The "official" housing bubble thread
04-15-2008, 07:23 AM
#1041
Senior Moderator
Originally Posted by Fibonacci
04-15-2008, 02:05 PM
#1042
'05 TSX 6MT
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Originally Posted by zamo
The American Nightmare, Season Finale coming in 2010
Worst case, we are the new Japan, give up all the appreciation since 1999 on an inflation adjusted basis. Can you say "lost decade"?
Best case scenario, we give back half the appreciation since 1999 on an inflation adjusted basis.
Easy calculation, I forecast the initial two years at 5% to 10% price depreciation, plus inflation. I got my market pegged, yours will be different.
Buyers here have become very forward looking. They see prices are off 10%, and they take another 10% off of that. We see rapid corrections, followed by stubborn years.
Honestly, I don't even feel good about the promised land of 2012.
05-27-2008, 08:58 AM
#1043
Senior Moderator
I recently learned about this phenomenon. Jingle Mail...
Foreclosure numbers are skewed as they don't account for people who just mail in their house keys to the bank and walk away.
http://www.financialweek.com/apps/pb.../REG/982961062
Foreclosure numbers are skewed as they don't account for people who just mail in their house keys to the bank and walk away.
http://www.financialweek.com/apps/pb.../REG/982961062
05-27-2008, 03:28 PM
#1044
Moderator Alumnus
Tracy Warren is not surprised by the foreclosure crisis. She saw the roots of it firsthand every day. She worked for a quality-control contractor that reviewed subprime loans for investment banks before they were sold off on Wall Street.
It was her job to dig into the loans and ferret out problems. By 2006, they were easy to find.
"I'd see people who were hotel workers saying that they made, in California, making $15,000 a month so that they could qualify for a $500,000 home," Warren says. "If a hotel worker is making $15,000 a month changing sheets at the Days Inn, everybody would want to do it. It just really made no sense."
Warren has worked in the mortgage business for 25 years, the past five in quality control. Most recently, she was a contract worker for a company called Watterson-Prime, which did loan audits for investment banks. She says their biggest client was Bear Stearns, which recently all but collapsed because of its exposure to bad loans.
Putting Bad Apples Back in the Barrel
Warren thinks her supervisors didn't want her to do her job. She says that when she would reject, or kick out, a loan, they usually would overrule her and approve it.
"The QC reviewer who reviewed our kicks would say, 'Well, I thought it had merit.' And it was like 'What?' Their credit score was below 580. And if it was an income verification, a lot of times they weren't making the income. And it was like, 'What kind of merit could you have determined?' And they were like, 'Oh, it's fine. Don't worry about it.' "
After a while, Warren says, her supervisors stopped telling her when she had been overruled. She figured it out by going back later and pulling the loans up on her computer.
"I would look every couple of days, and just see, if it was a loan that I thought was a bad loan, I'd go back and see if it was pulled."
About 75 percent of the time, loans that should have been rejected were still put into the pool and sold, she says.
http://www.npr.org/templates/story/s...58&ft=1&f=1001
It was her job to dig into the loans and ferret out problems. By 2006, they were easy to find.
"I'd see people who were hotel workers saying that they made, in California, making $15,000 a month so that they could qualify for a $500,000 home," Warren says. "If a hotel worker is making $15,000 a month changing sheets at the Days Inn, everybody would want to do it. It just really made no sense."
Warren has worked in the mortgage business for 25 years, the past five in quality control. Most recently, she was a contract worker for a company called Watterson-Prime, which did loan audits for investment banks. She says their biggest client was Bear Stearns, which recently all but collapsed because of its exposure to bad loans.
Putting Bad Apples Back in the Barrel
Warren thinks her supervisors didn't want her to do her job. She says that when she would reject, or kick out, a loan, they usually would overrule her and approve it.
"The QC reviewer who reviewed our kicks would say, 'Well, I thought it had merit.' And it was like 'What?' Their credit score was below 580. And if it was an income verification, a lot of times they weren't making the income. And it was like, 'What kind of merit could you have determined?' And they were like, 'Oh, it's fine. Don't worry about it.' "
After a while, Warren says, her supervisors stopped telling her when she had been overruled. She figured it out by going back later and pulling the loans up on her computer.
"I would look every couple of days, and just see, if it was a loan that I thought was a bad loan, I'd go back and see if it was pulled."
