Remember those threads talking about how a home is the BESTEST investment

[The Buddy Love Show]

as Cedric once said: "nah dog, it aint all good"

http://www.reuters.com/article/businessNews/idUSN2217772920080222



NEW YORK (Reuters) - A record number of homeowners thought their homes decreased in value in February, according to a Reuters/University of Michigan survey published on Friday.

Thirty-three percent of homeowners reported that their home had lost value in February, compared with 16 percent in February 2007 and well above the 24 percent peak recorded in 1992.

The recent survey showed the proportion of homeowners who reported falling home prices was greater than the proportion that reported gains for the first time.

Just 25 percent reported gains in their home's value, down from 48 percent in February 2007 and the peak of 76 percent in mid-2005.

When asked about prospects for the year ahead, 27 percent of all home owners in February anticipated additional declines in home prices, up from 21 percent in January and 12 percent in March 2007. Those anticipating gains in home values, in contrast, fell to just 21 percent in February, compared with 41 percent in March 2007.

The declines in home values were most frequently reported by residents of the West, with 45 percent reporting that their home had lost value in the past year. That was more than twice the 21 percent who reported recent gains in their home's value.

In sharp contrast, 36 percent of homeowners in the South said their home had appreciated in value, compared with 22 percent who reported declines during the past year.

"The most frequent and the largest percentage declines were reported by homeowners whose homes were valued in the top third of the distribution," the survey said.

Among owners of the most expensive homes, 44 percent reported declines in the past year, nearly three times as frequent as declines reported among owners of the least expensive homes. Those who owned the most expensive homes were more prone to expect additional declines than gains in the year ahead, at 32 percent versus 19 percent.

Overall, owners of the most expensive homes anticipated a decline of 1.5 percent during 2008, compared with an expected gain of 0.5 percent among owners of the least expensive homes. The larger decline in home values among upper-income households has been responsible for the steeper declines in confidence in their current and future economic prospects recorded in February.

Declines in home prices were expected to remain highly concentrated in the same locations that experienced declines in the past.

[The Buddy Love Show]

btw

the Federal Government might bail out homeowners and banks

kinda like a Universal Mortgage Care program

Damn - Imma have to pay for this "mandate"....I hope all of you'se against universal care will take a stand against Socialized Mortgages

[DaveR]

Yes, I remember

[DaveR]

...

kinda like a Universal Mortgage Care program

Damn - Imma have to pay for this "mandate"....I hope all of you'se against universal care will take a stand against Socialized Mortgages
:rofl5:

[DJ Loka]

btw

the Federal Government might bail out homeowners and banks

kinda like a Universal Mortgage Care program

Damn - Imma have to pay for this "mandate"....I hope all of you'se against universal care will take a stand against Socialized Mortgages


i <3 u. :biglaugha:

[mhd]

sheeeed,,, i remember when aol stock was triple digits and rising!

[The Buddy Love Show]

i <3 u. :biglaugha:

People and banks are asking for a government bailout. Thats the same as socializing debtors ills across society. I'm sure folk won't be huffing and puffing too hard about this "mandate" (the mandate is my tax dollars financing the mistakes of fuck ups who didnt read the fine print)

http://www.nytimes.com/2006/11/04/business/04money.html?_r=1&pagewanted=print&oref=slogin

November 4, 2006
YOUR MONEY
Mortgage Lesson No. 1: Home Is Not a Piggy Bank

By DAMON DARLIN
Economists are fond of pointing out that “there ain’t no such thing as a free lunch.” But for several years, as interest rates have fallen, homeowners have gotten something pretty close to it.

Anyone who had been diligently paying down a mortgage and others who had just sat back and watched their home appreciate in value were able to refinance and take out the difference between the value of the home and what was still owed, known as equity. Not only did they remove the increased equity in the home as cash, most people were paying lower monthly payments.

“People have literally picked up their house at the foundations and shook it upside down like a piggy bank,” said Ed Smith, chief executive of the Plaza Financial Group, a mortgage brokerage firm in La Mesa, Calif., near San Diego.

Since January 1999, according to figures compiled by Alan Greenspan, the former Federal Reserve chairman, and James Kennedy, a Fed staff economist, in a Federal Reserve Board paper, more than $2.62 trillion has been extracted by homeowners through refinancing and home equity loans.

But as rates have gone up, the extraction has continued. In the first six months of this year, even with interest rates rising, more than $511 billion was extracted from homes through cash-out refinancing and home equity loans, and that was more than the amount taken out for all of 2005, a record year for mortgage equity extraction.

