowers will struggle to make their monthly mortgage payments. Some will lose their homes.

But wait, there's more

Alt-A lenders such as IndyMac Bancorp (NYSE: IMB) and homebuilders such as KB Home (NYSE: KBH) should continue to suffer, and the worst companies in these industries may fail. But even if most homeowners manage to make their mortgage payments, they probably won't have any disposable income left over.

That means we can expect soft sales at home improvement retailers such as Lowe's (NYSE: LOW) and consumer discretionary concerns such as Harley-Davidson (NYSE: HOG). In fact, you'll probably want to avoid all luxury-good manufacturers and any retailer with heavy consumer credit exposure.

Gimme shelter

However, there are certain types of investments that should weather the Alt-A storm just fine -- or at least better than most.

Dividend-paying stocks aren't the sexiest securities in a bull market, but when the going gets rough, these high yielders are tough enough to keep going. Look for established companies with strong balance sheets, a history of dividend increases, and a portfolio of products that will always be in demand. No matter the state of the economy, consumers will always turn to Kimberly-Clark (NYSE: KMB) for tissues, towels, and toilet paper. Similarly, Johnson & Johnson's (NYSE: JNJ) consumer health-care products will continue to be best-sellers. What's more, these companies sell their products in more than 150 countries and have a history of raising payouts to shareholders.

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[With the amount of foreclosures happening now, no lender is going to think twice about lending you $$$ if you have cleaned up your credit by then. That is why I, once again and calling the housing boom of 2014-2019. You heard it hear first. :fro:

My thinking exactly. Those of us who have been in these cycles before know that it doesn't turn around in 2 years after the levels of appreciation we've had. Speculators are gone. It's back to the stock market. Stay in the stock market for another 5-6 years or so, then it'll be time for the next big run up in RE. It ain't all that complicated - the lemming mentality...
Exactly what my pops says. He's been in RE for 30+ years, and begs me not to think about buying for at least another year.
Look at the hustler. Blah, blah, blah, I know nothing about RE, but here are some articles, blah, blah, blah.Well, it looks like the hustler just slipped up and admitted he has a source, his father no less, who has been in RE his whole career. You probably are taking the bar to become a real estate attorney aren't you? You have probably worked in RE your whole career as well, haven't you? It would explain your inability to pass the bar.:hot:
:hifive:
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And now the Alt-A companies begin to fall. Those who thought this mess was contained to subprime were apparently wrong. Looks like lots of folks (regardless of credit score) got into loans way over their head.

American Home Hit Hammers Lenders

By Laurie Kulikowski

TheStreet.com Staff Reporter

7/30/2007 11:27 AM EDT

Mortgage stocks sold off again Monday after American Home Mortgage (AHM - Cramer's Take - Stockpickr - Rating) failed to make a dividend payment.

American Home said late Friday it was delaying paying quarterly dividends because of margin calls and writedowns. The news came just a month after American Home warned of a second-quarter loss but pledged to maintain its 70-cent common-stock dividend rate.

Shares of the Melville, N.Y.-real estate investment trust were delayed at the opening Monday after plunging 38% in premarket trading.

The news sent down shares of other primarily Alt-A lenders, such as IndyMac (IMB - Cramer's Take - Stockpickr - Rating), which dropped 5%, while Impac Mortgage (IMH - Cramer's Take - Stockpickr - Rating) fell 12%. Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating), the largest independent mortgage lender, dropped 2%.

Luminent (LUM - Cramer's Take - Stockpickr - Rating), another mortgage-related company, fell 3% Monday even after it reaffirmed its dividend plans and said it is "not subject to the loan repurchase risk that is currently impacting certain loan originators."

The decision by American Home Mortgage is yet another piece to the deteriorating mortgage puzzle that has spread way beyond the subprime loan industry. The news does not bode well for Pasadena, Calif.-based IndyMac, which is set to report earnings on Tuesday.

Countrywide said last week that rising delinquencies and defaults were being experienced in some so-called prime mortgage categories, such as home-equity loans.

The Calabasas, Calif.-based lender's CEO, Angelo Mozilo, also said he doesn't see a housing recovery until 2009.

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And now the Alt-A companies begin to fall. Those who thought this mess was contained to subprime were apparently wrong. Looks like lots of folks (regardless of credit score) got into loans way over their head.

American Home Hit Hammers Lenders

By Laurie Kulikowski

TheStreet.com Staff Reporter

7/30/2007 11:27 AM EDT

Mortgage stocks sold off again Monday after American Home Mortgage (AHM - Cramer's Take - Stockpickr - Rating) failed to make a dividend payment.

