[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
Well, you certainly have an intresting POV. I hope it serves you well
and profitably.



--- In FairfieldLife@yahoogroups.com, off_world_beings <[EMAIL PROTECTED]>
wrote:
>
> 
> > I suggest you are not getting it, or simply poorly informed about 
> the
> > housing markets in the US. First, how will foreign invesors, as a
> > class, be richer if  a global bubble occurs -- which is what what 
> I am suggesting. >>
> 
> 
> The most ridiculous suggestion. There might be little green men on 
> mars too. Gobal bubble burst. HOW?
> 
> >>> Even without such, most foreign investors are just that: 
> investors -- looking for a return. In most major markets, the 
> fundamentals are so out of whack, the rent/mortgage rates (30-50%), 
> and the affordability rates (15% or so) that the probability of a 
> positive return from either rentals or selling appreciated property 
> is fast becoming minimal. Losses, large losses, are gaining a much 
> higher probability. >>>
> 
> 
> So you are saying less people will be able to buy a house so more 
> people will be renting so rental acoomodation will become more 
> scarce so rent prices will rise so people with mortgages can rent 
> their place out and pay the mortgage. In addition renters will get 
> fed up with rising rent which the market will bear unless there is 
> mass unemployment on a scale not seen since the great depression. So 
> renters will (as always) get fed up renting and will start buying so 
> house prices will continuw to rise so there is no real bubble 
> burstjust a normal market wiggle.
> 
> 
> << the
> > markets readjust, then fine, >>.
> 
> 10 years+, as ALL intelligent investors look at it. Yes you have hit 
> the nail on the head. There are million of intelligent investors in 
> the world who look at gains over 10 to 15 yearsnot year by year. 
> They year by year types are the ones that CAUSED the tech bubble in 
> the late '90s.
> 
> housing may be a good long-term
> > investment for such. But the current housing investor market is
> > generally much shorter term.>>>
> 
> Then tough luck to them. Most people are not in it to make a 
> killing. Most people are in it to live in their own place and if 
> they make monety great, but if not they at least don't throw 10 to 
> 20,000 a year down the drain in rent money. (100,000 to 200,000 lost 
> in only 10 years). It is these people that are fueling the market. 
> 
> > 
> > > > >> If your theorized  crash occurs then that makes the US 
> poorer 
> > > than some other countries  who will be perfectly happy to buy
> > property  at the meagre prices they are seeing, wether there is a
> > prevailing  lower market rate or not. 
> >  
> > > > With prices dropping globally. They are -- from London to 
> > > Austrailia to Spain to China.>>
> > > 
> > >  
> > > Jya...right. House prices have been dropping in China for a long 
> > > time.jya right.
> > 
> > Actually thats a direct quote from the PBS Lehr News hour tonight.
> > There has been substantial state-financed overbuilding of upscale
> > condos in Peiking, Shanghai and other areas, and prices -- the 
> report
> > said, have dropped 30% in the last couple of years.
> 
> 
> > 
> > 
> > > > > In  fact, this very effect will be enough to keep house 
> prices
> > > > rising. We live in a global economy. The nouveau rich in 
> Russia or
> > > > Canada will come and buy your cheap little $300,000 dollar 
> house
> > in  Boston.
> > 
> > I am still waiting for you to buy the portfolio of overpriced
> > properties that I can structure for you. If you are not willing to 
> > buy, your points are just empty and uninformed idle banter>>>
> 
> 
> Yes Mr. Rich man. Sorry ain't got that kinda money to buy a bunch of 
> houses, and I'm glad I don't. Most intelligent people don't want 
> that much wealth, they just a house of their own and a car and a 
> decent job they like with prospects and a decent pension. This is 
> what most people actually want. Being rich is boring.
> 
> 
> > Yes, wages have to go up 4 fold in order for 50% of the population 
> to
> > be able to afford the median priced home in major markets. That 
> will
> > take a while. Or prices will have to drop 30-40% 
> >>>
> 
> 
> True to some extent but mostly in California dude,  but not 
> elsewhere. 
> 
> If a house is 250,000 then the monthly mortgage payment will be 
> around $2,300 including property taxes. Most working couples (on say 
> 35,000 and 40,000 a year = 70,000 total) can just about afford that. 
> And that is what mortgage companies look at. It is $24,000 a year, 
> as opposed to about 15,000 a year they would have to pay in rent for 
> something decent. With a bit of inginuity most working people can do 
> it...though it has never been easy. Once they get older and are on 
> 45,000 plus 55,000, then it is getting easier and easier, plus the 
> equity goes up over 10 years. 
> 
> If analysts such as the ones you are quoting are going by average 
> saleries of a single p

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread off_world_beings

> I suggest you are not getting it, or simply poorly informed about 
the
> housing markets in the US. First, how will foreign invesors, as a
> class, be richer if  a global bubble occurs -- which is what what 
I am suggesting. >>


The most ridiculous suggestion. There might be little green men on 
mars too. Gobal bubble burst. HOW?

>>> Even without such, most foreign investors are just that: 
investors -- looking for a return. In most major markets, the 
fundamentals are so out of whack, the rent/mortgage rates (30-50%), 
and the affordability rates (15% or so) that the probability of a 
positive return from either rentals or selling appreciated property 
is fast becoming minimal. Losses, large losses, are gaining a much 
higher probability. >>>


So you are saying less people will be able to buy a house so more 
people will be renting so rental acoomodation will become more 
scarce so rent prices will rise so people with mortgages can rent 
their place out and pay the mortgage. In addition renters will get 
fed up with rising rent which the market will bear unless there is 
mass unemployment on a scale not seen since the great depression. So 
renters will (as always) get fed up renting and will start buying so 
house prices will continuw to rise so there is no real bubble 
burstjust a normal market wiggle.


