The housing bubble bursts! Where's the bottom?

[Zorkorist]

No. Sorry, you can throw all the facts and figures you want at me as to why the American citizen is wrong, but it is obvious to me that our Government is wrong.

-John

 

[Zebo]

Another thing about commodity prices (food, gasoline, heat and other things you need to live) when they go up as they are that leaves people with less of a paycheck left over to pay mortgages since people buy on payment not cost. Interest rates do the same thing, low interest high housing prices due to low payment, high interest low housing prices due to high payment.. So with all time low interest (high house prices), rising commodity prices (less disposable income) it's time to buy a house?

Add this

to banks still holding tons of bad paper which they can't flood market with all at once or it will crash it's value of assets. So they are trickling them out to "investors".

to an economy that continues to move off shore meaning less jobs

to local and state governments slashing payrolls and maybe Federal Govt too - means less jobs

to very few blue chip borrowers left since most are over leveraged already or have poor credit

it's time to buy buy buy a house?


Don't say I didn't warn you Spidey.

 

[_GTech]

This is simply the aftermath of what is an economic fallout on the verge of a full fledged depression....

Most of the business people I talk to say the same bleak thing, main street is DEAD!

If you can't see that by taking a drive, then you're obviously blind, because businesses are closing up shop like dominoes! That means nobody is spending! (Excluding the Grocery Stores & At the Gas Pump, they are paying out the arse!)

The Unemployment numbers tell one story, those consumers not spending money tells a whole different story! When the money well drys up, or is flooding the markets* trying to keep it aloft, just like the last time before the depression, it's only a matter of time before the house cards comes crashing down.

The only question I have is, are we going to see Hyper Inflation or a major Deflation?

We are definitely going to see something, and soon too!


* The Federal Reserve Bank have been spending HUNDREDS OF BILLIONS a day to buy US Securities, you tell me what the ramifications of those actions will be? (BTW The Federal Reserve Bank is not Federal, has no reserve, and is not a Bank)


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


Buyers & Sellers are in a stalemate, the Buyers want to pay as little as possible, the Sellers don't want to sell for less, as they can't afford to, but buyers know the longer they hold out, the further those prices will fall! (*Smiles wickedly*)

 

[nonlnear]

There are legitimate uses for ARMs and interest only mortgages, mostly for investors. If people are too stupid to know whats good for them, thats their problem. 110% financing is insane though. I'm surprised you're seeing that. My experience lately is that the banks are being very conservative.

There are still >100% loans being pushed. 203(k)'s are getting a nudge to help move all the damaged foreclosures along. Of course the official line is that the homes are being financed for <=100% of the "improved value", but that's a fictitious number that doesn't have to survive the real world test of actually selling the home at that price. Banks certainly have tightened up on lending for loans that don't have a special federal guarantee. However I suspect we're going to see a coincidental growth in various federal loan guarantee programs. You know, to help "stabilize" the market, and to help ordinary folk take advantage of the "deals" on the market today.

I'd prefer they actually let the bubble finish collapsing, but I doubt it's going to play out that simply.

 

[Zebo]

This is simply the aftermath of what is an economic fallout on the verge of a full fledged depression....

Most of the business people I talk to say the same bleak thing, main street is DEAD!

If you can't see that by taking a drive, then you're obviously blind, because businesses are closing up shop like dominoes! That means nobody is spending! (Excluding the Grocery Stores & At the Gas Pump, they are paying out the arse!)

The Unemployment numbers tell one story, those consumers not spending money tells a whole different story! When the money well drys up, or is flooding the markets* trying to keep it aloft, just like the last time before the depression, it's only a matter of time before the house cards comes crashing down.

The only question I have is, are we going to see Hyper Inflation or a major Deflation?

We are definitely going to see something, and soon too!


* The Federal Reserve Bank have been spending HUNDREDS OF BILLIONS a day to buy US Securities, you tell me what the ramifications of those actions will be? (BTW The Federal Reserve Bank is not Federal, has no reserve, and is not a Bank)


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


Buyers & Sellers are in a stalemate, the Buyers want to pay as little as possible, the Sellers don't want to sell for less, as they can't afford to, but buyers know the longer they hold out, the further those prices will fall! (*Smiles wickedly*)

Or? More like and. You can have both. In Wiemar houses were cheap because people were selling everything they own to eat. Today we have both commodities up and houses and other things down (capital equipment, houses, etc).

 

[Jhhnn]

Or? More like and. You can have both. In Wiemar houses were cheap because people were selling everything they own to eat. Today we have both commodities up and houses and other things down (capital equipment, houses, etc).

Meh. The Weimar Republic has nothing to do with today's situation. The observed phenomena are the result of concentration of capital and excess liquidity at the tippytop of the economic foodchain, and the ability to rapidly move money from one venue to another. Too much hot money chasing too few returns, and the resulting series of bubbles is inevitable, thanks to the deception of trickledown economics.

 

[LegendKiller]

This is simply the aftermath of what is an economic fallout on the verge of a full fledged depression....

Most of the business people I talk to say the same bleak thing, main street is DEAD!

If you can't see that by taking a drive, then you're obviously blind, because businesses are closing up shop like dominoes! That means nobody is spending! (Excluding the Grocery Stores & At the Gas Pump, they are paying out the arse!)

The Unemployment numbers tell one story, those consumers not spending money tells a whole different story! When the money well drys up, or is flooding the markets* trying to keep it aloft, just like the last time before the depression, it's only a matter of time before the house cards comes crashing down.

The only question I have is, are we going to see Hyper Inflation or a major Deflation?

We are definitely going to see something, and soon too!


* The Federal Reserve Bank have been spending HUNDREDS OF BILLIONS a day to buy US Securities, you tell me what the ramifications of those actions will be? (BTW The Federal Reserve Bank is not Federal, has no reserve, and is not a Bank)


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


Buyers & Sellers are in a stalemate, the Buyers want to pay as little as possible, the Sellers don't want to sell for less, as they can't afford to, but buyers know the longer they hold out, the further those prices will fall! (*Smiles wickedly*)

I talk to small businesses around the country and most are doing OK. Things are not nearly as bad as you are portraying and businesses aren't "falling like dominoes".

People are spending, as you can see from consumer spending on discretionary items. We pay, as a % of income, the lowest in the world for food and energy, thus, inflationary pressures are still relatively low.

I don't think we'll see either.

The Fed is a bank, is Federally chartered and allowed to exist by mandate of Congress, does have reserves, contrary to your asinine assertions.

 

[dmcowen674]

I talk to small businesses around the country and most are doing OK.

Things are not nearly as bad as you are portraying and businesses aren't "falling like dominoes".

People are spending, as you can see from consumer spending on discretionary items.

No you are not.

You are talking to your fellow rich which have not been negatively impacted yet.

Hold on just a little longer, its getting closer to the foundation that the rich relies on and you will soon feel the damage done to this country by you and your kind.

You're not going to like it.

 

[LegendKiller]

No you are not.

You are talking to your fellow rich which have not been negatively impacted yet.

Hold on just a little longer, its getting closer to the foundation that the rich relies on and you will soon feel the damage done to this country by you and your kind.

You're not going to like it.

Dude, go predict another earthquake. Leave the serious talk to the people with an IQ above 75.

 

[Londo_Jowo]

Dude, go predict another earthquake. Leave the serious talk to the people with an IQ above 75.

Major ownage :thumbsup:

Hopefully Dave will make that move to Somalia soon.

 

[Capt Caveman]

Location, location, location. Prices and selling is ticking up strongly in my area and just today I read that those with capital are purchasing the foreclosed properties in droves with cash. Buy, buy, buy.

One thing I can agree with Spidey. The problem we had was the rising prices in speculative low demand areas. Housing prices have actually risen in the last four years in my city. Single family homes have risen 20%+. Having a large commercial base and major universities that bring people from around the globe, there will always be demand for a limited supply. Harvard and MIT are now forced to expand into surrounding towns due to the lack of available space.

 

[Capt Caveman]

Major ownage :thumbsup:

Hopefully Dave will make that move to Somalia soon.

Dave gets own'd anywhere he goes. Heck, he's the only person to ever have to sign a release form to buy vinegar at Target.

 

[Slew Foot]

Location and market matters. People are snapping up million dollar houses like theyre going out of style here in San Jose.

 

[werepossum]

Just think only a couple generations ago "neither a borrower or lender be" was ingrained in our psyche. Now we do this crap. Is it any wonder we're in trouble at all levels?

No wonder at all. Used to be people (at least poor people like my family) built their own houses. Then we began to finance houses. Then we began to finance automobiles. Then we began to finance luxury items and toys. Now we're beginning to finance lunch at the Taco Bell drive-through. I recognize the increase in societal wealth due to specialization, but we're now financing short term consumables. Any increase in societal wealth from specialization has long ago been overtaken by societal wealth consumed by interest payments.

There are legitimate uses for ARMs and interest only mortgages, mostly for investors. If people are too stupid to know whats good for them, thats their problem. 110% financing is insane though. I'm surprised you're seeing that. My experience lately is that the banks are being very conservative.