American Home said late Friday it was delaying paying quarterly dividends because of margin calls and writedowns. The news came just a month after American Home warned of a second-quarter loss but pledged to maintain its 70-cent common-stock dividend rate.

Shares of the Melville, N.Y.-real estate investment trust were delayed at the opening Monday after plunging 38% in premarket trading.

The news sent down shares of other primarily Alt-A lenders, such as IndyMac (IMB - Cramer's Take - Stockpickr - Rating), which dropped 5%, while Impac Mortgage (IMH - Cramer's Take - Stockpickr - Rating) fell 12%. Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating), the largest independent mortgage lender, dropped 2%.

Luminent (LUM - Cramer's Take - Stockpickr - Rating), another mortgage-related company, fell 3% Monday even after it reaffirmed its dividend plans and said it is "not subject to the loan repurchase risk that is currently impacting certain loan originators."

The decision by American Home Mortgage is yet another piece to the deteriorating mortgage puzzle that has spread way beyond the subprime loan industry. The news does not bode well for Pasadena, Calif.-based IndyMac, which is set to report earnings on Tuesday.

Countrywide said last week that rising delinquencies and defaults were being experienced in some so-called prime mortgage categories, such as home-equity loans.

The Calabasas, Calif.-based lender's CEO, Angelo Mozilo, also said he doesn't see a housing recovery until 2009.

I still think a huge issue is that foreclosures are too easy. I am not an expert on this, but if I bought a house at say 500k and it was worth 400k now and I decided to just stop making payments, what would happen? I would assume that after a certain period, the bank would foreclose on my house, but does that bank have any rights to any of my other assets? I assume the only asset on the loan is the house and if so, it seems like an easy decision to me to just dump the house, especially if I bought in 2005/2006 and I knew I was underwater quite a bit.

Also, you yourself mentioned that investors were the buying most of the homes in SD in 2005/2006. To me, those are the first ones to dump the houses. Unlike Joe Bob Smith who just decided to move to SD and buy too big a house, all of those investors don't have any skin in the game. They aren't having to tell their spouse and kids that they need to move and there is no pride factor that makes them try and stay in the house so that the neighbors don't think poorly of them.

Do you have any idea if investors are good % of the interest only, negam, alt-a, subprime type loans? Whenever I watch those flipping shows, they either show what looks like a company of people or some random folks that don't look like 100k+ FBGs. Those random folks to me, seem like the type to get the alternative type loans to have as low a mortgage as possible and to actually qualify for a mortgage that they probably wouldn't get. For instance a doctor making 300k, probably has an easy time getting a second mortgage for his lake house, but Joe schlub flipper probably doesn't and thus they have to get the funky loans and hope they flip fast enough to get out of the house before paying much on the funky mortgage.

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And now the Alt-A companies begin to fall. Those who thought this mess was contained to subprime were apparently wrong. Looks like lots of folks (regardless of credit score) got into loans way over their head.

American Home Hit Hammers Lenders

By Laurie Kulikowski

TheStreet.com Staff Reporter

7/30/2007 11:27 AM EDT

Mortgage stocks sold off again Monday after American Home Mortgage (AHM - Cramer's Take - Stockpickr - Rating) failed to make a dividend payment.

American Home said late Friday it was delaying paying quarterly dividends because of margin calls and writedowns. The news came just a month after American Home warned of a second-quarter loss but pledged to maintain its 70-cent common-stock dividend rate.

Shares of the Melville, N.Y.-real estate investment trust were delayed at the opening Monday after plunging 38% in premarket trading.

The news sent down shares of other primarily Alt-A lenders, such as IndyMac (IMB - Cramer's Take - Stockpickr - Rating), which dropped 5%, while Impac Mortgage (IMH - Cramer's Take - Stockpickr - Rating) fell 12%. Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating), the largest independent mortgage lender, dropped 2%.

Luminent (LUM - Cramer's Take - Stockpickr - Rating), another mortgage-related company, fell 3% Monday even after it reaffirmed its dividend plans and said it is "not subject to the loan repurchase risk that is currently impacting certain loan originators."

The decision by American Home Mortgage is yet another piece to the deteriorating mortgage puzzle that has spread way beyond the subprime loan industry. The news does not bode well for Pasadena, Calif.-based IndyMac, which is set to report earnings on Tuesday.

Countrywide said last week that rising delinquencies and defaults were being experienced in some so-called prime mortgage categories, such as home-equity loans.

