Mr Mortgage

Homebuilding on an Uptrend?

there is no fix for housing especially in the states that matter (make up most of nations gdp) such as CA. Remember, 1 year ago and for five years before that, we had hundreds of loan programs where a household income of $85k a year could buy a $1 million home worth zero to 5% down. Actually, no household income was ok on stated, no ratio or no doc programs, which were abundant to 100% interest only with teaser rates.

Now, with only 30-yr fixed, 15-yr fixed and selective 5/1 product, the same $1 million home requires 20 cash down and a household income of $150 - $175k. Inventories are up 500+%.

Essentially, we have 95% fewer buyers to buy 5x the number of homes for sale. And that does not include REO inventory. Remember, only 3-5% of homes sell to a 3rd party in foreclosure. The banks buy the rest back and add them to REO.