<< markets readjust, then fine, >>.

10 years+, as ALL intelligent investors look at it. Yes you have hit 
the nail on the head. There are million of intelligent investors in 
the world who look at gains over 10 to 15 yearsnot year by year. 
They year by year types are the ones that CAUSED the tech bubble in 
the late '90s.

housing may be a good long-term
> investment for such. But the current housing investor market is
> generally much shorter term.>>>

Then tough luck to them. Most people are not in it to make a 
killing. Most people are in it to live in their own place and if 
they make monety great, but if not they at least don't throw 10 to 
20,000 a year down the drain in rent money. (100,000 to 200,000 lost 
in only 10 years). It is these people that are fueling the market. 

> 
> > > >> If your theorized  crash occurs then that makes the US 
poorer 
> > than some other countries  who will be perfectly happy to buy
> property  at the meagre prices they are seeing, wether there is a
> prevailing  lower market rate or not. 
>  
> > > With prices dropping globally. They are -- from London to 
> > Austrailia to Spain to China.>>
> > 
> >  
> > Jya...right. House prices have been dropping in China for a long 
> > time.jya right.
> 
> Actually thats a direct quote from the PBS Lehr News hour tonight.
> There has been substantial state-financed overbuilding of upscale
> condos in Peiking, Shanghai and other areas, and prices -- the 
report
> said, have dropped 30% in the last couple of years.


> 
> 
> > > > In  fact, this very effect will be enough to keep house 
prices
> > > rising. We live in a global economy. The nouveau rich in 
Russia or
> > > Canada will come and buy your cheap little $300,000 dollar 
house
> in  Boston.
> 
> I am still waiting for you to buy the portfolio of overpriced
> properties that I can structure for you. If you are not willing to 
> buy, your points are just empty and uninformed idle banter>>>


Yes Mr. Rich man. Sorry ain't got that kinda money to buy a bunch of 
houses, and I'm glad I don't. Most intelligent people don't want 
that much wealth, they just a house of their own and a car and a 
decent job they like with prospects and a decent pension. This is 
what most people actually want. Being rich is boring.


> Yes, wages have to go up 4 fold in order for 50% of the population 
to
> be able to afford the median priced home in major markets. That 
will
> take a while. Or prices will have to drop 30-40% 
>>>


True to some extent but mostly in California dude,  but not 
elsewhere. 

If a house is 250,000 then the monthly mortgage payment will be 
around $2,300 including property taxes. Most working couples (on say 
35,000 and 40,000 a year = 70,000 total) can just about afford that. 
And that is what mortgage companies look at. It is $24,000 a year, 
as opposed to about 15,000 a year they would have to pay in rent for 
something decent. With a bit of inginuity most working people can do 
it...though it has never been easy. Once they get older and are on 
45,000 plus 55,000, then it is getting easier and easier, plus the 
equity goes up over 10 years. 

If analysts such as the ones you are quoting are going by average 
saleries of a single person then they are not very good analysts. 
Working couples buy houses probably the mostand they fuel house 
price growth over time.

MAIN POINT: Most ordinary people understand the above 10 -15 year 
inverstment period, and they are fueling the house buying econmoy in 
the 150,000 to 450,000 range. Their logic will continue to fuel it .
(barring the black hole of Iraq and other disasters)

Without the 

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
> >  
> > > > Are you implying such nationalities are stupid and will buy 
> homes 30% above prevailing market rates (if a bubble burst occurs).
I  thought only certain eccentric Brits were that bonkers. :)
> >  
> >   
> > > Why not, we do it all the time in other countries that are
poorer than  us. Someone from a rich country doesn't really care if
the  house  costs $10,000 and is only worth $7,000 to sell it again. 
> > 
> > Really! Quite shrewd investors these arab, canadian and russan 
> friends of yours.>>>
> 
> Lol, your just not getting are you? They will be able to  afford to 
> make a loss on a US home because, ubder your bubble bust theory they 
> will be  rich compared to US, and they are not worried about 100,000 
> here or there.

I suggest you are not getting it, or simply poorly informed about the
housing markets in the US. First, how will foreign invesors, as a
class, be richer if  a global bubble occurs -- which is what what I am
suggesting. 

Even without such, most foreign investors are just that: investors --
looking for a return. In most major markets, the fundamentals are so
out of whack, the rent/mortgage rates (30-50%), and the affordability
rates (15% or so) that the probability of a positive return from
either rentals or selling appreciated property is fast becoming
minimal. Losses, large losses, are gaining a much higher probability.
If the foreign investors want to wait it out, 10 - 20 years while the
markets readjust, then fine, housing may be a good long-term
investment for such. But the current housing investor market is
generally much shorter term.


> > >> If your theorized  crash occurs then that makes the US poorer 
> than some other countries  who will be perfectly happy to buy
property  at the meagre prices they are seeing, wether there is a
prevailing  lower market rate or not. 
 
> > With prices dropping globally. They are -- from London to 
> Austrailia to Spain to China.>>
> 
>  
> Jya...right. House prices have been dropping in China for a long 
> time.jya right.

Actually thats a direct quote from the PBS Lehr News hour tonight.
There has been substantial state-financed overbuilding of upscale
condos in Peiking, Shanghai and other areas, and prices -- the report
said, have dropped 30% in the last couple of years.


> > > In  fact, this very effect will be enough to keep house prices
> > rising. We live in a global economy. The nouveau rich in Russia or
> > Canada will come and buy your cheap little $300,000 dollar house
in  Boston.

