Aces High Bulletin Board
General Forums => The O' Club => Topic started by: Sixpence on August 20, 2007, 09:37:56 AM
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and you wonder what action by the fed could help the housing market. A friend at work seems to think that if the fed says it is going to raise rates, that his house will sell because people will buy before the rates go up.
I am not so sure of this, I wonder if that happened that people who are stuck in adjustable rate mortgages and can't refinance will bail out before the rates go up and they lose their house anyway. Which I believe will hurt the market even more.
I think if they lower rates it will stabilize the market and people will be able to buy more house and buy before rates go back up.
What do you think?
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There is very little chance if any that the Fed will raise rates in the near term. The Bond market has all ready priced in that the Fed will lower rates in the near term, more than likely in Sept.
Housing is such a local thing. Some markets will go up, and some down, regardless of what the Fed does. Supply & Demand rule.
One thing for sure, if you are not a prime borrower, mortgages are going to be much harder to get. A lot of people got homes they couldn't begin to afford & will be stuck when their teaser rates adjust, and will not have an option but to give the house up.
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The recent Fed cash injection was done in such an unusual way that I don't think anyone can say for sure what the effects will be... even the Fed. It was the first time a repo using MBS has ever been done for so much money, not to mention the historical precedence of the Fed trying to affect an individual sector of the economy. That has always been a no-no. These are unchartered waters for the Fed with no historical reference.
That's why the discount rate was lowered in advance of the Sept 18th meeting - a "just in case it doesn't work" move. Lenders may pull back significantly. The stock market is not going to be relevant to what happens in mortgage lending, so upward moves the first of the week should not be taken as a sign things are improving. Some of the repos won't be due until the end of the month.
Credit tightening (or even hording) by lenders in the near term may have more impact on the market than small moves in interest rates on Sept 18th. Sub-prime loans were a way to expand the universe of loans since the market was already topped out for traditional, credit-worthy mortgages. The pendulum usually swings too far on these types of things. Look to the liquidity injection method to see that there is a fundamental housing bubble that is going to be deflated, one way or the other.
(Added) I just realized that this will make no sense unless you know how the Fed temporarily injects liquidity. I don't think mass media has even discussed anything about the unusual method the Fed used in the last few weeks. If you don't know how it's done, just say so, and I'll explain it tomorrow. Or, someone else can. It's 1 am here and I have a long day tomorrow.
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For one, the money injected was lent in one day contracts. So most of that money has already been paid back by the banks, the fed's involvement was very short term.
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Housing is such a local thing. Some markets will go up, and some down, regardless of what the Fed does. Supply & Demand rule.
That, Sixpence, I would believe to be the starting point for any housing sale. Interest rates and credit availability for any potential buyer would be another, but you will have to look at your area demographically, find out what price range is median for that particular neighborhood, Sq. footage, lot size, etc. Then, see how many other homes' like it are on the market.
Alot of areas(Such as California, where I live) have priced themselves right out of the market. Median incomes' for the area I live cannot support many of these mortgages. However, that might be different for your area.
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Where I live in Oregon, the average time on market is up to about 6 months now. Sobering, considering that this area is considered one of the healthier areas for real-estate.
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Originally posted by Sixpence
and you wonder what action by the fed could help the housing market.
I'm surprised to not read posts by those who think the Federal Government's proper role bars them from "helping the housing market."
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Originally posted by Chairboy
Where I live in Oregon, the average time on market is up to about 6 months now. Sobering, considering that this area is considered one of the healthier areas for real-estate.
My parents' are actually living in Coos Bay, right now. They are retired, and looking to buy a place somewhere in that area (They got stuck renting for the moment.)
There's quite a few places for sale, but my dad's kinda picky. He wants at least an acre, more if possible, and a good well.
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the double whammy of high taxes and exhorbitantly high home insurance costs have all but stagnated the residential real estate market here in my beloved south florida.
it's not uncommon to hear of people paying twelve to fifteen thousand dollars per year between the two on the average home.
folks don't have a problem making the mortgage payments but the taxes need to be decreased significantly here.
way back when the state began taxing property they included an exemption which was the first $25,000 of the property's value was exempt from taxation provided it was the homestead of the owner, hence the homestead exemption rule. it was a beautiful thing because the average home was selling for about $20,000 at the time. it was a very progressive law, there is no state income tax in florida and the property tax was low thus the average citizen really paid little or no taxes. the slack was picked up by commercial real estate and investors who had more than one home in their name.
as real estate values crept up and no adjustments were made to increase the homestead exemption to reflect the spirit of the rule there was now more money in the coffers so more government jobs were invented. we now have bloated building departments with rediculous regulations and roaming packs of inspectors generating fines and what not for every imaginable offense. that is just one governmental agency that I'm well aquainted with I'm sure others are just as bad.
with the average home in south florida now being valued at $400,000 (that would be your standard 3/2) the taxes for these homes are in the $10-12,000 range.
the other pitfall is that insurance is about $5-7000 for that home.
what happens is this (using my home as an example) our home was purchased for $168,000 so the taxes we pay on it are roughly $4800. if I sold it for it's market value $900,000 the people who purchase it would pay somewhere in the neighborhood of $20,000 in taxes. the next home I buy would pay roughly the same amount of taxes unless I purchased something markedly inferior and even then I would pay far more taxes than I do now.
the result is no one moves, they can't afford to. furthermore no one buys new homes, they can't afford the full burden. we have a stagnant real estate market. the good news is people are remodelling in record numbers.
