Just received notice from Amhesrt Security Group that they estimate another 7 Milion homes are in the bank's unsold inventory of foreclosed homes!
We are also at the early stages of a catastrophic wave of new foreclosures as the Option Arms reset and Jumbo loans default at a record pace.
Option Arms were loans made to good credit buyers that employed a microscopic "Teaser" interest rate, is some cases as low as 1% for the first 3-5 years of the loan. These resets will take place between the end of this year and 2011Estimates are that as much as 70% of these loans will default, given the employment picture which is still worsening.
Jumbo loans were large loans given to "Executive" home buyers. So many of these loans have defaulted that Thornburg Mortgage, the larges player in this market just went under. Their avearage Jumbo Loan borrower had a FICO score of 740 and an income of over $200,000!
We predictt that because of the factors mentioned above, the number of "Underwater" mortgages, where the value of the house is less than the mortgage balance will exceed 50% by mid 2010, if not sooner.
This will initiate the real bottoming of the market, the capitulation of millions of sellers who were holding their properties off the market waiting for the market to improve.
As they dump their properties into the ballooning cascade of the bank owned REO's, prices will plummet another 50% from where they are now, bringing the median priced home below $100,000 in many areas.
As far as the governments efforts to shore up housing and prevent this scenario? Puleeze!
Bill Young 646-961-3818
PS If you cannot pay your mortgage, we can show you how to stay in your home for 1-3 years without making any more payments! Call for info
We al Estate Owned
Showing posts with label real estate market. Show all posts
Showing posts with label real estate market. Show all posts
Thursday, October 8, 2009
Sunday, December 28, 2008
Home prices to fall and fall and fall...
I just read an article forecasting more trouble for real estate in 2009.
The author seemed to be incredulous about that possibility, saying that some markets were even approaching Pre-Bubble price levels as though that was an organic impossibility.
If you check you will see that the last 2 real estate booms in the 70's and 80's resulted in prices dropping back to pre-boom levels before they took off again.
That is what statisticians refer to as a "regression to the mean," falling back to the historic trend line.
There are even more significant troubles for real estate in 2009 and beyond than are perceived by many real estate experts.
These troubles will continue to drive prices down even further. Although some markets are in fact approaching pre-boom prices, the pendulum may not stop at mid point and may actually swing all the way past pre-boom prices. Have you ever known a pendulum to stop mid way through its swing?
Here are some additional factors to consider:
The credit crisis is forcing banks to husband what little capital they have which is why they will restrict lending to the Very qualified.
How many prospective home buyers have 750+ FICO or Credit scores And 30% in cash for down payment, closing costs and bank mandated cash reserves? Especially since the US savings rate has been hovering around zero for the past decade.
Fewer buyers equal lower demand which means lower prices.
Also, how many more homes will be deserted by home owners who are Underwater, owing more than they owe? It is estimated that nearly 16% of owners with mortgages or about 8 Million home owners are in this situation. These desertions will add greatly to the bloated inventory of homes weighing down the market.
Finally, the only bright spot in housing will probably be extinguished in 2009 as interest rates will skyrocket once China is forced to stop buying our debt because of our dwindling purchases from them.
One report I read said that rental of a typical space on a freighter delivering goods to the US from China, fell from $236,000 for the trans Pacific crossing to $5,000!
Once China stops buying our Treasury Bonds, we will have to lower prices on them to attract other buyers, which will jack up their yields or interest rates as they move inversely to prices.
Our mortgage rates will then soar because they are pegged to the 10 year Treasury Bond yield.
So, despite the optimistic predictions of many rose tinted, shade wearing real estate "professionals" the likelihood of a rebound in housing is probably further away in 2009 than at any time since the real estate bubble burst.
Copyright 2008 Bill Young. Bill is offering a free, one year course for people who want to know how to quit living pay check to pay check and how to become financially free developing multiple streams of income from real estate and home based business assets. Register here: http://HowtoSolveYourMoneyProblems.Com
Article Source: http://EzineArticles.com/?expert=Bill_Young http://EzineArticles.com/?Home-Prices-to-Fall-and-Fall-and-Fall&id=1819502
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The author seemed to be incredulous about that possibility, saying that some markets were even approaching Pre-Bubble price levels as though that was an organic impossibility.
If you check you will see that the last 2 real estate booms in the 70's and 80's resulted in prices dropping back to pre-boom levels before they took off again.
That is what statisticians refer to as a "regression to the mean," falling back to the historic trend line.
There are even more significant troubles for real estate in 2009 and beyond than are perceived by many real estate experts.
These troubles will continue to drive prices down even further. Although some markets are in fact approaching pre-boom prices, the pendulum may not stop at mid point and may actually swing all the way past pre-boom prices. Have you ever known a pendulum to stop mid way through its swing?
Here are some additional factors to consider:
The credit crisis is forcing banks to husband what little capital they have which is why they will restrict lending to the Very qualified.
How many prospective home buyers have 750+ FICO or Credit scores And 30% in cash for down payment, closing costs and bank mandated cash reserves? Especially since the US savings rate has been hovering around zero for the past decade.
Fewer buyers equal lower demand which means lower prices.
Also, how many more homes will be deserted by home owners who are Underwater, owing more than they owe? It is estimated that nearly 16% of owners with mortgages or about 8 Million home owners are in this situation. These desertions will add greatly to the bloated inventory of homes weighing down the market.
Finally, the only bright spot in housing will probably be extinguished in 2009 as interest rates will skyrocket once China is forced to stop buying our debt because of our dwindling purchases from them.
One report I read said that rental of a typical space on a freighter delivering goods to the US from China, fell from $236,000 for the trans Pacific crossing to $5,000!
Once China stops buying our Treasury Bonds, we will have to lower prices on them to attract other buyers, which will jack up their yields or interest rates as they move inversely to prices.
Our mortgage rates will then soar because they are pegged to the 10 year Treasury Bond yield.
So, despite the optimistic predictions of many rose tinted, shade wearing real estate "professionals" the likelihood of a rebound in housing is probably further away in 2009 than at any time since the real estate bubble burst.
Copyright 2008 Bill Young. Bill is offering a free, one year course for people who want to know how to quit living pay check to pay check and how to become financially free developing multiple streams of income from real estate and home based business assets. Register here: http://HowtoSolveYourMoneyProblems.Com
Article Source: http://EzineArticles.com/?expert=Bill_Young http://EzineArticles.com/?Home-Prices-to-Fall-and-Fall-and-Fall&id=1819502
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