About 75 percent of the time, loans that should have been rejected were still put into the pool and sold, she says.
http://www.npr.org/templates/story/s...58&ft=1&f=1001
09-12-2008, 09:38 PM
#1045
I feel the need...
Alt-A Mortgages Next Risk for Housing Market as Defaults Surge
For Dean Nessen, the choice of a mortgage was easy. By agreeing to pay only interest for three years, the self-employed salesman didn't have to show proof of income and landed a rate of 6.25 percent.
Now, four years later, Nessen's industrial coatings business has gone belly up and his rate has jumped to 10.6 percent. He can't afford the payments and may have to move his family out of their home in Commerce Township, Michigan.
Homeowners lured by low introductory rates to Alt-A mortgages, which typically require little or no proof of a borrower's income, may fuel the next wave of foreclosures and further delay a recovery from the worst housing decline since the 1930s. Almost 16 percent of securitized Alt-A loans issued since January 2006 are at least 60 days late, data compiled by Bloomberg show. Defaults will accelerate next year and continue through 2011 as these loans hit their three- and five-year reset periods, according to RealtyTrac Inc., an Irvine, California-based foreclosure data provider.
``Alt-A will be another headache,'' said T.J. Lim, the London-based global co-head of markets at Unicredit Group. ``I would be very worried about anything issued in the last half of 2006 and the first half of 2007.''
About 3 million U.S. borrowers have Alt-A mortgages totaling $1 trillion, compared with $855 billion of subprime loans outstanding, according to Inside Mortgage Finance, a trade publication in Bethesda, Maryland. Of the Alt-A borrowers, 70 percent may have exaggerated their income, said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland.....
Now, four years later, Nessen's industrial coatings business has gone belly up and his rate has jumped to 10.6 percent. He can't afford the payments and may have to move his family out of their home in Commerce Township, Michigan.
Homeowners lured by low introductory rates to Alt-A mortgages, which typically require little or no proof of a borrower's income, may fuel the next wave of foreclosures and further delay a recovery from the worst housing decline since the 1930s. Almost 16 percent of securitized Alt-A loans issued since January 2006 are at least 60 days late, data compiled by Bloomberg show. Defaults will accelerate next year and continue through 2011 as these loans hit their three- and five-year reset periods, according to RealtyTrac Inc., an Irvine, California-based foreclosure data provider.
``Alt-A will be another headache,'' said T.J. Lim, the London-based global co-head of markets at Unicredit Group. ``I would be very worried about anything issued in the last half of 2006 and the first half of 2007.''
About 3 million U.S. borrowers have Alt-A mortgages totaling $1 trillion, compared with $855 billion of subprime loans outstanding, according to Inside Mortgage Finance, a trade publication in Bethesda, Maryland. Of the Alt-A borrowers, 70 percent may have exaggerated their income, said David Olson, president of mortgage research firm Wholesale Access in Columbia, Maryland.....
09-15-2008, 06:37 PM
#1046
I feel the need...
09-15-2008, 08:51 PM
#1050
Moderator Alumnus
The average price of a home sold in Canada's major markets dropped 5.1% in August from a year ago, the largest decline in more than 12 years, according to the Canadian Real Estate Association.
House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets.
"The 5% is not much. It will get worse. There is no information that it will stop in the west," Mr. Tal said.
The average price of a home sold in Canada's 25 largest markets was $316,052 last month. It was the largest year-over-year decline since February, 1996. The drop comes after prices fell 3.6% in July from a year earlier, and 0.4% in June.
http://www.financialpost.com/story.html?id=792278
House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets.
"The 5% is not much. It will get worse. There is no information that it will stop in the west," Mr. Tal said.
The average price of a home sold in Canada's 25 largest markets was $316,052 last month. It was the largest year-over-year decline since February, 1996. The drop comes after prices fell 3.6% in July from a year earlier, and 0.4% in June.
http://www.financialpost.com/story.html?id=792278
09-15-2008, 09:09 PM
#1051
Photography Nerd
The average price of a home sold in Canada's major markets dropped 5.1% in August from a year ago, the largest decline in more than 12 years, according to the Canadian Real Estate Association.
House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets.
"The 5% is not much. It will get worse. There is no information that it will stop in the west," Mr. Tal said.