The Calabasas, Calif.-based lender's CEO, Angelo Mozilo, also said he doesn't see a housing recovery until 2009.

I still think a huge issue is that foreclosures are too easy. I am not an expert on this, but if I bought a house at say 500k and it was worth 400k now and I decided to just stop making payments, what would happen? I would assume that after a certain period, the bank would foreclose on my house, but does that bank have any rights to any of my other assets? I assume the only asset on the loan is the house and if so, it seems like an easy decision to me to just dump the house, especially if I bought in 2005/2006 and I knew I was underwater quite a bit.
That's what thousands of people are doing. Their decision basically comes down to: their credit being ruined for 7 yrs, or getting out of a house that is 50, 100, or 200k underwater. We all know good credit is important, but at some point it becomes too expensive.

My wife and I have very good credit at this point. For 200k, I would strongly consider trashing my credit and waiting 7 years.

Also, you yourself mentioned that investors were the buying most of the homes in SD in 2005/2006. To me, those are the first ones to dump the houses. Unlike Joe Bob Smith who just decided to move to SD and buy too big a house, all of those investors don't have any skin in the game. They aren't having to tell their spouse and kids that they need to move and there is no pride factor that makes them try and stay in the house so that the neighbors don't think poorly of them.

Do you have any idea if investors are good % of the interest only, negam, alt-a, subprime type loans? Whenever I watch those flipping shows, they either show what looks like a company of people or some random folks that don't look like 100k+ FBGs. Those random folks to me, seem like the type to get the alternative type loans to have as low a mortgage as possible and to actually qualify for a mortgage that they probably wouldn't get. For instance a doctor making 300k, probably has an easy time getting a second mortgage for his lake house, but Joe schlub flipper probably doesn't and thus they have to get the funky loans and hope they flip fast enough to get out of the house before paying much on the funky mortgage.

Lots of investors bought in SD during that time period and have been burnt. At the same time, regular Tom and Joe's also bought homes, and the homes they purchased were artificially inflated by investors and easy credit. Now that investors are long gone and easy credit is drying up, no one can afford homes in SD at current prices, which is why sales are flatlining.

Think about it. SD median family income is $62k. The average home price is right around 500k. That is why I have been screaming that RE is vastly overvalued in my market for the past couple of years. Historically, home prices are around 3-4X median incomes. That means at the high end, San Diego RE should carry average values of 186k-248k in order for the population support local RE.

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I still think a huge issue is that foreclosures are too easy.

What is the alternative, then? They don't have the money to pay the increased mortgage.
Exactly. Loose underwriting helped create this bubble, so investors and banks who loaned 500k to people making 40k for a home are going to pay the price. As they should.
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I still think a huge issue is that foreclosures are too easy.

What is the alternative, then? They don't have the money to pay the increased mortgage.
Exactly. Loose underwriting helped create this bubble, so investors and banks who loaned 500k to people making 40k for a home are going to pay the price. As they should.
If all goes according to plan, the entire economy will take the hit.
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I still think a huge issue is that foreclosures are too easy.

What is the alternative, then? They don't have the money to pay the increased mortgage.
Well to me there are 3 types of foreclosures:1. Person buys a home, can afford it, but a job/medical/other issue occurs and they can no longer afford the home. This happens all the time and always will, good markets or bad. Since employment numbers have been pretty static, this can't be the reason for the huge rise.2. Person buys a home with a risky loan, but feels that they can afford the house. Prices drop and their rates go up and they realize they can't afford it.3. Person buys the home as a flipper, doesn't care if they can afford the house. Prices drop and sales dry up and they are left holding a mortgage they never wanted.Now 2 and 3 are the cause behind the big rise in foreclosures. You may say that #2 is a person down on their luck. Well, they either are really, really, really stupid not to realize their loan will be unaffordable in 2 years or they got tricked into that loan. I think that there may be cases where people didn't understand the loan, but I think that those are the more sensationalized cases. They are great for the Dateline shows, but that really isn't the 95% case. What I think the folks in 2 were thinking is that real estate is just easy money. We will buy an unaffordable home, live in it at the teaser rate for 2 years and then sell it and roll that 150k into our real new home, or buy then, we will be able to afford it. To me, those people are "investors" whether they actually lived in the home or not. If it were 1997, those same people probably would never have done what they did.For instance, the person that bought my house was Latino. Now, the first instinct you might have since my house was very expensive and was in an rapid price growth region, was that they got into a loan that they didn't understand. They were led to believe that they could afford the house. Well, a year later, the house was foreclosed on and my FIL happened to get a letter from a lawyer and accidentally opened it since our mail was being forwarded to them a year ago. In it, it detailed the other properties that they also had gotten foreclosed. They knew exactly what they were getting into. They were trying to make money in the RE market and when they attempted to sell (they planned to sell because of issues with the neighbors, not to flip), they realized that they would lose money, so they walked.
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I still think a huge issue is that foreclosures are too easy.

