bubbleinfo.com

Seems like 1/2 the homes for sale in Carmel Valley then are casual home sellers or chronic relisters.

My advice for all potential home sellers is to hang on & wait for better days, and in the mean time rent those units out. I love it when I read of investor/owners carrying homes costing $3,500 (5% cost of funds on $700k + property taxes) and rent them out for $2,000.
There's no question prices will turn upwards again, but when & from what point I certainly don't know - so, I say hang on & by all means keep paying that mtg.
By the way, we're looking for a great rental you you know of one. :)

Try Temecula or Murietta.

In 92127 & 92128, rental market is very hot. Even 1800 sq town home could be easy to be rent out at 2,200+/mth.
My friend rent a 3400 sq single house in 4S (92127) last summer, he paid 3,500/mth. This year, he may need to pay more to renew his contract.

Doug

So your recommendation is to lose about $24,000 a year waiting for the market to turn around. Using the last So Cal downturn as an example it took 10 years from the 1988 peak to recover to the peak value. I think it is worse this time. However, in your scenario the recommendation is negative cash flow of about $250,000 over ten years. You also need to pray some renter does not ruin the place. Shrewd.

Doug

PS how many other people are holding on. What happens to prices when they cannot "hold on" anymore?

LV,

I know Doug, and he's kidding. He'd just as soon get this steamroller moving.

Jim,
Curious, did you think the gov't bailout scheme was crazy and not worth commenting or did not see it?

government bailout scheme?

I don't get it - here we are on the wrong coast, and we can see from the first minute of inception that every hair-brained scheme they propose has no chance of fixing anything.

My fix is the answer - I sent it to Cramer too, and I haven't heard from him.

Whoever is out there in a position in power, try this idea:

Have FHA fund new purchase loans at a 30-year fixed rate of 4.75%. Everything else will take care of itself.

Prices still come down.
No bailout of speculators
Encourages buyers without over-doing it
Resulting in softer landing

The MBS-holder are toast no matter what happens, and the homeowners who are over-encumbered have a choice to make. None of the other bailout schemes have done anything on the street, and until the buyers feel more comfortable buying then the price escalator will continue downward.

Have FHA fund new purchase loans at a 30-year fixed rate of 4.75%. Everything else will take care of itself.

Assuming you require some money down and reasonable background checks, I don't think this is a bad idea.

Right now the fed is "subsidizing" the banks by providing a very low window rate while the mortgage houses jack up the retail interest rates. This is the "gap."

The effect of this gap is that the fed is pushing on a string.

Your idea to bypass the banks makes sense and the fed/government would get a better return on its investment than with the indirect method of helping the banks.

However, it will make mortgage companies useless, and the financial industry still donates to the candidates like crazy, so I think it will meet a lot of resistance.

And Kramer is similarly in bed with the financial big wigs, so he will not give this the time of day.

Let me post my response to your "Fix" again. If you really want to make sure no one can get a home loan and destroy the market, just trust that "everything else will take care of itself..." What exactly does that mean?

--

If you really want to destroy a market, just have the government get involved. At the end of the day someone still needs to buy these loans. What entity (business, foreign government, etc) wants to buy loans that are locked for 30 years at this low a rate with prices being set by the government? What's to keep the government from next year saying that all the loans made at 4.75% will now be 3.75% and whomever bought those loans is screwed?

This is just another idea to somehow control a market, same as all the rest of the plans that don't work (by definition) that are dreamed up by the "smartest minds" that are the same ones that got us here.

Similarly to how the fed cutting rates has actually raised interest rates for home loans (but raised the margins for banks), everyone needs to stop thinking there's some solution other than LOWER PRICES... which hurts some people (the ones the government cares about - banks, etc...) and helps others (people buying houses they can afford at lower prices.)

There are already so many incentives to home ownership through taxes that it's simply too much to economically justify. IF BUYERS DON'T HAVE 20% DOWN AND CAN'T AFFORD THE PREVAILING INTEREST RATE, THEY SHOULDN'T BE BUYING A HOUSE! IF THEY DID, THEY SHOULD LOSE IT.

Bravo, 150!!!! :)

It's not the down payment, but the monthly. I've known lots of people who bought houses with less than 20% down (VA, FHA and some who just gritted their teeth, put 10% down and paid the PMI) who are still comfortably in their homes, because they bought smaller homes or condos with fixed rate loans whose monthly payments were affordable for them. People losing their homes are not losing them because they put less than 20% down, or even because they owe more than their houses are now worth, but because they overbought and lived beyond their means.

It's actually a pretty good show, although as time goes on maybe a 30 minute format might work to update the market, especially if you don't get that many calls.