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Originally posted by FrodeMk3
My parents' are actually living in Coos Bay, right now. They are retired, and looking to buy a place somewhere in that area (They got stuck renting for the moment.)
There's quite a few places for sale, but my dad's kinda picky. He wants at least an acre, more if possible, and a good well.
There are some great properties like that in the area, Oregon has good open spaces. If they don't have a local agent, my wife can help, PM me if you want her info. One of the biggest impediments to new buyers right now is the newly aggressive mortgagers. Getting a loan means impeccable credit, good downpayment, and so on. Kinda like I always imagined it would be, not the drunken sailor style popular just 3-4 years ago.
I'm just amazed that this whole mortgage crisis has snuck up on so much of the country.
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In Austin we are not feeling the pinch like other areas of the country. With the AR mortgagees starting to turn we are seeing foreclosures going up.
Our company had one of the best summers on record. This mortgage scare is coming at the worst possible time during the year. Our season will end in Sept and after that those house that are on the market will have a long winter before we start up the new year.
I personally sold homes to people that couldn't afford them. Many times at the closing table the title company would cut a check for $500-1000 to the buyers. New home builders were to worst with the 0 down 0 closing cost. They took complete advantage of the system.
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My house is fixing to go on the market. Not for any reason other than my Wife and I want to get closer to an area for a reason. Our mortgage is a fixed rate. No worries with what happens.
What makes it unique for us is that we have no time table what so ever. Our mortgage is very affordable for us. It's just a want to move. Not a have to because we got snookered into an ARM.
SO we may have to wait all winter , we may sell it fast. FX1 knows the area I am in very well. A house on our street sold in 20 days. The market anyalsis done for us by our realtor shows 41 days. Probably will change. Its all a guessing game.
1 thing about tho , if we do sell it fairly quick....I think the builders will be offering BIG deals on new homes setting on the ground. More incentives than you can shake a stick at to buy a new home.
We'll see tho.
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When selling a house pretty much all you can do is wait and see, or lower your price. I suggest you don't do the latter unless you don't get any serious interest for three months. Even then it all depends on your need to sell.
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there is more then.."wait and see"..and lower price
IF a realtor tells you that..they dotn deserve a dime
and Big Guns..CHECK SIX!!!!!!!!!!!!!!!!!!!!!
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Originally posted by BiGBMAW
there is more then.."wait and see"..and lower price
IF a realtor tells you that..they dotn deserve a dime
and Big Guns..CHECK SIX!!!!!!!!!!!!!!!!!!!!!
There is more to selling a house than depending on realtors. I sold mine myself when a realtor couldn't and came out at least 5 grand ahead.
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The wait and see thing is....we dont have to sell. We're in absolutley fine shape with the mortgage. It's not a need , its simply a want to move next to a golf course and just a lil closer to work.
IF we don't sell it for the price we ask , say in a couple of months , then no biggie and ill stay in it until things change.
We like the house we're in fine. Just a notion to move next to a club that ill be a memnber of and play as well as practice at alot getting ready for a future goal I have.
Sell or not is not a huge deal. Ist just like I said.....its just a want.
Lowering the price JUST to sell it....is a BIG FAT no.
I have the advantage IMHO in this....I can sit and sit....no worries...no changes in payments at all....no ARM's to worry about. Im a fixed rate 30 year vanilla loan guy. And its an easy payment.
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Originally posted by storch
with the average home in south florida now being valued at $400,000 (that would be your standard 3/2) the taxes for these homes are in the $10-12,000 range.
the other pitfall is that insurance is about $5-7000 for that home.
wow, holy ****
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Originally posted by Chairboy
There are some great properties like that in the area, Oregon has good open spaces. If they don't have a local agent, my wife can help, PM me if you want her info. One of the biggest impediments to new buyers right now is the newly aggressive mortgagers. Getting a loan means impeccable credit, good downpayment, and so on. Kinda like I always imagined it would be, not the drunken sailor style popular just 3-4 years ago.
I'm just amazed that this whole mortgage crisis has snuck up on so much of the country.
Thanks, Chair, I'll talk to them on what they're final decision is. They waver back and forth between wanting to settle on the coast, and moving inland near a lake or a river.(I saw a couple of places that looked pretty nice up the Rogue River.)
The place they are renting in Coos Bay is on the market, and whereas they liked alot of the features, they didn't like the price (450,000$). My dad's thinking the people are getting ready to come down on the price, a few others' in the area already have. He's gonna sit tight for a bit, to see what's gonna happen.
