http://news.yahoo.com/s/nm/20090805/bs_n...utschebank

Someone on this board (sorry, getting names confused) predicted this very thing.

I just don't see these home prices falling that precipitously. Granted, I'm no expert on real estate, but for 50% of mortgages to be underwater in 18 months means that the houses have to lose another 20% or more of value.

(08-06-2009 08:19 AM)mlb Wrote:  I just don't see these home prices falling that precipitously. Granted, I'm no expert on real estate, but for 50% of mortgages to be underwater in 18 months means that the houses have to lose another 20% or more of value.

Depends in many ways as to the type of home you have. Entry level / starter homes have probably hit bottom in most markets, since these homes typically had the least amount of equity and had to most mobile home owners (young professional, job hopping, no kids, not tied to area etc) These homes will not lose much if any more value.

Next painful round will be the mid to higher level homes, the sort of homes that you sold your starter home to move into, and put down a fair amount for downpayment (say +15%) and you are now tied to area (career, family) These homes probably have another 10% to fall.

And after that, well see the jumbo home values fall even more that they have to date. This jumbo market will not be really painful for people outside of the market, but the starter home and the mid level home market declines have been painful for the jumbo markets. These homes could fall 30% or more, but remember at this level you sometimes are talking about people who can buy homes outright with cash, so some declines will be less than others (basically those homes that are location protected by waterfront, golfcourses etc)

For instance, in Mpls what used to cost 1MM to purchase now only costs 750M to purchase. That 250m price drop is the price of 1 1/2 starter homes here in the Cities. If that price drops another 30%, watch out we'll have another real estate bubble!

(08-06-2009 07:58 AM)DrTorch Wrote:  http://news.yahoo.com/s/nm/20090805/bs_n...utschebank

Someone on this board (sorry, getting names confused) predicted this very thing.

I didn't predict it but I'm living it. Paid $650k in December of 06, now it's only in the upper $300's....if that. The way I look at it is it only matters if I want to sell and I don't.

Appraisals are like ********… everyone has them. A Mortgage is underwater depending on whose appraisal?

If this report is close to true..We are headed for deep S*** fast.

IMO, we are on the brink.....True demand has dried up. The government is the only creditor. They are trying the old ways out of trouble borrow,borrow and borrow. People do NOT want to be borrowers they want to be savers. We are still in a deflationary environment..... Debt has to be destroyed ....assets will move lower...... I have to stop I'll get sick....

If unemployment keeps rising, job losses will trigger more foreclosures When houses sell at foreclosure, it depresses the market. That's how I think we get there.

(08-06-2009 08:19 AM)mlb Wrote:  I just don't see these home prices falling that precipitously. Granted, I'm no expert on real estate, but for 50% of mortgages to be underwater in 18 months means that the houses have to lose another 20% or more of value.

Someone up the street from me paid $340K for their house, it's on the market for $275K they are relocating to NJ so they have to sell it. When it sells, and it's been on the market for 6 months, that will adjust the price of all homes in the neighborhood downward.

The weight of the debt is becoming too heavy. The savers/creditors are still shy. Credit card companies have reduced credit lines. Getting a mortgage is just one big PIA.The government is the one making mortgage loans....FHA/Fannie .... FHA now has approx 40% of the market. Velocity of money has been and is contracting and that is why even with the Govt EXPANDS / EXPLODES the money supply there is no inflation. People are holding their dollars NOT spending and NOT lending.

It's the debt to Equity ratio. Margins are so slim a 10% drop could cause a snowball effect, especially in places like SF... NY, too bad those places will be underwater when GW kicks in.

(08-06-2009 08:09 PM)NIU05 Wrote:  The weight of the debt is becoming too heavy. The savers/creditors are still shy. Credit card companies have reduced credit lines. Getting a mortgage is just one big PIA.The government is the one making mortgage loans....FHA/Fannie .... FHA now has approx 40% of the market. Velocity of money has been and is contracting and that is why even with the Govt EXPANDS / EXPLODES the money supply there is no inflation. People are holding their dollars NOT spending and NOT lending.

I had no problem getting a mortgage last winter. And that was despite the fact that we hadn't sold our other home, and I had to borrow on the down payment.

More info. Perhaps there won't be wave after wave of foreclosures. No, it will be worse than that.

http://mortgage.freedomblogging.com/2009...ger/15037/

But Dr.T, We were told we have to spend our way out of the mortgage debt crisis.

Torch, that is one ugly chart you posted......not good.....

I have owned a mortgage company for -12- years, the lenders are PETRIFIED to make loans. They consistently over underwrite files, the normal process has gone from -21- days to -60- days. My clients have high credit scores 750+, -6- figure income and equity, but the process never ends. The feds are coming very close to regulating brokers out of business. Their policies are based not on helping consumers, but making more money for the banks.

(08-07-2009 01:58 PM)NIU05 Wrote:  Torch, that is one ugly chart you posted......not good.....

Yeah, it's pretty ugly. Just for anyone who hasn't read the article, it's for Orange County. That may not be a proxy for the US in terms of absolute REO rate. It may or may not be a proxy for the trend seen in the REO rate.

Last month the house accross the street sold for $20,000 more than I paid for mine, and mine was new construction (built 3 months ago). Not sure if it is just here in Oklahoma, but the housing market doesnt seem to be in that bad of shape.