More homeowners did cash-out refinancings in the third quarter of this year than at any time since 1990, according to Freddie Mac, the mortgage company. Many of them, Freddie Mac said, were scrambling to get out of interest-only mortgages that will soon reset at a higher interest rate.

“A lot of folks are squeezing out the last bit of equity from their homes,” said Celia Chan, director for housing economics at Moody’s economy.com.

Economists argue over what effect that money, which they call mortgage equity withdrawal, has had on consumer spending. Homeowners cash out to pay off more expensive credit card debt, remodel the house to build more equity, or just have fun. They may very well have used it to buy another house or not spent it at all, but added it to savings. Economists really are not certain.

“I guess it is one of those mysteries,” said Christopher D. Carroll, an economics professor at Johns Hopkins University. “I don’t think anyone knows what the answer is.”

Nevertheless, mortgage equity withdrawal is closely watched as an indicator of the general economy because, Mr. Carroll said, “there is a lot concern that a cooling housing market could result in a sharp fallback in consumer spending.”

A recent paper that Mr. Carroll helped write contends that for every $1,000 change in housing wealth there is an immediate propensity to consume about $20 more. The wealth effect, as the phenomenon is called, is twice as high for housing wealth as it is for stock wealth, Mr. Carroll and his associates said.

Economists will argue for many years to come how much a decline in home prices damped consumer spending. But this much is already clear — it is a lot more expensive to tap home equity. It is one reason economists predict consumer spending will slow in 2007 and even more in 2008.

The slowdown is already being seen in home remodeling. The Joint Center for Housing Studies at Harvard found that over the last 12 months homeowners have spent only 1.6 percent more on remodeling projects than they did in the preceding 12 months. That rate was running at close to 20 percent throughout 2005 and the first four months of 2006.

Homeowners with equity built up in their home can still get at it, but it is no longer free money. Unlike the situation five years ago, when a person seeking to refinance heard the same thing from nearly every mortgage broker and lender — do it! — now the advice is varied.

The best thing to do in most cases is to leave the equity alone. No one expects home prices to appreciate sharply. A cautious consensus among economists is developing that prices will decline in some areas, but that the depreciation will not be sharp or prolonged. But should home values fall, a homeowner who has depleted the built-up equity risks finding himself paying a mortgage on a home that is worth less than the mortgage.

There is another change in the market that could block a homeowner’s desire to borrow against the increased value of the home. “Lenders are being very cautious today as they do appraisals,” said Patty McGill, president of Money Marketing, a mortgage broker in Frederick, Md. “They are scrutinizing appraisals so they are not lending on phantom equity.”

She said she had done very little equity extraction business recently. These mortgages carry higher interest rates than first mortgages because lenders view them as riskier. It is usually about two percentage points above the prime rate. Right now you can get one for about 9 percent to 10.25 percent compared with borrowing at about 6 percent on a fixed 30-year loan.

Sometimes, and a homeowner has to analyze this carefully because it is not always the case, a homeowner might be better off refinancing the first mortgage than taking out the home equity loan, even if that means refinancing at a higher interest rate.

If you have a mortgage at 5 percent, why would you give it up for an even larger one at 6 percent? Opinion is divided on this issue. Mr. Smith, for example, is an advocate of the “blended rate,” the marketing term lenders use for paying an interest rate that is higher than the one on the first mortgage, but lower than a second mortgage’s. But the fact remains that it will cost homeowners more.

“If you reach out to tap equity, but can’t afford to make the payments, what use is it?” Mr. Smith asked. “Most people’s income has not grown to allow them to tap it. If you pull money out,” you have to pay for it eventually.

Some mortgage brokers say that some homeowners become obsessed with the low interest rate they are paying on their first mortgage and do not realize that a new first mortgage might be cheaper than adding the home equity loan. “We call that low rate the ‘cocktail rate,’ because it is the one people brag about at cocktail parties,” said Neil Sweren, president of the mortgage brokerage company Allymac Mortgage Services in Owings Mills, Md.

He is recommending a 30-year loan, with the payments in the first 10 years being interest-only. Take a homeowner who borrowed $425,000 a number of years ago to buy a home that is estimated to be worth about $620,000. The homeowner has convinced himself that he should use about $75,000 of that increased value to fix up the house, where he intends to stay for 10 years.