The average price of a home sold in Canada's 25 largest markets was $316,052 last month. It was the largest year-over-year decline since February, 1996. The drop comes after prices fell 3.6% in July from a year earlier, and 0.4% in June.
http://www.financialpost.com/story.html?id=792278
House prices have dropped for three straight months and it's probably only the beginning, says Benjamin Tal, senior economist with CIBC World Markets.
"The 5% is not much. It will get worse. There is no information that it will stop in the west," Mr. Tal said.
The average price of a home sold in Canada's 25 largest markets was $316,052 last month. It was the largest year-over-year decline since February, 1996. The drop comes after prices fell 3.6% in July from a year earlier, and 0.4% in June.
http://www.financialpost.com/story.html?id=792278
Toronto pricing is still going up, albeit slower than normal. However, last year was a record year for housing prices here, so the fact that it's up at all in these markets is very positive.
09-15-2008, 11:59 PM
#1052
I feel the need...
09-16-2008, 12:09 AM
#1053
I feel the need...
09-16-2008, 05:35 PM
#1054
Moderator Alumnus
09-16-2008, 06:24 PM
#1055
I feel the need...
09-17-2008, 05:22 PM
#1057
I feel the need...
How we got here: It's housing, stupid
The Wall Street crisis has been caused by plunging housing prices. So despite the billions of dollars being thrown at the problem, experts say more trouble lies ahead.
http://money.cnn.com/2008/09/17/news...sing/index.htm
.....But because of the depth of the housing problems, it may take a long time before real estate prices head higher again. Here's why.
Home prices, while sharply off from the 2006 peaks, are still high in comparison to long-term gains in income, rents or overall prices, suggesting that they still have a way to fall, according to experts......
Home prices, while sharply off from the 2006 peaks, are still high in comparison to long-term gains in income, rents or overall prices, suggesting that they still have a way to fall, according to experts......
08-03-2010, 06:32 PM
#1058
I feel the need...
Did Low Interest Rates Cause the Great Housing Convulsion?
Between April 2000 and April 2006, the Standard & Poor’s/Case-Shiller Repeat Sales Index for 20 metropolitan areas shows that real housing prices rose by 71 percent. Between April 2006 and April 2009, that same index showed that real housing prices dropped by 36 percent. It would be nice to understand what caused this great housing convulsion, but we do not.
The most common explanation for the great surge in prices is the availability of easy credit, which took the form of low interest rates, high loan-to-value ratios and permissive approval of mortgages. These variables certainly affect housing prices, but they don’t seem to have moved nearly enough to explain the great price fluctuations of the past decade. I’m going to address interest rates today, and next week, with far less certainty, I’ll turn to other aspects of the credit market. Both of these posts describe joint research with Joseph Gyourko of the Wharton School and Joshua Gottlieb, a Harvard Ph.D. student.
The chart below shows housing prices, as measured by the more nationally representative Federal Housing Finance Agency housing price index, and the real interest rate, as measured by the 10-year Treasury bond rate, which is corrected for expected inflation by using the Livingstone survey of inflation expectations. Over the course of the boom, from 1996 to 2006, real interest rates fell by 1.2 percentage points, or 120 basis points......
The most common explanation for the great surge in prices is the availability of easy credit, which took the form of low interest rates, high loan-to-value ratios and permissive approval of mortgages. These variables certainly affect housing prices, but they don’t seem to have moved nearly enough to explain the great price fluctuations of the past decade. I’m going to address interest rates today, and next week, with far less certainty, I’ll turn to other aspects of the credit market. Both of these posts describe joint research with Joseph Gyourko of the Wharton School and Joshua Gottlieb, a Harvard Ph.D. student.
The chart below shows housing prices, as measured by the more nationally representative Federal Housing Finance Agency housing price index, and the real interest rate, as measured by the 10-year Treasury bond rate, which is corrected for expected inflation by using the Livingstone survey of inflation expectations. Over the course of the boom, from 1996 to 2006, real interest rates fell by 1.2 percentage points, or 120 basis points......
Post-mortem
08-06-2010, 09:12 AM
#1059
Suzuka Master
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Interesting. In a couple weeks I have to make a presentation in my Financial Crises class on the Subprime fiasco. This post (and entire thread) will certainly help.
08-20-2010, 08:50 AM
#1060
Team Owner
Good luck unloading one of these...
Death of the 'McMansion': Era of Huge Homes Is Over
http://finance.yahoo.com/news/Death-...33821.html?x=0
Death of the 'McMansion': Era of Huge Homes Is Over
http://finance.yahoo.com/news/Death-...33821.html?x=0
What sets a McMansion apart from a regular mansion, according to Wikipedia, are a few characteristics: They're tacky, they lack a definitive style and they have a "displeasingly jumbled appearance."
"We continue to move away from the McMansion chapter of residential design, with more demand for practicality throughout the home," Baker said. "There has been a drop off in the popularity of upscale property enhancements such as formal landscaping, decorative water features, tennis courts, and gazebos."
"McMansions just look and feel out of place today, given the more cautious environment everyone's living in," said Paul Bishop, vice president of research for the National Association of Realtors.
"McMansions just look and feel out of place today, given the more cautious environment everyone's living in," said Paul Bishop, vice president of research for the National Association of Realtors.
09-13-2020, 09:39 PM
#1061
it's been 10 years since the last post in this thread.
Have things gotten any better? Has low interest rates since the Great Recession helped? Will the FED's announcement of low interest rates for the next 5 years help? What about the FED letting inflation run rampart?
How about the virus and the challenges that it has brought? Renters who have lost their jobs may live rent free, while small time landlords still service their debt. How is any of this fair?
it's a very weird time for me! I, like millions of other Americans, have lost a job and is unemployed.
I am very lucky that I still stay at my mom's house which is paid off. I am very grateful that she has allowed me to save for my own house one day, while still helping her out with my portion of the rent.
All this to say; I do have cash on hand for a future house. but now, I dont think it's such a great idea.
Low interest rates will only further prop up asset prices, in my opinion. And I dont want to be stuck holding the bag.
Renters who have lost their jobs obviously cant pay rent. While Landlords still have to pay the mortgage and any other fees that go along with owning a property. with the current moratorium in place, it may be sustainable for a few months...but what if the moratorium is extended for a year? Seems like the Government is forcing private owners to provide free public housing at the cost of the landlord.
We are seeing the rules change in front of our very eyes.
just some of my thoughts.
Have things gotten any better? Has low interest rates since the Great Recession helped? Will the FED's announcement of low interest rates for the next 5 years help? What about the FED letting inflation run rampart?
How about the virus and the challenges that it has brought? Renters who have lost their jobs may live rent free, while small time landlords still service their debt. How is any of this fair?
it's a very weird time for me! I, like millions of other Americans, have lost a job and is unemployed.
I am very lucky that I still stay at my mom's house which is paid off. I am very grateful that she has allowed me to save for my own house one day, while still helping her out with my portion of the rent.
All this to say; I do have cash on hand for a future house. but now, I dont think it's such a great idea.
Low interest rates will only further prop up asset prices, in my opinion. And I dont want to be stuck holding the bag.
Renters who have lost their jobs obviously cant pay rent. While Landlords still have to pay the mortgage and any other fees that go along with owning a property. with the current moratorium in place, it may be sustainable for a few months...but what if the moratorium is extended for a year? Seems like the Government is forcing private owners to provide free public housing at the cost of the landlord.
We are seeing the rules change in front of our very eyes.
just some of my thoughts.
09-22-2020, 11:10 AM
#1062
Whats up with RDX owners?
iTrader: (9)
I think the market is great for people that already have a house (refi at a much lower rate, values increasing, etc) or have a shit ton of money to be able to buy something now.
But inflation coupled with the skyrocketing home values, and the lack of inventory is going to leave a lot of people behind. Until the next recession, of course.
Sorry to hear about your job btw. Hope you can find something soon.
But inflation coupled with the skyrocketing home values, and the lack of inventory is going to leave a lot of people behind. Until the next recession, of course.
Sorry to hear about your job btw. Hope you can find something soon.
09-22-2020, 11:45 AM
#1063
Ex-OEM King
I think the market is great for people that already have a house (refi at a much lower rate, values increasing, etc) or have a shit ton of money to be able to buy something now.
But inflation coupled with the skyrocketing home values, and the lack of inventory is going to leave a lot of people behind. Until the next recession, of course.
Sorry to hear about your job btw. Hope you can find something soon.
But inflation coupled with the skyrocketing home values, and the lack of inventory is going to leave a lot of people behind. Until the next recession, of course.
Sorry to hear about your job btw. Hope you can find something soon.
Thankfully we were able to go to a 15 year at a low rate to boost our equity for when we are ready.
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