What is the alternative, then? They don't have the money to pay the increased mortgage.
Exactly. Loose underwriting helped create this bubble, so investors and banks who loaned 500k to people making 40k for a home are going to pay the price. As they should.
See my post above. While I agree that lenders got greedy and instead of realizing the risks, which were obvious since house prices cannot continue to go up 15% a year, they got what they had coming. You cannot ignore that the buyers also got greedy and because of it, they will take a hit as well. I have no doubt that most of the people making 40k knew that they couldn't afford the loan, but went ahead with it because they thought it was easy money. Just stay in the house long enough at the teaser rates and you can make 40k a year in appreciation, i.e. double your salary.Unless all of the closing agents out there are crooked as well, there is a huge page that everyone signs that lists the amount of each and every payment that you will make. Maybe it is just NC and VA, but I still think it is crazy to think that anything more than a scant set of folks were actually "tricked" into a bad mortgage. Enough to see on Dateline, but I think I would classify most of those 40k folks as people that knew what they were doing and were trying to make money on RE like everyone else had.
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Think about it. SD median family income is $62k. The average home price is right around 500k. That is why I have been screaming that RE is vastly overvalued in my market for the past couple of years. Historically, home prices are around 3-4X median incomes. That means at the high end, San Diego RE should carry average values of 186k-248k in order for the population support local RE.

Your math isn't right here. First of all median income at $62k isn't the high end, that is the norm. So, that means the normal SD familay should be able to carry a 186k to 248k MORTGAGE. You aren't taking into account that people, even before the skyrocketing prices, had equity in their houses. The whole point of a 15 or 30 year fixed loan is that at the end of 15 or 30 years, your mortgage balance is 0. Also, throw in the fact that a long time ago the norm was to put 20% down on a house. Also, throw in wealth/savings and you can easily that that number that you threw out for house VALUES and make it a lot higher.

That said, in SD, home prices may be out of whack, but I couldn't tell you how much, because with waterfront cities, one $15 million beach home, takes 999 $200k houses and makes the total average $215k. That is 1 house in 1000 that ups the average by 7.5%. What is the 62k family actually buying? The guy in the $15 million beach home might have a very low income but very high capital gains since I don't know what "income" means. Is it salary or is it the IRS AGI (which I think includes everything)?

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By the way, I do agree with a lot of what you are saying TG. I just think that all parties have a lot of blame. The homebuilders/lenders got greedy and weren't smart enough to not see the risk of a slowdown. The home buyers tried to ride the wave as well since all their coworkers and friends would tell them how much paper value they had in their homes at get togethers. Investors figured flipping was easy money with no risk. Brokers and appraisers played with numbers to get approvals. I don't think that only the lenders with their loose standards are to blame, because it wasn't like some finance scandals where one guy just made stuff up, their was always a real person at the end of every loan.

Also, I agree on the prices. Many places like Boston, New England, Florida, Cali seemed to go up as much as places like Las Vegas, Arizona, the Northwest and DC, even though it was really only the latter locations where there were huge infuxes of people going a long with good economies.

In the county I lived in, outside of DC, the average family income was 100k+ and it was the fastest growing county in the US in the early 2000s. So we actually had incomes and demand to support the prices. Not to say it wasn't frothy, but if San Diego wasn't booming like we were, why would the prices have gone up there about the same? Sure, interest rates dropping to historically low levels should buoy something, but not like where I was. Outside DC, the market sucks now and prices have dropped, but the income levels and population are still there so their should be an actual floor once the "fear" seems to subside. In San Diego, the fundamentals may not be there so a floor might not really be there.

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And now the Alt-A companies begin to fall. Those who thought this mess was contained to subprime were apparently wrong. Looks like lots of folks (regardless of credit score) got into loans way over their head.

American Home Hit Hammers Lenders

By Laurie Kulikowski

TheStreet.com Staff Reporter

7/30/2007 11:27 AM EDT

Mortgage stocks sold off again Monday after American Home Mortgage (AHM - Cramer's Take - Stockpickr - Rating) failed to make a dividend payment.