The homeowner could pay about $562 a month to borrow the money in a home equity loan.

In Mr. Sweren’s plan, he would trade in the original $425,000 30-year loan with a fixed rate of 5.5 percent on which he had been paying $2,413 a month. He would borrow $500,000 at 6.5 percent. Under the new first mortgage, the monthly payments during the first 10 years would be $2,708, or $295 more than the old one, a 12 percent increase.

Of course, without the interest-only feature, that payment would be another $452 a month.

In the 11th year, the payment jumps to $3,727 a month for the next 20 years. In that period the entire loan must be paid off. The homeowner pays $567 a month more than he would have paid with a conventional 30-year loan.

If it sounds like a losing proposition, you are not alone in that opinion. Still, Mr. Sweren said the larger the overall debt, the more sense it makes to arrange a refinance rather than a home equity loan. Most people are not going to go for deals like that and will leave the piggy bank undisturbed.

Ms. Chen, the economist, predicts that there will be a lot fewer equity withdrawals in 2007. “I don’t think there is a compelling reason to extract equity at this point,” she said. “People will just wait.”

[The Buddy Love Show]

sheeeed,,, i remember when aol stock was triple digits and rising!


I know!!!!

we are headed into a period of stagflation

[DaveR]

:thumbsup:
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[The Buddy Love Show]

NEGATIVE EQUITY!!!!!!

If the unemployment increases shit won't be pretty

http://zillow.mediaroom.com/index.php?s=press_releases&item=52


Home Values Continued Decline in Fourth Quarter, Leaving Approximately One in Three New Homeowners With Negative Equity
Condos Post Largest Year-over-Year Value Declines, down 7.4%, followed by Single-family homes, down 5.5%, according to Zillow® Q4 Home Value Report

SEATTLE, Feb. 12 /PRNewswire/ -- Home values continued to decline in the fourth quarter of 2007, falling 3.5 percent from the third quarter and 3 percent year-over-year to a U.S. Zindex® home value indicator(1) of $224,890, according to Zillow's Q4 2007 Home Value Report(2). The Zindex is the median Zestimate® valuation and measures the value of all homes in an area, not just those that have sold during the quarter. In 2007, condominiums posted the largest year-over-year drop, down 7.4 percent to a Zindex of $229,017 while single-family residences fell 5.5 percent to a Zindex of $230,908. On a quarter-over-quarter basis, the decline in value of single-family residences outpaced the decline of condominiums, falling 4.4 percent and 4 percent respectively.

(Logo: http://www.newscom.com/cgi-bin/prnh/20060503/ZILLOWLOGO)

Following on Zillow's recent database expansion to 67 million Zestimates on 80 million homes, the Zillow Home Value Report has been expanded to cover 125 Metropolitan Statistical Areas (MSAs), including a national report, and details for corresponding counties, cities and neighborhoods.

The continued decline in home values means many U.S. homeowners saw equity slip away while more homeowners were pushed into negative equity situations, meaning they owe more on their mortgage than the home is currently worth. Nationwide, those at most risk of being underwater on their mortgage are those who bought in the last two years when most markets peaked. Of those who bought in 2006, 39 percent now have negative home equity as do 30 percent of those who purchased in 2007. By comparison, only 3 percent of those who purchased five years ago, in 2003, and less than one percent of all homes in the U.S., regardless of when they were purchased, have negative equity(3).

The rates of negative equity are typically higher in markets that have had significant value declines and relatively low median down payments. Parts of California, Florida, Nevada and Arizona, where the median down payments were zero to 5 percent during the last two years and year-over-year value drops in the fourth quarter were in the double digits have negative equity rates two to three times the national median. For example, in Las Vegas, where homeowners saw values drop 13.8 percent year-over-year, more than half (57.6%) of those who bought in 2007, when the median down payment for the area was 5 percent, and nearly three out of four (72.5%) who bought in 2006 with a median down payment of zero, are currently underwater.

"With consecutive declines over the past five quarters, we haven't seen the housing market bottom yet, and it may very well get worse before things get better. Even many markets that have been largely insulated from recent declines, like some in the Pacific Northwest, reported notable value declines in the fourth quarter," said Dr. Stan Humphries, Zillow vice president of data and analytics. "As home values have slid down further, the median amount of equity people have in their homes has declined and more U.S. homeowners are now underwater, owing more than the current value of their home."