I am still waiting for you to buy the portfolio of overpriced
properties that I can structure for you. If you are not willing to 
buy, your points are just empty and uninformed idle banter.

> > --
> > 
> > Actually foreign investors already have been aggresive buyers in 
> hot markets. And some are getting / may get caught in the bubble.>>>
> 
> 
> No, becuase, like any wise investor,  they know it is just a bubble 
> and that eventually prices will start to rise again, along with 
> wages.

Yes, wages have to go up 4 fold in order for 50% of the population to
be able to afford the median priced home in major markets. That will
take a while. Or prices will have to drop 30-40% 

And wise investors of course will try to buy at the bottom of a
market, not at its peak. 

 
> > But, you being an astute investor, I will sell you a potfolio of
> > overpriced homes right now and you can make a killing on it 
> selling it to the market you you envision. I am sure you will put 
> your money where your mouth is.>>>

> 
> I am not talking about inverstors. Try reading more carefully. I am 
> talking about 2 things: 


> 1. People who have bought their house to live in it and own it 
> (rather than throwing 10,000 to 20,000 a year down the drain in rent 
> money)

I thought you were talking about people who are going to buy housing
at a 30% premium after the  market drops such. These by definition are
NOT people "who have bought their house to live in it and own it" .

How many of your rich canadian, arabs and russians are planning to
live and settle in their new US homes? 

The current market bubble has been driven by investors -- over 25%of
buyers. 


> 2. People spending some expendable cash on a second home in the US. 
> There are plenty. Canada is a thriving economy not as tied to the US 
> as people think. 

And you are sugggesting that such a foreign second home in US market
is large and motivated enough to buy up all of the listed homes for
sale so that they do not lingering on the market with eventual price
drops. So where are they? That is already happening. Days on market is
already stretching out substantially, and prices are beginning to drop. 
  
> The whole point being that your bubble will not last under such 
> supply and demand conditions. 

First you suggest that sellers will be able to sell at curret prices
because of all of your envisioned foreign investors wanting second
homes in the US. If prices are stable ther

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread off_world_beings
--- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> 
wrote:
>
> --- In FairfieldLife@yahoogroups.com, off_world_beings 
<[EMAIL PROTECTED]>
> wrote:
> >
> > --- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> 
wrote:
> > >
> > > --- In FairfieldLife@yahoogroups.com, off_world_beings <<
>  
> > > Are you implying such nationalities are stupid and will buy 
homes 30%
> above prevailing market rates (if a bubble burst occurs). I 
thought 
> only certain eccentric Brits were that bonkers. :)
>  
>  
> > Why not, we do it all the time in other countries that are poorer
> than  us. Someone from a rich country doesn't really care if the 
house
> costs $10,000 and is only worth $7,000 to sell it again. 
> 
> Really! Quite shrewd investors these arab, canadian and russan 
friends
> of yours.>>>

Lol, your just not getting are you? They will be able to  afford to 
make a loss on a US home because, ubder your bubble bust theory they 
will be  rich compared to US, and they are not worried about 100,000 
here or there.

> 
> >> If your theorized  crash occurs then that makes the US poorer 
than
> some other countries  who will be perfectly happy to buy property 
at
> the meagre prices they are seeing, wether there is a prevailing 
lower
> market rate or not. 
> 
> With prices dropping globally. They are -- from London to 
Austrailia
> to Spain to China.>>


Jya...right. House prices have been dropping in China for a long 
time.jya right.


> 
> 
> > In  fact, this very effect will be enough to keep house prices
> rising. We live in a global economy. The nouveau rich in Russia or
> Canada will come and buy your cheap little $300,000 dollar house in
> Boston.
> 
> --
> 
> Actually foreign investors already have been aggresive buyers in 
hot
> markets. And some are getting / may get caught in the bubble.>>>


No, becuase, like any wise investor,  they know it is just a bubble 
and that eventually prices will start to rise again, along with 
wages.


> 
> 
> But, you being an astute investor, I will sell you a potfolio of
> overpriced homes right now and you can make a killing on it 
selling it to the market you you envision. I am sure you will put 
your money where your mouth is.>>>



I am not talking about inverstors. Try reading more carefully. I am 
talking about 2 things: 
1. People who have bought their house to live in it and own it 
(rather than throwing 10,000 to 20,000 a year down the drain in rent 
money)
2. People spending some expendable cash on a second home in the US. 
There are plenty. Canada is a thriving economy not as tied to the US 
as people think. 

The whole point being that your bubble will not last under such 
supply and demand conditions. 
Maybe in some places there will be a fall but it will not be across 
the board, except for the fact that Bush's Quagmire will suck up 
money and resources for economic development, and another big 
disaste in US could rock things.

As long as there is an increasing population in an area there will 
be increasing house prices. Not that it is a big advantage to 
anyone , unless it is their business to buy and sell.






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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
--- In FairfieldLife@yahoogroups.com, off_world_beings <[EMAIL PROTECTED]>
wrote:
>
> --- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> wrote:
> >
> > --- In FairfieldLife@yahoogroups.com, off_world_beings <<
 
> > Are you implying such nationalities are stupid and will buy homes 30%
above prevailing market rates (if a bubble burst occurs). I thought 
only certain eccentric Brits were that bonkers. :)
 
 
> Why not, we do it all the time in other countries that are poorer
than  us. Someone from a rich country doesn't really care if the house
costs $10,000 and is only worth $7,000 to sell it again. 

Really! Quite shrewd investors these arab, canadian and russan friends
of yours.

>> If your theorized  crash occurs then that makes the US poorer than
some other countries  who will be perfectly happy to buy property at
the meagre prices they are seeing, wether there is a prevailing lower
market rate or not. 