American Home said late Friday it was delaying paying quarterly dividends because of margin calls and writedowns. The news came just a month after American Home warned of a second-quarter loss but pledged to maintain its 70-cent common-stock dividend rate.

Shares of the Melville, N.Y.-real estate investment trust were delayed at the opening Monday after plunging 38% in premarket trading.

The news sent down shares of other primarily Alt-A lenders, such as IndyMac (IMB - Cramer's Take - Stockpickr - Rating), which dropped 5%, while Impac Mortgage (IMH - Cramer's Take - Stockpickr - Rating) fell 12%. Countrywide Financial (CFC - Cramer's Take - Stockpickr - Rating), the largest independent mortgage lender, dropped 2%.

Luminent (LUM - Cramer's Take - Stockpickr - Rating), another mortgage-related company, fell 3% Monday even after it reaffirmed its dividend plans and said it is "not subject to the loan repurchase risk that is currently impacting certain loan originators."

The decision by American Home Mortgage is yet another piece to the deteriorating mortgage puzzle that has spread way beyond the subprime loan industry. The news does not bode well for Pasadena, Calif.-based IndyMac, which is set to report earnings on Tuesday.

Countrywide said last week that rising delinquencies and defaults were being experienced in some so-called prime mortgage categories, such as home-equity loans.

The Calabasas, Calif.-based lender's CEO, Angelo Mozilo, also said he doesn't see a housing recovery until 2009.

I still think a huge issue is that foreclosures are too easy. I am not an expert on this, but if I bought a house at say 500k and it was worth 400k now and I decided to just stop making payments, what would happen? I would assume that after a certain period, the bank would foreclose on my house, but does that bank have any rights to any of my other assets? I assume the only asset on the loan is the house and if so, it seems like an easy decision to me to just dump the house, especially if I bought in 2005/2006 and I knew I was underwater quite a bit.
That's what thousands of people are doing. Their decision basically comes down to: their credit being ruined for 7 yrs, or getting out of a house that is 50, 100, or 200k underwater. We all know good credit is important, but at some point it becomes too expensive.

My wife and I have very good credit at this point. For 200k, I would strongly consider trashing my credit and waiting 7 years.

Also, you yourself mentioned that investors were the buying most of the homes in SD in 2005/2006. To me, those are the first ones to dump the houses. Unlike Joe Bob Smith who just decided to move to SD and buy too big a house, all of those investors don't have any skin in the game. They aren't having to tell their spouse and kids that they need to move and there is no pride factor that makes them try and stay in the house so that the neighbors don't think poorly of them.

Do you have any idea if investors are good % of the interest only, negam, alt-a, subprime type loans? Whenever I watch those flipping shows, they either show what looks like a company of people or some random folks that don't look like 100k+ FBGs. Those random folks to me, seem like the type to get the alternative type loans to have as low a mortgage as possible and to actually qualify for a mortgage that they probably wouldn't get. For instance a doctor making 300k, probably has an easy time getting a second mortgage for his lake house, but Joe schlub flipper probably doesn't and thus they have to get the funky loans and hope they flip fast enough to get out of the house before paying much on the funky mortgage.

Lots of investors bought in SD during that time period and have been burnt. At the same time, regular Tom and Joe's also bought homes, and the homes they purchased were artificially inflated by investors and easy credit. Now that investors are long gone and easy credit is drying up, no one can afford homes in SD at current prices, which is why sales are flatlining.

Think about it. SD median family income is $62k. The average home price is right around 500k. That is why I have been screaming that RE is vastly overvalued in my market for the past couple of years. Historically, home prices are around 3-4X median incomes. That means at the high end, San Diego RE should carry average values of 186k-248k in order for the population support local RE.