Just outta curiosity, at 6.5% or 7% interest, can anyone figure the monthly payment on a $400,000 home? with a 25 or 30 year fixed? That's the average price for a new home here.
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Originally posted by Sixpence
wow, holy ****
yup it's even worse in the florida keys. I met up with a highschool chum who is repairing boats on vaca key and his workers are bussed in with the hotel workers from homestead, florida one hundred miles away. working folks can't afford the housing costs in the keys. dade county is rapidly becoming that way with houses in liberty city (a ghetto neighborhood built by the communist roosevelt administration) nearby brownsville and the allapattah prairie now in the mid $200k range.
there were a few neighborhoods on the east side on biscayne bay where property values were low but even those are now in the one million dollar range.
miami is rapidly becoming an exclusive city, segregated by economics. we will be much poorer for it as well. for me part of the charm of living here is the great cultural diversity we enjoy.
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kalifornia has become a young persons state.. you have to be young and ambitious to afford a home but.. the home itself becomes part of your retirement plan. Like florida... the weather is too hard to beat. Home prices will continue to go up and the states economy will continue to grow.
I figure that by the end of 08 the home prices here will start to look like they did just before the "adjustment". I used to get a realator a week leaving his card on the door saying he could sell my place in a week... I have seen slumps and recoveries before and will see em again.
I will wait a year or two and then sell and move further out away from people so that I can have a little freedom... If I get 20 more years before the people move in around me and "help" me "for my own good" I will be content.
If not.. I can simply move again.
In some states you don't have that option... never did. people live in houses 10 years and get less or.. not much more than they paid for the place originally. Not so here.. I will just have to be patient.
lazs
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Originally posted by FrodeMk3
Just outta curiosity, at 6.5% or 7% interest, can anyone figure the monthly payment on a $400,000 home? with a 25 or 30 year fixed? That's the average price for a new home here.
With 10% down and 7% interest, the payment is $ 2,395.09 a month. With property taxes and insurance, it pops up to about $3,000. They'd save a huge amount in taxes by being able to write off the interest, so that helps adjust the 'payment' figure back down, but you'd probably have to talk to your accountant to figure out how much it'd affect them specifically.
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Lazs..I have a scenic piece of property on Yankee Hill...lake view and good shooting; )...only 1 hour 40 minutes from sacramento,
Well water, electricity, septic all ready in!!...and few neighbors around enjoy shooting
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bigb... yes.. it is still possible to find such places in northern kalifornia... I have found then in places like grimes and maxwell and colusa....
I found a place on 4 acres that has hundreds of acres of orchard on either side and backs up to a levee for the sacramento river.... the guy shoots into the bank from his back porch.. I could build a huge shop... it is 3 minutes from downtown colusa and 30 minutes from yuba city. probly still be able to shoot 20 years from now... by then I won't care or the land will be worth so much I can sell and buy something else.
kalifornia is still the best for that.
lazs
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I just did a home refinance a few days ago, I bought my home with an ARM. First time homebuyer, seemed like a good idea. Ouch! But now I'm locked under 7%.
My neighbor's home sat on the market for 2 months and he got what he was asking for it. Another home further down is still for sale. From what I can tell, its a buyers market right now.
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Make hay while the sun shines this quarter if you're a seller. Make hay while the sun scorches next year if you're a buyer. I say we'll be headlong into a good, old-fashioned recession -- the kind we haven't seen in 25 years -- by this time next year. And I've been an optimist for a long time.
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The problem - currently - with property is that its been on such a good run for the last ten years everyone has viewed it as an investment. The thing is that historically property has been a pretty mediocre place to put your money if that's how you view it.
The other thing to remember is that even if we see property value adjustments in certain markets (and there's plenty of evidence to say we will), negative equity tends to be a temporary thing, and only a problem if you absolutely have to move or can't afford your mortgage (which I accept is a very real problem for many people). If you are making your payments and don't need to move, just ride it out. Prices will go up again eventually, albeit probably not as much as we've seen over the last ten years.
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The other thing to remember is that even if we see property value adjustments in certain markets (and there's plenty of evidence to say we will), negative equity tends to be a temporary thing, and only a problem if you absolutely have to move or can't afford your mortgage (which I accept is a very real problem for many people).
The part about Negative equity is somewhat true for some people, Wooley. But one thing that alot of people did during this boom, when equity was skyrocketing even on homes that they owned for only 6 months, was to take out equity loans' on those homes. Now, with values' and prices starting to slide backwards a bit, you are starting to see lot's of panic and woe. Of course, mainly from the people who have taken out a large 2nd.
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A secondary issue on valuation would be those who took out a reverse mortgage. If property values drop significantly, the situation is going to get ugly for those entities that are offering them.
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I'm just a simple man with simple pleasures..Is shooting off your porch such a demand!!?
really wish suppressors weren't such a scary thing to linguini's spines out here