ArnoldCountry

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

Lumber is cheap because the demand has dropped significantly with building stopped and remodels way down.


On Jan 14 06:18 PM Rhett wrote:

> Hoover, replacement costs are falling. Lumber, for example, is at
> its lowest price in years.

Home Prices May Be Nearing Bottom, Bank Equities to Follow?

You said: "I believe that real estate has gotten cheap enough that drive-by shoppers will increasingly stop in for a look, and when they do, the combination of price and mortgage cost will turn shoppers into buyers."

The only buyers are really investors, this does not make a market. You need mainstream buyers to come forth, but they can't. Unemployment is too high, many of the folks who would buy have lost their homes and have damaged credit, rent is still cheaper than buying, credit requirements are way too stringent and consumer sentiment is running too low. Its like having a great sale and no one is showing up. Which equates into even lower prices in the long run. Its the perfect storm.

"Pick-a-Pay" Defaults Deepen - Housing Tracker

Pick a payment loans will most likely be worse. I have seen persons have a 460k loan with payments going along for 2 years at 1800.00/month all of sudden hit the 115% cap, recast and the new amortized payment jumps to 3600.00/month. Net income for the family is 4600.00/month. That leaves them $1,000.00 per month to pay utilities, cars, gas, food, etc. Cannot be done. Many families with these loans go one day from comfortably living in their homes to instant bankruptcy and having to make real choices about living. The lenders merely send them a notice saying here is your new payment next month. Its shameful that lenders expect that consumers can afford that type of payment shock. As these hit, given many of those some homeowners are under water on their values in the home already, the only decision will be to walk. Especially since there are plenty of rentals available in most markets for half their payment. Some lenders are being "generous" and lowering their rates by 2% for a couple of years but the payment still recasts and that savings is only a couple hundred per month at best. This type of shock is well beyond the shock experienced by many sub-prime borrowers.