This is what you are waiting for? :thumbup: . For a home in San Diego drop below the national average. Good ####### luck.
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Riskiest U.S. Housing MarketsBy Matt Woolsey, Forbes.comJuly 17, 2007 Those looking to spin the real estate roulette wheel might want to steer clear of Miami. It ranks first on our list of the nation's riskiest real estate markets. There, a high share of adjustable-rate mortgages, high vacancy rates and slumping prices still too elevated for the local populous means should long-term bond yields climb, interest rates jump or the housing crisis linger much longer, things could go from bad to worse. Affairs are not much better farther north--or west. Following in Miami's wake are Orlando, Sacramento and San Francisco. Our ranking of the country's riskiest markets measures which of the 40 largest metros are most vulnerable to future shocks. We've done this by assessing which have the most strained lending conditions, and which markets are the most overvalued and likely to face downward price pressures. Many of the cities on our list--like San Francisco and San Diego--are traditional high fliers where speculators can still make a lot of money if they pick the right neighborhood or hit the price trough. Of course, they might also take a serious bath. Others, like Chicago or Phoenix, are generally stable markets that are currently under significant strains. Finally, some, like Cincinnati or Kansas City, are precariously teetering and are not well equipped to handle further downturn. Crunching The NumbersA good place to start in assessing risk is the state of the local mortgage market. Take adjustable-rate mortgages, or ARMs, in which borrowers, for a limited time, usually five or seven years, make interest-only or reduced-rate payments. The most obvious danger in this is that at the end of the five- or seven-year term, monthly payments increase to a rate the borrower is unable to sustain. Given Federal Reserve chairman Ben Bernanke's continuing worries about inflation, economists say there's a good chance rates could go up in the next couple of years, meaning that the increased costs of lending will be passed along to ARM borrowers, and that can mean higher rates of defaults. What's more, high ARM share generally means a market is unaffordable to its residents. The metros with the highest shares of ARMs, according to the National Association of Realtors, are in San Francisco, San Diego and Los Angeles, respectively. These three cities are also the most overpriced, according to our price-to-earnings measure. And these areas are three of the four least affordable to the local population, according to the National Association of Home Builders and Wells Fargo's affordability index. If rates go up or lending tightens, fewer will be able to buy in, bringing the markets to a screeching halt. Another arbiter of risk? Cities with a high proportion of mortgages with loan-to-value ratios in excess of 90%. Loan-to-value (LTV) measures the size of the mortgage to a home's overall value. In a standard home buy, the down payment is 10% of the overall value, meaning the LTV is 90%. When the loan-to-value ratio is above 90%, it means buyers have little equity in their homes. And homeowners with low equity are far more likely to default or walk away from a mortgage. If the market teeters and lenders take a hit from defaults, it can depress prices overall, as is currently being seen with the subprime lending fallout. For that reason, Kansas City is particularly vulnerable. It has a 39% share of mortgages with LTV ratios above 90%. The median rate for cities on our list was 11%, according to the National Association of Realtors. We next mixed in a price-to-earnings ratio for each market. (Like the P/E of a stock, this value attempts to measure the price a homeowner would pay for one dollar of return.) Using data from the National Association of Realtors, the U.S. Census Bureau and the Office of Federal Housing Enterprise Oversight, we took each market's median home price and divided it by annual rents minus taxes and insurance for those properties. The price-to-earnings ratio highlights two significant risks. It magnifies risk factors in overly expensive markets in which there is more money at stake. For example, a 5% drop in median home prices in San Francisco is possible; but the nominal equivalent, a 24% price drop in Dallas, is not something the market is likely to bear. Second, overvalued bubble markets are more likely to face downward price pressures in a slumping market as overvalued markets are, by definition, most likely to experience a correction. A final factor was vacancy rates. It's not a complicated or glamorous measurement, but it's difficult to find a better indicator of supply and demand. Orlando's staggering 5.2% vacancy rate represents a significant risk factor for the city. Strong local economic indicators like job growth and immigration significantly mitigate that risk, but it is in a vulnerable position should there be an economic slowdown or a disruptive hurricane season. Two larger cities that performed very well by this measure were Los Angeles and New York, which ranked fourth and eighth for lowest vacancy rate. While both cities had high ARM shares and high P/Es, their low vacancy rates bode well for those markets.

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  • 4 weeks later...

Want to know what a "bubble market" is?

But even as the market has slowed, the popularity of risky loans has spread. New data for San Diego County reveals that 67 percent of loans made in the first 11 months of 2006 were interest-only or negatively amortized. Of that 67 percent, 30 percent were negative-amortization loans, a threefold increase since January 2004 and 30-fold jump since January 2003, according to FirstAmerican Loan Performance.

:yes:
You don't.
Obviously not. I should be going neg-am for half a mill right now, regardless of the fact that whatever I buy will be worth 30% less in 2 years.
Like I said before, waiting hasn't worked in your favor so far. However, some people are stupid enough to get a mortgage with the lowest payment, or buy a home way over their financial capabilities.

I'm not advocating that, but a "bubble" has nothing to do with the fact that some people are ####ing stupid, and bought these con-artist mortagage offerings.

It has everything to do with a "bubble". Investors and idiots taking out neg-am loans are two reasons housing prices are far, far above any rational value level in SoCal. As investors have pretty much left this "musical chairs" game in San Diego, only idiots taking out IO and neg-am loans are keeping the sinking boat afloat. Once they are shaken out of the game as their mortgages reset (happening now) and subprime lending dries up (happening now), prices will decline more dramatically.