While most homeowners still have positive equity in their homes, the amount of equity in most areas deteriorated in the fourth quarter. In fact, many of those who purchased in the last two years now have less equity than their original down payment. Homeowners who purchased in 2006 and 2007 placed a median down payment of 10 percent and now own a smaller fraction of their investment -- just 5 percent and 9 percent equity(4) respectively as of December 31, 2007. In contrast, those who purchased in 2003, after placing a median down payment of 10 percent watched the market grow at an annualized rate of 6.9 percent and now own a median of 37 percent of their home, without factoring in any payments toward principal.

"It's important to remember that value declines and negative equity situations are largely unrealized effects for most homeowners unless they are in a situation where they must sell or withdraw equity immediately," added Dr. Humphries. "The decline in values, combined with the recent rate cuts by the Fed should make entering the market more attractive to would-be buyers, but we may not see any effects until the spring when the home shopping season usually kicks off."

A full comparison of home values in the 125 Metropolitan Statistical Areas (MSAs), representing 43 million homes, can be found in Zillow's national Q4 2007 Home Value report, at http://www.zillow.com/quarterlies/QuarterlyReports.htm. To generate the quarterly Zindex for each MSA and the corresponding counties, cities and ZIP codes or neighborhoods, Zillow calculates more than 10 years of historical values. Highlights for select MSAs from the Zillow reports can be found below:

[vic]

Im not up on economics and all that, but this seems like some real bullshit.
Im thinking some level of natural selection needs to be introduced into this whole fiasco.
This is the equivalent of a lifeguard telling you the water in the pool is fine, and
you jump in without looking to see that the water is slowly draining out as you do that
triple lindy.

[The Buddy Love Show]

Im not up on economics and all that, but this seems like some real bullshit.

Lenders looking for a nice longterm payday, offering mortgages to folks that they would have never considered years ago. All the while knowing they gonna jack up the interst rates in 3 or so years. I guess the lenders/ mortgagers(?) figured that the homebuyers will be in a higher income bracket by the time the new rates kicked in?

Buyers/ wannabe homeowners/ wannabe players in the real estate market, jumpin on properties that they should have known they could not realistically afford (and that was assumming that they did not lose their jobs, anotehr child on the way, medical bills, utilities, etc). Too stupid or too greedy to figure out that they were well over their head; I mean fuck, if you are only earning 30k a year, and that is your only income, you gots kids or not, there is no realistic way you can afford an expensive house without some serious help. And even with all that on your side, you will be living a very modest life; if you even have a life after all that.

I'm sorry, but i feel like we as a country should not have to suffer companies that do stupid things to appeal to people willing to do stupid things. At some point , Im thinking some level of natural selection needs to be introduced into this whole fiasco

IRONY:

The free market types want government intervention

The no socialization types want to have their burden socialized

BIG laughs

[housewithme]

Im not up on economics and all that, but this seems like some real bullshit.
Im thinking some level of natural selection needs to be introduced into this whole fiasco.
This is the equivalent of a lifeguard telling you the water in the pool is fine, and
you jump in without looking to see that the water is slowly draining out as you do that
triple lindy.

this is scaring me, now after all this time, I am finally interested in buying a house - b/c I need more space, but damn, if i do this, what will happen? the market is so unpredictable & unstable it's destablizing my thinking about trying to buy something at a time in my life when i really need to consider it, shit.

[mhd]

this is scaring me, now after all this time, I am finally interested in buying a house - b/c I need more space, but damn, if i do this, what will happen? the market is so unpredictable & unstable it's destablizing my thinking about trying to buy something at a time in my life when i really need to consider it, shit.

its a great time to buy, falling prices, low interest rates, higher standards for scrutiny on loans, etc

[The Buddy Love Show]

its a great time to buy, falling prices, low interest rates, higher standards for scrutiny on loans, etc

INDEED!!!!!!

you need to say that shit louder. Can you imagine what the housing market would have been like if this had been a rough winter??

(although I dont think we've hit bottom yet. Market timing aint my thing either)

[housewithme]

i really want to do this, i've never owned a house b 4, and am really anxious about jumping in so I hope it works out

[Suspended]

Choose better investments :tongueout:

http://www.krakenopus.com/images/opus_collection/general/invest_banner.gif

[mhd]

i really want to do this, i've never owned a house b 4, and am really anxious about jumping in so I hope it works out

hope works well for obama, for you, research is your friend, www.naca.com also, i would suggest you holla at rom as well

[mhd]

Choose better investments :tongueout:

http://www.krakenopus.com/images/opus_collection/general/invest_banner.gif

no doubt, diversify, normally i would spend a weekend day looking at properties, this past weekend i spent it at art galleries

[mhd]

INDEED!!!!!!

you need to say that shit louder. Can you imagine what the housing market would have been like if this had been a rough winter??