With prices dropping globally. They are -- from London to Austrailia
to Spain to China.


> In  fact, this very effect will be enough to keep house prices
rising. We live in a global economy. The nouveau rich in Russia or
Canada will come and buy your cheap little $300,000 dollar house in
Boston.

--

Actually foreign investors already have been aggresive buyers in hot
markets. And some are getting / may get caught in the bubble.


But, you being an astute investor, I will sell you a potfolio of
overpriced homes right now and you can make a killing on it selling it
to the market you you envision. I am sure you will put your money
where your mouth is. 






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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
off_world_beings <[EMAIL PROTECTED]>
wrote:
>
> Nonsense.

And you base your apprisal on a review of loan agreements for Option
ARMS? Option ARMS are quite a different animal than traditional ARMS.
To cite evidence about conventional ARMS as an argument about Option
ARMS is non-sensical.


> Secondly: You can always sell your house to a rich Arab or a rich
> Canadian or a rich German (Germany is much stronger than people are
> saying in the media)

Are you implying such nationalities are stupid and will buy homes 30%
above prevailing market rates (if a bubble burst occurs). I thought
only certain eccentric Brits were that bonkers. :)








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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread off_world_beings
--- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> wrote:
>
> --- In FairfieldLife@yahoogroups.com, off_world_beings <<
> 
> Are you implying such nationalities are stupid and will buy homes 30%
> above prevailing market rates (if a bubble burst occurs). I thought
> only certain eccentric Brits were that bonkers. :)>>>


Why not, we do it all the time in other countries that are poorer than 
us. Someone from a rich country doesn't really care if the house costs 
$10,000 and is only worth $7,000 to sell it again. If your theorized 
crash occurs then that makes the US poorer than some other countries 
who will be perfectly happy to buy property at the meagre prices they 
are seeing, wether there is a prevailing lower market rate or not. In 
fact, this very effect will be enough to keep house prices rising. We 
live in a global economy. The nouveau rich in Russia or Canada will 
come and buy your cheap little $300,000 dollar house in Boston. 






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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
--- In FairfieldLife@yahoogroups.com, off_world_beings <[EMAIL PROTECTED]>
wrote:
>
> Nonsense.

And you base your apprisal on  a review of loan agreements for Opriosn
ARMS? Option ARMS are quite a different animal than traditional ARMS. 
To cite evidence about conventional ARMS as an argument about Option
ARMS is non-sensical. 


> Secondly: You can always sell your house to a rich Arab or a rich 
> Canadian or a rich German (Germany is much stronger than people are 
> saying in the media)

Are you implying such nationalities are stupid and will buy homes 30%
above prevailing market rates (if a bubble burst occurs). I thought
only certain eccentric Brits were that bonkers. :)


 






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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread off_world_beings
Nonsense.
Mortgages are subject (by law) to a limit in interest rate 
increases, so the most you could see after the 5 year term is up is 
about 2%. It is not in the interest of the business of the mortgage 
company to always put the highest legal rate up every year, because 
you will just sell your mortgage to a more reasonable company. Sure 
your interest can go up, but it is not unmanagable, plus you can re-
mortgage. 

http://mortgages.interest.com/content/firsttime/ed-ab09.asp
HOW CAN I REDUCE MY RISK?
""Besides an overall rate ceiling, most ARMs also have "caps" that 
protect borrowers from extreme increases in monthly payments. Others 
allow borrowers to convert an ARM to a fixed-rate mortgage. While 
these may offer real benefits, they may also cost more, or add 
special features, such as negative amortization. 

Interest-Rate Caps
An interest-rate cap places a limit on the amount your interest rate 
can increase. Interest caps come in two versions: 
Periodic caps, which limit the interest rate increase from one 
adjustment period to the next; and 

Overall caps, which limit the interest-rate increase over the life 
of the loan. 
By law, virtually all ARMs must have an overall cap. Many have a 
periodic interest rate cap. 
Let's suppose you have an ARM with a periodic interest rate cap of 
2%. At the first adjustment, the index rate goes up 3%. The example 
shows what happens. 

 ARM Interest Rate Monthly Payment
-- ---
First year @ 10%$570.42
2nd year @ 12% (without cap)$717.12
2nd year @ 12% (with cap)   $667.30

  Difference in 2nd year between payment
  with cap and payment without = $49.82


Secondly: You can always sell your house to a rich Arab or a rich 
Canadian or a rich German (Germany is much stronger than people are 
saying in the media)






--- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> 
wrote:
>
> San Diego Housing Bubble Pops
> 
> Tuesday, October 04, 2005
> 
> Option Arm mortgages now account for over 75% of all mortgage
> originations for the month of September. I have never seen anything
> like this before.
> 
> I attended two mortgage conventions this month and every broker I
> talked to said they were experiencing the same thing.
> 
> Add fuel to the fire because the San Diego housing bubble has 
finally
> popped and I am sure much of the rest of the country will soon 
follow.
> The damage will be the worst disaster in recent U.S. history.
> 
> The fixed rate refinance boom has transformed into the Option ARM
> refinance boom. This is the negative amortization loan that your
> monthly payment is based on a 1% loan for 40 years for the first 3 
to
> 5 years and then it recasts at normal adjustable rates. This allows
> someone to purchase a $700,000 home with $35,000 down using a 
$560,000
> first mortgage with a starting payment of $1,415.99 plus an 
interest
> only second of $105,000 with a payment of $613.00.
> 
> Put this together and you can buy a $700,000 home with $35,000 down
> and a monthly payment of $2,028.99. The same house would rent for
> around $2,500 a month, so the person buying justifies the purchase.
> The problem is when this loan recasts in 3 to 5 years, depending on
> how quickly interest rates rise, the new payment will be around
> $4,711.26 a month. That's right, the payment jumps from $2,028.99 
to
> $4,711.26 in less than 5 years, and if interest rates rise the 
payment
> could be higher! This is justified by "I am planning on moving in 
less
> than 5 years anyway."
> 
> This is only the beginning of the problem…
> 
> Then because the house just sold for $700,000, an appraiser uses 
this
> house as a comparable on the next door neighbors refinance and this
> person only owes $250,000 because they bought several years ago 
when
> prices were lower. This person decides to tap into this inflated 
value
> and due a loan for $350,000 using an Option ARM so he can take out
> $100,000 to fuel the consumer spending bubble. His payment on his 
old
> mortgage was $1,500 per month, but because of this new super duper
> Option ARM loan he can get his $100,000 cash out and his new 
payment
> is only $885 per month. Now he can really blow up consumer spending
> and even use this extra money to "invest in real estate". How 
about a
> nice condo in Florida?
> 
> And the 3 to 5 year recast? (Which will be around $2,200 per month 
if
> rates don't rise) He figures he has another $350,000 in equity in 
his
> home so he can just keep refinancing every few years and knock his
> payment back down and don't forget "real estate always goes up, so 
in
> ten years or so his house will be worth millions" and he will 
probably
> just cash in and move into his Florida condo anyway.
> 
> I disagree with all the "experts"… I don't see a "soft landing". 
With
> all this funny money being pumped into the American consumers 
pockets,
> all you can expect to see if a drastic end

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
--- In FairfieldLife@yahoogroups.com, Peter <[EMAIL PROTECTED]> wrote:
>
> This is "Enron" type financial thinking. It always
> blows-up in the end.
 
These Option ARMS are just aggressive leveraging and laxing of credit
standards. Enabled by lenders. All quite legal and transparent. Though
quite imprudent IMO, as housing price appreciation expectations begin
to diminish and turn negative. But no one is conning anyone. 

What CFO Fastau did, with CEO Skilling nodding, at Enron was a series
of complex misleading, corrupt, illegal con transactions. These and
Option ARMS are not really at all in the same ballpark. 

An intersting book that goes into the complexity and manipulative
nature of the transacions is:

http://www.amazon.com/exec/obidos/tg/detail/-/0767911784/103-0654142-0704622?v=glance





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Re: [FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread Peter
This is "Enron" type financial thinking. It always
blows-up in the end.

--- akasha_108 <[EMAIL PROTECTED]> wrote:

> San Diego Housing Bubble Pops
> 
> Tuesday, October 04, 2005
> 
> Option Arm mortgages now account for over 75% of all
> mortgage
> originations for the month of September. I have
> never seen anything
> like this before.
> 
> I attended two mortgage conventions this month and
> every broker I
> talked to said they were experiencing the same
> thing.
> 
> Add fuel to the fire because the San Diego housing
> bubble has finally
> popped and I am sure much of the rest of the country
> will soon follow.
> The damage will be the worst disaster in recent U.S.
> history.
> 
> The fixed rate refinance boom has transformed into
> the Option ARM
> refinance boom. This is the negative amortization
> loan that your
> monthly payment is based on a 1% loan for 40 years
> for the first 3 to
> 5 years and then it recasts at normal adjustable
> rates. This allows
> someone to purchase a $700,000 home with $35,000
> down using a $560,000
> first mortgage with a starting payment of $1,415.99
> plus an interest
> only second of $105,000 with a payment of $613.00.
> 
> Put this together and you can buy a $700,000 home
> with $35,000 down
> and a monthly payment of $2,028.99. The same house
> would rent for
> around $2,500 a month, so the person buying
> justifies the purchase.
> The problem is when this loan recasts in 3 to 5
> years, depending on
> how quickly interest rates rise, the new payment
> will be around
> $4,711.26 a month. That's right, the payment jumps
> from $2,028.99 to
> $4,711.26 in less than 5 years, and if interest
> rates rise the payment
> could be higher! This is justified by "I am planning
> on moving in less
> than 5 years anyway."
> 
> This is only the beginning of the problem…
> 
> Then because the house just sold for $700,000, an
> appraiser uses this
> house as a comparable on the next door neighbors
> refinance and this
> person only owes $250,000 because they bought
> several years ago when
> prices were lower. This person decides to tap into
> this inflated value
> and due a loan for $350,000 using an Option ARM so
> he can take out
> $100,000 to fuel the consumer spending bubble. His
> payment on his old
> mortgage was $1,500 per month, but because of this
> new super duper
> Option ARM loan he can get his $100,000 cash out and
> his new payment
> is only $885 per month. Now he can really blow up
> consumer spending
> and even use this extra money to "invest in real
> estate". How about a
> nice condo in Florida?
> 
> And the 3 to 5 year recast? (Which will be around
> $2,200 per month if
> rates don't rise) He figures he has another $350,000
> in equity in his
> home so he can just keep refinancing every few years
> and knock his
> payment back down and don't forget "real estate
> always goes up, so in
> ten years or so his house will be worth millions"
> and he will probably
> just cash in and move into his Florida condo anyway.
> 
> I disagree with all the "experts"… I don't see a
> "soft landing". With
> all this funny money being pumped into the American
> consumers pockets,
> all you can expect to see if a drastic end to
> consumer spending. If
> you really think about it, this extra money is
> fueling a bubble now
> not just in housing, but everything of value. If
> people stop buying
> cars, TVs, appliances, etc. then all those stocks
> will drop in value
> and everyone of those companies will cut back on
> spending and labor
> which will spiral undemployment out of control,
> which will cause more
> deflation. Credit Card accounts will begin
> defaulting because people
> won't be able to refinance out of credit card debt
> and now with the
> new bankruptcy rules (Effective Oct 15) there is no
> way out.
> Additionally, the banks and all these mortgage pools
> will go bust
> holding all these underwater loans and a massive
> government bail out
> will put everyone including the government into
> massive debt. Then the
> government will start the presses and print more
> money in order to
> combat deflation, which will cause more deflation
> because the money
> will enter the broken banking system instead of the
> consumers pockets
> and then we will have a prolonged depression like
> Japan.
> 
> Maybe I am crazy, that is just how I see it playing
> out.
> 
> Anyway, back to the housing bubble… This thing is
> over in San Diego,
> September last year we had 67 loans coming from real
> estate agents,
> this month we have had 8. I am being told that the
> buyers have
> vanished and all that is left is people trying to
> sell. Some of these
> sellers are dropping prices by as much as 30% and
> they are still
> sitting. Luckily, these Option ARM loans are very
> profitable and the
> refinance business continues to boom.
> 
> I hope all of my fellow mortgage brokers have
> managed to stash some
> cash under the mattress. I just sold my last piece
> of real estate and
> I am go

