Comments on: The Housing Crisis – A View from the Front Lines http://spiralcalendar.com/2008/08/the-housing-crisis-a-view-from-the-front-lines/ Christopher Carolan on Financial Markets & Lunar Cycles Wed, 09 May 2012 12:58:36 +0000 hourly 1 http://wordpress.org/?v=3.3.1 By: deuxsous http://spiralcalendar.com/2008/08/the-housing-crisis-a-view-from-the-front-lines/comment-page-1/#comment-42 deuxsous Thu, 14 Aug 2008 05:25:21 +0000 http://spiralcalendar.com/?p=470#comment-42 libertas, I agree with you completely. People are now demanding "normal mortgage rights", but what they really need is for the market to clear. As in your case I had to do a California personal real estate transaction in the early 1980's--late 1981 to spring 1982. My wife and I were working very long days in San Francisco and the commute from Marin had to stop. But rates were 14+% and loans were non-existent. We had one offer to exchange for a small guava platation on Maui! In retrospect it could have been a good deal as the "plantation" ended up as part of a shopping mall, but it was out of the question. Finally a woman appeared who had coveted our home since her childhood friend had lived in the house, and her husband, a rising star at AutoDesk, was able to get bridge financing from his company (interest only) at 14%, and complete the sale. On the other end in the city we got a fabulous deal buying for cash. Much later in the 1990's in NM we hit another real estate air pocket for several years. There really is a once per decade cycle in real estate just as there seems to be in "bank tanks". Bank reserve leverage, mortgage leverage, and greed collide and have to be sorted out. Stuff gets done at market if buyer and seller are willing and able. Otherwise not. TD libertas,

I agree with you completely. People are now demanding “normal mortgage rights”, but what they really need is for the market to clear. As in your case I had to do a California personal real estate transaction in the early 1980′s–late 1981 to spring 1982. My wife and I were working very long days in San Francisco and the commute from Marin had to stop.

But rates were 14+% and loans were non-existent. We had one offer to exchange for a small guava platation on Maui! In retrospect it could have been a good deal as the “plantation” ended up as part of a shopping mall, but it was out of the question. Finally a woman appeared who had coveted our home since her childhood friend had lived in the house, and her husband, a rising star at AutoDesk, was able to get bridge financing from his company (interest only) at 14%, and complete the sale.

On the other end in the city we got a fabulous deal buying for cash.

Much later in the 1990′s in NM we hit another real estate air pocket for several years. There really is a once per decade cycle in real estate just as there seems to be in “bank tanks”. Bank reserve leverage, mortgage leverage, and greed collide and have to be sorted out.

Stuff gets done at market if buyer and seller are willing and able. Otherwise not.

TD

]]> By: muellerjoerg http://spiralcalendar.com/2008/08/the-housing-crisis-a-view-from-the-front-lines/comment-page-1/#comment-41 muellerjoerg Wed, 13 Aug 2008 22:42:10 +0000 http://spiralcalendar.com/?p=470#comment-41 Chris, Do you think the date in 2010 you mention in the special report as a VERY important one for market changes and the Long Wave winter would be good for buying RE? Could both prices AND interest rates reach a low then? Thanks, Joe Chris,

Do you think the date in 2010 you mention in the special report as a VERY important one for market changes and the Long Wave winter would be good for buying RE? Could both prices AND interest rates reach a low then?
Thanks, Joe

]]> By: libertas http://spiralcalendar.com/2008/08/the-housing-crisis-a-view-from-the-front-lines/comment-page-1/#comment-40 libertas Wed, 13 Aug 2008 22:15:53 +0000 http://spiralcalendar.com/?p=470#comment-40 That makes no sense. If he is "priced out," then if the house is really worth $900K, others must be willing and able to bid and pay that, and the market is functioning just fine. If the market is at equilibrium, then if rates come down, the price will go up and his situation will not change. He will still be "priced out." Although he isn't - PIT would be about $6K/month, and he is supposedly making $33K/month. Does he want the seller to "give it away"? :) When I bought my first house in California, I paid 9.25% (in 1983). With the tax benefit, that's about 5% after tax. Tough. 20% down payments were usual, although seller financing was sometimes available to make it easier. But this writer just wants to bring back the bubble. It doesn't "have to" happen. I doubt that it will happen. Prices will continue to slide, and all his client needs to do is wait to find a seller who will accept what he is willing to pay. Interest rates are where they are because of default risk. Lenders know that when prices are declining, foreclosures and losses rise, even for prime credits. Lenders have to not only preserve their remaining capital, but make enough of a spread to rebuild their capital through profits. This means spreads will stay high, and probably go even higher. Second mortgages and HELOCs are typically total losses in foreclosures these days. They will be hard to get until price stability returns. That makes no sense. If he is “priced out,” then if the house is really worth $900K, others must be willing and able to bid and pay that, and the market is functioning just fine. If the market is at equilibrium, then if rates come down, the price will go up and his situation will not change. He will still be “priced out.” Although he isn’t – PIT would be about $6K/month, and he is supposedly making $33K/month. Does he want the seller to “give it away”? :)

When I bought my first house in California, I paid 9.25% (in 1983). With the tax benefit, that’s about 5% after tax. Tough. 20% down payments were usual, although seller financing was sometimes available to make it easier.

But this writer just wants to bring back the bubble. It doesn’t “have to” happen. I doubt that it will happen. Prices will continue to slide, and all his client needs to do is wait to find a seller who will accept what he is willing to pay.

Interest rates are where they are because of default risk. Lenders know that when prices are declining, foreclosures and losses rise, even for prime credits. Lenders have to not only preserve their remaining capital, but make enough of a spread to rebuild their capital through profits. This means spreads will stay high, and probably go even higher.

Second mortgages and HELOCs are typically total losses in foreclosures these days. They will be hard to get until price stability returns.

]]>