(although I dont think we've hit bottom yet. Market timing aint my thing either)

i'm a pragmatic optimist, so, i'm counting on an upswing, most are saying we will hit bottom this year with prices inching up in 2009, i think most sellers build that into their pricing today, with negotiated terms more and more to the buyers side, so, why wait

[DaveR]

You are right Suspended ... the collector's stamp market is out of this world (literally) ... peeps outside the US trade stamps (normal 1st class postage, and collectors') like currency

... and the PO makes out too ... Collector's Stamps are product they produce (albeit produced by a 3rd party), that they never have to service (mail handling)

[DJ Loka]

there is also alot of stories popping up about car repossessions....

i dont think this has bottomed out yet, but in another 6-8 months...it will be a great time to pick up a house OR a car at a stupid price...

[DaveR]

there is also alot of stories popping up about car repossessions....

...
Here's to Universal Auto Ownership and Care :thumbsup:

[DJ Loka]

Here's to Universal Auto Ownership and Care :thumbsup:


ok i just choked on my grape juice lololololololol:rofl5:

[DaveR]

ok i just choked on my grape juice lololololololol:rofl5:
Choked? ... please contact PWW - he's a Gold Level Provider, under the new DHP Universal Health Care program ... be careful, sometimes that thermometer ain't really a thermometer

[DJ Loka]

Choked? ... please contact PWW - he's a Gold Level Provider, under the new DHP Universal Health Care program ... be careful, sometimes that thermometer ain't really a thermometer


i can't. ::sigh:: mhd sez he has me on ignore :frown:

[DaveR]

i can't. ::sigh:: mhd sez he has me on ignore :frown:
mhd is also reopening the Tawana Brawley case

[DJ Loka]

mhd is also reopening the Tawana Brawley case

:rofl:

[MEP]

Choked? ... please contact PWW - he's a Gold Level Provider, under the new DHP Universal Health Care program ... be careful, sometimes that thermometer ain't really a thermometer
:lach:

[The Buddy Love Show]

Choked? ... please contact PWW - he's a Gold Level Provider, under the new DHP Universal Health Care program ... be careful, sometimes that thermometer ain't really a thermometer

I'm a great guesstimator!!!!

[E-Phi]

Since most homes are now worth less than what was paid for them, banks have been informing their customers that they can't take any money out because of negative equity. Now that money isn't available there people are maxing out credit cards. They are also unable to afford car payments which is affecting auto financing companies (see GMAC). Jingle mail (sending home keys back to the lender) is becoming popular again. The home industry is claiming prices should start appreciating later in the year, but many economists say the market isn't near a bottom as of yet. Homes prices will continue to fall for the next couple of quarters.

Any money the government gives will continue to devalue the dollar. We may end up with hyperinflation.

[MadMixer]

and then you realize that you really dont own that home you live in. You were renting afterall.

[housewithme]

hope works well for obama, for you, research is your friend, www.naca.com also, i would suggest you holla at rom as well


very interesting article, indeed - who is rom?

[mhd]

very interesting article, indeed - who is rom?

https://www.naca.com/index_main.jsp this is their main page where you can find info on help for first time home buyers, rom is a chicago realtor and esteemed member of dhp

[Steven Stewart]

rom is a chicago realtor and esteemed member of dhp

How many posts before you become esteemed?:conf06:

[The Buddy Love Show]

I wanna get a chick in the car today and esteem up the windows

[Martin Red]

as Cedric once said: "nah dog, it aint all good"



Is that why the 2001, 2002, 2003 archives have gone missing , LOL

[Leslie]

[quote=Palatine William Wilson;656459]P(the mandate is my tax dollars financing the mistakes of fuck ups who didnt read the fine print)

The truth and the devil....

[travy]

no doubt, diversify, normally i would spend a weekend day looking at properties, this past weekend i spent it at art galleries

i'm investing in bullets myself...

[housewithme]

https://www.naca.com/index_main.jsp this is their main page where you can find info on help for first time home buyers, rom is a chicago realtor and esteemed member of dhp


thanks, mhd

[housewithme]

I wanna get a chick in the car today and esteem up the windows

puhleaze! :jpshakehead: