Article

2011-05-09 -Signs, Portents, and the Weather-

Zillow data confirms - double dip housing crash is starting

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Posted by DarthVader 2011-05-09 12:33|| || Front Page|| [9 views ] Top

#1 Oh no, talk about silly!

House Prices raised by High local Incomes is a good sign, but houses weren't boosted by higher productivity.

House Prices with low Affordability (i.e High Price to Wages ratio) is simply (credit) Inflation and therefore Bad.

Trying to continue harmful inflation by wasting taxpayers cash is even worse!

Posted by Bright Pebbles 2011-05-09 12:52|| 2011-05-09 12:52|| Front Page Top

#2 Darth thank you for the post. This one's for you and it isn't beer;

Posted by Dale 2011-05-09 13:03|| 2011-05-09 13:03|| Front Page Top

#3 The run up was fueled by cheap money.

For purposes of illustration only, imagine you could spend $2000 month on a mortgage. Under traditional guidelines (20% down, 80% LTV, etc) let's say that would buy you $350,000 worth of house.

Along came "creative" financing tools like the Option ARM and suddenly, presto, you could buy $700,000 worth of house for that same $2000 monthly payment. The result was that all those $350k homes were promptly bid up to $700k.

This all kind, of sort, of worked while prices were going up, up, up. Then the house of cards came tumbling down. "Creative" mortgages went away, flippers had no one to flip to and buyers were stuck in homes worth less than the balance on the mortgage. What now?

Well, prices have to come back down, period. People who can afford $2000 / month probably can't pay $4000 / month. Creative financing is no longer available. Only option left is to devalue real estate until people can afford it again. That is why prices are coming down, and will continue to come down. Unfortunately it is a very slow process. The primary driver is foreclosure, and that takes about 12 months start to finish -- and that is if you can find a buyer, and if your buyer can get a loan.

Posted by Iblis 2011-05-09 16:28|| 2011-05-09 16:28|| Front Page Top

#4 Iblis HI!, you know what your talking about. Banks have money to loan but the people that are applying can't get a loan from their regular bank. Then you have those who want to consolidate because they are overextended. Then you have those that are high credit risks. If you have a good credit rating then you can get a loan.

Posted by Dale 2011-05-09 22:09|| 2011-05-09 22:09|| Front Page Top

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