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
San Diego Housing Bubble Pops

Tuesday, October 04, 2005

Option Arm mortgages now account for over 75% of all mortgage
originations for the month of September. I have never seen anything
like this before.

I attended two mortgage conventions this month and every broker I
talked to said they were experiencing the same thing.

Add fuel to the fire because the San Diego housing bubble has finally
popped and I am sure much of the rest of the country will soon follow.
The damage will be the worst disaster in recent U.S. history.

The fixed rate refinance boom has transformed into the Option ARM
refinance boom. This is the negative amortization loan that your
monthly payment is based on a 1% loan for 40 years for the first 3 to
5 years and then it recasts at normal adjustable rates. This allows
someone to purchase a $700,000 home with $35,000 down using a $560,000
first mortgage with a starting payment of $1,415.99 plus an interest
only second of $105,000 with a payment of $613.00.

Put this together and you can buy a $700,000 home with $35,000 down
and a monthly payment of $2,028.99. The same house would rent for
around $2,500 a month, so the person buying justifies the purchase.
The problem is when this loan recasts in 3 to 5 years, depending on
how quickly interest rates rise, the new payment will be around
$4,711.26 a month. That's right, the payment jumps from $2,028.99 to
$4,711.26 in less than 5 years, and if interest rates rise the payment
could be higher! This is justified by "I am planning on moving in less
than 5 years anyway."

This is only the beginning of the problem…

Then because the house just sold for $700,000, an appraiser uses this
house as a comparable on the next door neighbors refinance and this
person only owes $250,000 because they bought several years ago when
prices were lower. This person decides to tap into this inflated value
and due a loan for $350,000 using an Option ARM so he can take out
$100,000 to fuel the consumer spending bubble. His payment on his old
mortgage was $1,500 per month, but because of this new super duper
Option ARM loan he can get his $100,000 cash out and his new payment
is only $885 per month. Now he can really blow up consumer spending
and even use this extra money to "invest in real estate". How about a
nice condo in Florida?

And the 3 to 5 year recast? (Which will be around $2,200 per month if
rates don't rise) He figures he has another $350,000 in equity in his
home so he can just keep refinancing every few years and knock his
payment back down and don't forget "real estate always goes up, so in
ten years or so his house will be worth millions" and he will probably
just cash in and move into his Florida condo anyway.

I disagree with all the "experts"… I don't see a "soft landing". With
all this funny money being pumped into the American consumers pockets,
all you can expect to see if a drastic end to consumer spending. If
you really think about it, this extra money is fueling a bubble now
not just in housing, but everything of value. If people stop buying
cars, TVs, appliances, etc. then all those stocks will drop in value
and everyone of those companies will cut back on spending and labor
which will spiral undemployment out of control, which will cause more
deflation. Credit Card accounts will begin defaulting because people
won't be able to refinance out of credit card debt and now with the
new bankruptcy rules (Effective Oct 15) there is no way out.
Additionally, the banks and all these mortgage pools will go bust
holding all these underwater loans and a massive government bail out
will put everyone including the government into massive debt. Then the
government will start the presses and print more money in order to
combat deflation, which will cause more deflation because the money
will enter the broken banking system instead of the consumers pockets
and then we will have a prolonged depression like Japan.

Maybe I am crazy, that is just how I see it playing out.

Anyway, back to the housing bubble… This thing is over in San Diego,
September last year we had 67 loans coming from real estate agents,
this month we have had 8. I am being told that the buyers have
vanished and all that is left is people trying to sell. Some of these
sellers are dropping prices by as much as 30% and they are still
sitting. Luckily, these Option ARM loans are very profitable and the
refinance business continues to boom.

I hope all of my fellow mortgage brokers have managed to stash some
cash under the mattress. I just sold my last piece of real estate and
I am going to watch the storm roll in from the side lines.

 




--- In FairfieldLife@yahoogroups.com, akasha_108 <[EMAIL PROTECTED]> wrote:
>
> Manhattan home prices drop
> 
> A report shows luxury apartments took hit in third quarter amid
lower sales activity
> 
> October 4, 2005: 8:11 AM EDT
> Latest home prices for 149 markets
>   
> Refinance Rates Hit Record Lows
> 
 NEW YORK (CN

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
Manhattan home prices drop

A report shows luxury apartments took hit in third quarter amid lower
sales activity

October 4, 2005: 8:11 AM EDT
Latest home prices for 149 markets

Refinance Rates Hit Record Lows

NEW YORK (CNN/Money) - Homes in Gotham got a little more affordable in
the third quarter...or rather, prices dropped, but they still remained
in nosebleed territory for most people.