We were freakin' shocked, the 110% financing is literally announced on a sign in the front yard. Honestly, my first thought is that the seller and the financier are one and the same. Throw in a pet appraiser and suddenly that house loan isn't upside down, rather it's an extra 25% profit if it's paid off. I disagree on the investors though; there are far too many amateur investors who are investing money they do not have, like the condo owners in Atlanta and Florida who had one mortgage and would take out another one or two figuring to sell them before they were finished and payments began. When the economy went south and no one was buying, these people could not make additional mortgage payments.

Once government expects me to help pay for those who are stuck investing money they don't have, then it's time government stops people from investing money they don't have. Want to invest, put 20% down on a standard mortgage, that way the bank is covered and my tax money is not needed to make sure tthey make their quarterly bonus payments.

 

[Jhhnn]

I think you confuse cause and effect, werepossum. Financiers are the people who make money from finance, after all, and it's percentage based, with higher percentages to the middlemen for subprime or even prime ARM loan products. Lots of buyers who qualified for prime 30 year fixed rate mortgages were steered into subprime short term ARM's for just that reason. And some of the loan products offered were obviously defective in light of who they were offered to. It's one thing for a very high net worth person to take out a negative amortization ARM or introductory rate ARM on property speculation, entirely another when the same product is sold willy-nilly to people of very limited means. If the deal goes south, the high net worth individual can take the loss, meet their obligations, while the second party simply can't when the interest rate jumps and the property value falls. One of my coworkers was caught in that trap. It saved him money the first 3 years, and he'd expected to be able to refinance to a 30 year fixed interest note, but when values fell, he was locked out of that. His original lender was obligated to continue financing him, of course, and charged 11.25&#37; to do so, as compared to the 4% of the introductory loan... He held on, and only an inheritance allowed him to put more cash up front & refinance into a note he could afford long term. Most people in that situation weren't so lucky, and had little choice but to default. The simple fact that high risk mortgage products, subprime Arm's, were actually cheaper than prime 30 year products tells us that the system was rigged to fail all along.

At the other end of the chain, securitizers discovered that they could sell crap as gold, and also operated under the correct assumption that the govt would bail them out even if they ended up having to choke down some of their own product. The fix was in, so long as the Bush Admin was still running things, and everybody involved knew it full well. The only honest answer, which would have been to sack the bastards, nationalize the affected entities, reorganize them and sell them back into the market was simply off the table for ideological reasons, the failed ideology of self regulated free market banking. It *failed*, miserably, except for the perps and the Bush Admin, who gained re-election largely on the basis of the false prosperity of the "Ownership Society". This wasn't an accident, at all, but rather a planned event, as most great financial crimes are...

 

[nonlnear]

There are legitimate uses for ARMs and interest only mortgages, mostly for investors. If people are too stupid to know whats good for them, thats their problem. 110&#37; financing is insane though. I'm surprised you're seeing that. My experience lately is that the banks are being very conservative.

The banks are only being conservative with their own money. The 110% financing that's being pushed today is mostly 203(b)s from what I've seen in my house hunting (which is hardly a comprehensive picture to be sure). If Uncle Sam will put a guarantee under it, they're still happy to encourage overborrowing.

 

[the DRIZZLE]

No wonder at all. Used to be people (at least poor people like my family) built their own houses. Then we began to finance houses. Then we began to finance automobiles. Then we began to finance luxury items and toys. Now we're beginning to finance lunch at the Taco Bell drive-through. I recognize the increase in societal wealth due to specialization, but we're now financing short term consumables. Any increase in societal wealth from specialization has long ago been overtaken by societal wealth consumed by interest payments.


We were freakin' shocked, the 110% financing is literally announced on a sign in the front yard. Honestly, my first thought is that the seller and the financier are one and the same. Throw in a pet appraiser and suddenly that house loan isn't upside down, rather it's an extra 25% profit if it's paid off. I disagree on the investors though; there are far too many amateur investors who are investing money they do not have, like the condo owners in Atlanta and Florida who had one mortgage and would take out another one or two figuring to sell them before they were finished and payments began. When the economy went south and no one was buying, these people could not make additional mortgage payments.

Once government expects me to help pay for those who are stuck investing money they don't have, then it's time government stops people from investing money they don't have. Want to invest, put 20% down on a standard mortgage, that way the bank is covered and my tax money is not needed to make sure tthey make their quarterly bonus payments.

I didn't say they shouldn't have down payment requirements. You can put 20% down and still get an ARM or interest only.