There is absolutely no way a county where the median family income is 62k can support median home prices at 500k for long without voodoo financing.

Again, you're taking a fact (point 2 regarding the family with 62k) and pretending it implies a bubble. The fact that rates are CLIMBING while values are FALLING indicates it's merely correcting itself slightly. The fact that your spending power today is exactly what it was 18 months ago proves it's no bubble.
Scupper, still believe that there's no housing bubble?
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not if the biggest decline is yet to come - especially when the market believes rates will fall before they climb in the future (yeild curves).

please don't waste my time pretending to predict the future.
isn't that what we all do everyday, practically all day?do you make 300-500k decisions without an eye on what you think the future holds?
I really am done with you. I've already shown you that your financial decision that you claim "saved you $50,000" really didn't save you anything, in fact, cost you money. Now you're saying you're going to wait for a 30% correction, while rates fall. You've been wrong for a long time here.Good luck to you.
:shrug:
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Want to know what a "bubble market" is?

But even as the market has slowed, the popularity of risky loans has spread. New data for San Diego County reveals that 67 percent of loans made in the first 11 months of 2006 were interest-only or negatively amortized. Of that 67 percent, 30 percent were negative-amortization loans, a threefold increase since January 2004 and 30-fold jump since January 2003, according to FirstAmerican Loan Performance.

:bow:
You don't.
Obviously not. I should be going neg-am for half a mill right now, regardless of the fact that whatever I buy will be worth 30% less in 2 years.
Like I said before, waiting hasn't worked in your favor so far. However, some people are stupid enough to get a mortgage with the lowest payment, or buy a home way over their financial capabilities.

I'm not advocating that, but a "bubble" has nothing to do with the fact that some people are ####ing stupid, and bought these con-artist mortagage offerings.

It has everything to do with a "bubble". Investors and idiots taking out neg-am loans are two reasons housing prices are far, far above any rational value level in SoCal. As investors have pretty much left this "musical chairs" game in San Diego, only idiots taking out IO and neg-am loans are keeping the sinking boat afloat. Once they are shaken out of the game as their mortgages reset (happening now) and subprime lending dries up (happening now), prices will decline more dramatically.

There is absolutely no way a county where the median family income is 62k can support median home prices at 500k for long without voodoo financing.

Again, you're taking a fact (point 2 regarding the family with 62k) and pretending it implies a bubble. The fact that rates are CLIMBING while values are FALLING indicates it's merely correcting itself slightly. The fact that your spending power today is exactly what it was 18 months ago proves it's no bubble.
Scupper, still believe that there's no housing bubble?
i'm a little confused. how do you define a bubble?

if median or mean prices are down not even 10% from their 2005 highs in phoenix, do you think that is a bubble?

if you don't like using mean or median pricing because the higher end market is still doing well, is that really a bubble if only a segment of the market is doing poorly?

there may have been severe overpricing in poor outlying locations, but if infill is still doing relatively well, is that really a bubble?

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I live in Thousand Oaks CA. Amgen laying off over 2K workers, Countrywide in neighboring Moorpark (though the B of A deal helps) - not pretty. Anybody over the age of 40 has seen this cycle perpetuate. 5-8 years, rapid speculation and run up, big correction, down for 5-7 years, rinse repeat.

i am from westlake and have 3 friends who work in amgen. not sure what that has to do with this but amgen is laying off workers due to a study out of sweden than changed how doctors get reimbursed from one of their biggest drugs. the threshold of what they get reimbursed was lowered significantly lowering demand for this drug.not sure how much of a long term phenomenon this is, but most people getting laid off were in non critical jobs there.bottom line, TO is still insulated quite well from dramatic declines due to its location and lack of supply in new housing.
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i'm a little confused. how do you define a bubble?if median or mean prices are down not even 10% from their 2005 highs in phoenix, do you think that is a bubble?if you don't like using mean or median pricing because the higher end market is still doing well, is that really a bubble if only a segment of the market is doing poorly?there may have been severe overpricing in poor outlying locations, but if infill is still doing relatively well, is that really a bubble?

bubble = unsustainable asset prices that will decline until buyers can once again afford the assetit's pretty clear that a real estate bubble is currently deflating. no, i don't have a standard quantitative definition for a real estate bubble that is analagous to, say, a stock market "correction" (e.g., 10% market decline). but it's probably not a bad place to start. when the boston condo market declined 30-40% in the early 90's, that was definitely a bubble. ditto for southern california real estate in the early 90's. given that nobody can accurately predict what will happen to real estate prices, it's difficult to say if/when the bubble becomes fully evident. last i read, the schiller futures index was down ~8-9% year-over-year. in other words, if you inflation-adjust it, people expect residential real estate to decline 10-12% in the next year.
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House next to me has been for sale for at least one year now. Talk about putting your house for sale at the absolute worst time. The house just down the road fetched $475000 in 2004, then was flipped within 1 year for $680000 (what an absolute beating they took).

"Gated with over 2 acres, CUSTOM built in 1997, ....Over 2260 square feet of living area...3 car Garage. Screened 32' Lanai PLUS an open lanai with Inground Pool." blah blah blah.

# of times show: ZERO.

Outrageous asking price: $449,000.

Estimated Payment:

$2,167 Per Month* :thumbup:

When they cut that price in half, they may get some lookers. Absolutely nothing special about it to warrant anything over $250000.

Pop went the bubble.

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A bud of mine built two houses in an upper class area in Chicago suburbs. Both are over million dollar homes. He recently sold one at a break even point and the other at a loss just to get rid of them and get out from the carrying costs. The sad thing is that he GC slowed things down so much to the point that if he had a decent GC working them he would have had them on the market and sold for profit about a year ago.

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House next to me has been for sale for at least one year now. Talk about putting your house for sale at the absolute worst time. The house just down the road fetched $475000 in 2004, then was flipped within 1 year for $680000 (what an absolute beating they took). "Gated with over 2 acres, CUSTOM built in 1997, ....Over 2260 square feet of living area...3 car Garage. Screened 32' Lanai PLUS an open lanai with Inground Pool." blah blah blah.# of times show: ZERO.Outrageous asking price: $449,000. Estimated Payment:$2,167 Per Month* :popcorn: When they cut that price in half, they may get some lookers. Absolutely nothing special about it to warrant anything over $250000. Pop went the bubble.

:lmao: Are you happier now that the house next to you is going down in value and thus so is yours? Why didn't you do the smart thing and sell your house for $680k, rent for a couple years and buy your neighbors' house for $350k and be mortgage free? That is kind of like owning a stock at $200, knowing that it was only worth $100, but instead of selling just watching it slide down to $100 and then acting happy because you were right.Even TGunz would have dumped and run. Sounds like the smartest guy in your neighborhood was the guy that bought and flipped that house.
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A bud of mine built two houses in an upper class area in Chicago suburbs. Both are over million dollar homes. He recently sold one at a break even point and the other at a loss just to get rid of them and get out from the carrying costs. The sad thing is that he GC slowed things down so much to the point that if he had a decent GC working them he would have had them on the market and sold for profit about a year ago.

That sucks. I can't imagine flipping is much fun at all these days. I wonder if people even still try. Even in NC, where you still see news shows about how Raleigh and Charlotte avoided all the downturns, the market is slow. The builder in my neighborhood has only a couple houses remaining out of a hundred or so that they built (2 other custom builders) over the past few years and they just dropped their prices. I know that they just want to dump ASAP and get their money because like any business, that capital drives their other new neighborhoods which they just started. I feel bad for a couple neighbors who "have" to move and those price drops hurt them the most because the builder will absolutely sell under market price just to be done and $$ is the reason that they "had" to move.
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House next to me has been for sale for at least one year now. Talk about putting your house for sale at the absolute worst time. The house just down the road fetched $475000 in 2004, then was flipped within 1 year for $680000 (what an absolute beating they took). "Gated with over 2 acres, CUSTOM built in 1997, ....Over 2260 square feet of living area...3 car Garage. Screened 32' Lanai PLUS an open lanai with Inground Pool." blah blah blah.# of times show: ZERO.Outrageous asking price: $449,000. Estimated Payment:$2,167 Per Month* :eek: When they cut that price in half, they may get some lookers. Absolutely nothing special about it to warrant anything over $250000. Pop went the bubble.

:lmao: Are you happier now that the house next to you is going down in value and thus so is yours? Why didn't you do the smart thing and sell your house for $680k, rent for a couple years and buy your neighbors' house for $350k and be mortgage free? That is kind of like owning a stock at $200, knowing that it was only worth $100, but instead of selling just watching it slide down to $100 and then acting happy because you were right.Even TGunz would have dumped and run. Sounds like the smartest guy in your neighborhood was the guy that bought and flipped that house.
:goodposting:
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