The price declines followed two consecutive record quarters in which
real-estate prices saw gains of at least 10 percent.

In its third-quarter Manhattan Market Overview report released
Tuesday, Prudential Douglas Elliman attributed the price declines to a
number of factors, including a modest uptick in mortgage rates,
concern over the economic impact of Hurricanes Katrina and Rita, and a
spike in gas prices.

Luxury-home prices (condos and co-ops combined) were hit hardest,
according to the report. The average sales price of a luxury home sank
26 percent, to $3.8 million, from $5.2 million in the second quarter.
It also was 7 percent below the average price of $4.1 million from a
year earlier.

The median price of luxury homes – meaning the price above which half
of all luxury home sold -- also dropped, falling to $3.1 million from
$3.8 million in the second quarter. A year ago, the median price was
$3.2 million.

Meanwhile, the average sales price for all types of Manhattan homes
combined fell nearly 13 percent to $1.1 million from a record $1.3
million in the second quarter. Still, that was 10 percent higher than
a year ago.

The median sales price also fell, by 3.2 percent to $750,000. But it
was still 25 percent higher than the median price of $600,000 a year ago.

There were, however, price increases for smaller apartments. The
average price for studios rose nearly 13 percent, to $428,831, while
the average price for one-bedrooms rose nearly 10 percent to $687,744.

Drilling down, prices for condos and co-ops both fell. Most notable:
the average price of a co-op fell below the $1 million threshold,
which it crossed for the first time in the second quarter.

Sales activity overall declined. The number of units sold fell 8.4
percent, to 1,997, from 2,181 in the second quarter. And the average
size of apartments sold fell 14 percent to 1,169 square feet. That's
due in large part to the fact that there was an increase in sales
activity for studios and 1-bedroom apartments, while demand declined
for larger apartments.

Not everything was down in the third quarter, however. The average
price per square foot rose 1.4 percent, to $984, compared with the
second quarter and it was up 22.5 percent from the year-ago price.

Also higher was the amount of time it took to sell a property: 133
days versus 102 in the second quarter.


=

 Prices in London fell by 0.1 per cent in September, according to the
latest report from Hometrack...
> 
 London The average house price in London now stands at £261,000, down
 from £274,200 in July 2004, an annual decline of -4.6 per cent.
> 
 Out of all 33 London boroughs, only six saw house price rises, 18
remained static and nine recorded falls. The best results were seen in
 Hounslow (0.5 per cent), Tower Hamlets (0.5 per cent) and City of
 London (0.3 per cent).
> 
> ===
> > Home prices top out?
> > 
> > Cost of new houses levels off in area after meteoric rise
> > By Andrew LePage -- Bee Staff Writer
> > Published 2:15 am PDT Friday, October 7, 2005
> > Story appeared on Page A1 of The Bee
> > 
> > 
> > Price appreciation for new homes in the Sacramento area has slowed
> to  a crawl, with more builders tempering or skipping price
increases and offering greater incentives to attract buyers.
> > 
> > The median price of a new home sold in the capital region was
> $459,990 in the third quarter, unchanged from the previous quarter
and up 3.4  percent from one year ago, according to the Gregory Group,
a  Folsom-based market research firm.
> > 
> > 
> > = 
> > > ---
> > > October 08, 2005
> > > Asking prices drop by nearly 15% in 16 suburban Boston towns
> > > 
> > > Price_reducedHomeowners in Greater Boston and elsewhere continue
to expect "big real estate gains" despite a stunning revelation this 
week: "asking prices in 16 MetroWest towns have dropped by nearly 15 
percent" since August, according to MLS statistics.
> >
>






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[EMAIL PROTE

[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
Prices in London fell by 0.1 per cent in September, according to the
latest report from Hometrack...

London The average house price in London now stands at £261,000, down
from £274,200 in July 2004, an annual decline of -4.6 per cent.

Out of all 33 London boroughs, only six saw house price rises, 18
remained static and nine recorded falls. The best results were seen in
Hounslow (0.5 per cent), Tower Hamlets (0.5 per cent) and City of
London (0.3 per cent).

The worst performers in September were Enfield (-1.4 per cent),
Southwark (-0.6 per cent), Redbridge (-0.5 per cent) and harrow (-0.5
per cent).

Sales, Supply and Demand
Activity levels (the number of sales agreed) were up over the month,
however, rising by 5.9 per cent (4.3 per cent in August) but with the
number of properties listed falling by 2.5 per cent and the number of
buyers decreasing by 2.5 per cent, supply continues to outweigh demand
meaning that further house price falls are likely, says Hometrack.

There was a slight dip in sales price as a percentage of asking price
to 93.4 per cent compared to 93.6 per cent in August's report, an
indication that it remains a buyers' market with vendors being forced
to accept lower offers to secure a sale.

The length of time taken to sell a property dropped slightly from 6.4
weeks in August to 6.3 weeks, and the number of viewings per sale was
down from 14.4 in August to 14 in September, both indicating that
properties are not sticking on the market for as long, according to
Hometrack.

"Gradual Downward Trend"
Commenting on the report, John Wriglesworth, Hometrack's housing
economist, says: "House prices have continued along their gradual
downward trend this month, falling by a further 0.1 per cent.

"London has been hit hard by house price deflation although there are
no signs of an imminent crash. If activity continues to increase, and
buyers come back to the market in force then prices should eventually
continue their upward trend. However, while supply continues to exceed
demand house prices will fall.

"House prices in the capital are still well above the national
average, making it difficult for first time buyers to get on the first
step of the property ladder.

"Although incomes are rising and mortgage lenders are relaxing their
lending criteria, confidence is still low. A further rate cut is
needed to help boost confidence across the capital. Our London house
price forecast for 2005 remains at -five per cent."

===
> Home prices top out?
> 
> Cost of new houses levels off in area after meteoric rise
> By Andrew LePage -- Bee Staff Writer
> Published 2:15 am PDT Friday, October 7, 2005
> Story appeared on Page A1 of The Bee
> 
> 
> Price appreciation for new homes in the Sacramento area has slowed
to  a crawl, with more builders tempering or skipping price increases
and offering greater incentives to attract buyers.
> 
> The median price of a new home sold in the capital region was
$459,990 in the third quarter, unchanged from the previous quarter and
up 3.4  percent from one year ago, according to the Gregory Group, a
> Folsom-based market research firm.
> 
> 
> = 
> > ---
> > October 08, 2005
> > Asking prices drop by nearly 15% in 16 suburban Boston towns
> > 
> > Price_reducedHomeowners in Greater Boston and elsewhere continue to
> > expect "big real estate gains" despite a stunning revelation this
> > week: "asking prices in 16 MetroWest towns have dropped by nearly 15
> > percent" since August, according to MLS statistics.
>






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[FairfieldLife] Re: The Housing Bubble Beginning to Burst?

2005-10-11 Thread akasha_108
Home prices top out?

Cost of new houses levels off in area after meteoric rise
By Andrew LePage -- Bee Staff Writer
Published 2:15 am PDT Friday, October 7, 2005
Story appeared on Page A1 of The Bee


Price appreciation for new homes in the Sacramento area has slowed to
a crawl, with more builders tempering or skipping price increases and
offering greater incentives to attract buyers.

The median price of a new home sold in the capital region was $459,990
in the third quarter, unchanged from the previous quarter and up 3.4
percent from one year ago, according to the Gregory Group, a
Folsom-based market research firm.

For the same July-September period last year, the new home median shot
up 23 percent for Sacramento, Placer, El Dorado, Yolo, Yuba and Sutter
counties.

"In general the market is responding like it should, based on what's
happened with price increases the last couple of years," said analyst
Greg Paquin, who heads the Gregory Group. "If we kept going at the
same (appreciation) rate we would have been in trouble. We couldn't
have sustained it, and we would have fallen off the proverbial cliff."

Sales incentives and a surge in lower-priced condos and homes on small
lots helped push overall third-quarter sales up 4.5 percent, but sales
so far this year are down 7.5 percent.

The lost steam in the new home market is the latest in a string of
signs that the region's seven-year housing boom is winding down to a
more normal pace of sales and appreciation. For example, sales of
existing homes fell 7 percent in August and the number of resale homes
on the market roughly doubled compared with a year ago.

Paquin's forecast calls for the median sale price of a new home in the
capital region to rise 1 percent to 5 percent annually for the next
two to three years as job and income growth catch up to home prices.

That forecast could include a dip in prices at some projects,
especially those with homes priced over $600,000.

Some economists and housing analysts view Sacramento homes as
overpriced and vulnerable to significant price declines in the event
of an economic shock, such as an interest rate spike. But most predict
a "soft landing" for the market, meaning mild price declines, if any,
as long as the national economy stays out of recession and local job
growth continues.

"The outlook for the (Sacramento) region over the next five to 10
years is very bright, in my opinion; so consequently the outlook for
the number of homes sold and the prices for those homes is very good,"
said economist Matt Newman, who tracks the Sacramento market for the
Stanford Institute for Economic Policy Research. "But because interest
rates are rising and prices are already so high, I don't think you'll
see a lot of price appreciation over the next few years."

Today's new home market bears little resemblance to the frantic one of
the last few years when buyers waited in lines overnight, entered
lotteries and put their names on long waiting lists for a shot at
buying a home.

Now most builders are offering incentives worth $1,000 to $50,000 as
they work to sell a growing number of houses that are under
construction without a buyer lined up. In the last year the number of
homes available for sale - including bare lots and homes under
construction but not yet completed - has jumped 89 percent, to 2,303
in the third quarter, the Gregory Group reports.

Often a buyer has backed out or the builder has forced someone out of
a deal.

Such "cancellations" have roughly doubled in the past year, to about
28 percent of all sales in the third quarter.

Builders say they are ferreting out more investors. At the same time,
more buyers are getting cold feet or simply failing to obtain financing.

"I wouldn't say it's totally a buyers' market," said Jack Hood,
president of Centex Homes' local division. "But it's getting to be
more of an equilibrium between buyer and seller. If they can find a
house that's nearing completion they can probably negotiate a better
deal."

Many shoppers realize the market is turning in their favor.

"It looks like it's a buyers' market right now," said Joe Gilmette as
he toured a model home one recent afternoon at the burgeoning Anatolia
community off Sunrise Boulevard in Rancho Cordova. "There are a ton of
homes on the market and maybe there will be some room to negotiate. I
can make a good decision and not feel pressured."

Gilmette, who works in law enforcement, noted that six months ago "all
of the builders had waiting lists and all of the lots were gone."

The number of new homes sold in the six-county region fell 12 percent
in the third quarter compared with the second quarter - a seasonal dip
also seen in previous years.

Hood, the Centex president, said builders have caused much of the
market's slowdown by preventing investors from buying.

Investors hoping to "flip" homes for a quick profit compete with
builders for sales. And investors buying homes to rent out perturb
neighbors who resent "For Rent"