Can the Mortgage Crisis Swallow a Town?

[w¡n9Nµ7 §£@¥€r 123]

... this means the prices will come down for a short time and then go back up.

Just curious: where did you get the "for a short time" part from? This article or somewhere else?

The stock market is already coming back. I am in the process of buying a home and I talked to our banker at length about the "mortgage crisis". He said that most banks are not effected at all with the sub-prime melt down. They only do regular mortgages. Once the speculators pay the price for their bad decisions the rest of the market will come back. I have "less than perfect" credit and I qualify for a regular mortgage. To be honest the ones that are loosing out fall into two classes. Those that had no business buying a house and those that had no business making the loans to them.

I see. So once speculators pay the price for their bad decisions, the rest of the market will come back? Any idea how long that might take?

Just trying to understand. I'm not challenging your beliefs. The last RE downturn in the NY/NJ area lasted a decade, thus my skepticism.

This IMO is a superficial downturn. Just my opinion and based solely on my area and what my local banker said to me. I have no idea what is going on in NJ/NY area. The reason I think it's a short term thing is because the rest of the economy is doing well. Interest rates are not going up, employment is still good and the market is coming back. It isn't like the previous downturns where the rest of the economy led the downturn in the housing market. But that is just MO.

Fair enough. Hopefully you're right.

[Caladan 19]

Housing problems hit the middle class, though, and as goes the middle class, so goeth the country. As this article shows, it's not just the speculators who suffer: a couple who made a good decision is getting hurt because their property values are tanking because their neighbors had to default.

What concerns me most is that this is Cleveland. Like Pittsburgh (where I grew up), an area that really didn't go through a massive boom and so doesn't really have anywhere to go during a bust. It's one thing for a house to lose 10% of its value when it was gaining and gaining. Another thing entirely when the gain had been 2-3% a year.

[GaryC 7]

Housing problems hit the middle class, though, and as goes the middle class, so goeth the country. As this article shows, it's not just the speculators who suffer: a couple who made a good decision is getting hurt because their property values are tanking because their neighbors had to default.

What concerns me most is that this is Cleveland. Like Pittsburgh (where I grew up), an area that really didn't go through a massive boom and so doesn't really have anywhere to go during a bust. It's one thing for a house to lose 10% of its value when it was gaining and gaining. Another thing entirely when the gain had been 2-3% a year.

Where you see a problem I see an opportunity. Since the rest of the economy is doing well a person could make good money right now. Buy a home in those neighborhoods where the property values are going down. When the market comes back the prices will rise again and you have instant profit. The neighborhoods that are having a problem right now IMO will find the problem a short term one, they will just end up with new neighbors is all.

[w¡n9Nµ7 §£@¥€r 123]

The neighborhoods that are having a problem right now IMO will find the problem a short term one, they will just end up with new neighbors is all.

Gary, see here's the problem. Home buying is an emotional decision as well as a rational+financial one. When you drive into a neighborhood and see boarded windows and/or "youth" in bright red bandannas chilling on the corner ... that's likely to evoke a negative emotional reaction, one which makes the prospective buyer much more likely to go to a neighborhood without those problems. Neighborhoods that turn south tend to stay that way well into the upturn.

[ChristinaM 0]

Although not uniquely, this particular crisis is hitting mainly lower-income families and those with poor credit. These are the people typically steered into sub-prime mortgages. Just because someone is willing to lend you the money doesn't mean that it is the right thing for you to accept it.

Those in the middle class who ended up in a sub-prime mortgage either did so because they had lousy credit (and therefore probably shouldn't have been buying a home in the first place) or because they didn't shop hard enough. It's no secret that a mortgage broker or lender will try and get you into the most profitable loan for them, not necessarily the best loan for you.

It is sad to see areas fall down because the social demographic was such that many people in the area are hit by the same problem, but what is the solution? Reregulation of the mortgage industry would help, but there are always those crying for less regulation and how limiting access to credit destroys the American Dream because it prevents people from buying - even if those people are being fleeced by an unscrupulous industry and really should not have been buying a home in the first place. I feel sorry for those who borrowed responsibly and are now suffering because of the inability of their neighbours to pay.

[Mr. Big Dog 10,747]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

It would be if there were any buyers.

[Caladan 19]

Housing problems hit the middle class, though, and as goes the middle class, so goeth the country. As this article shows, it's not just the speculators who suffer: a couple who made a good decision is getting hurt because their property values are tanking because their neighbors had to default.

What concerns me most is that this is Cleveland. Like Pittsburgh (where I grew up), an area that really didn't go through a massive boom and so doesn't really have anywhere to go during a bust. It's one thing for a house to lose 10% of its value when it was gaining and gaining. Another thing entirely when the gain had been 2-3% a year.

Where you see a problem I see an opportunity. Since the rest of the economy is doing well a person could make good money right now. Buy a home in those neighborhoods where the property values are going down. When the market comes back the prices will rise again and you have instant profit. The neighborhoods that are having a problem right now IMO will find the problem a short term one, they will just end up with new neighbors is all.

Cleveland is not a market where you can expect to flip the house and have a good ROI. It's a market where if you're buying a house, it's because you expect to live there. Best case, the neighborhood stays about the same. Worst case, the middle class moves out, and then it's a troubled area everyone winks and nudges about on VJ.

[Trumplestiltskin 5,791]

There was a story on the radio last night about how rents are going up all over NJ because of rising house prices and mortgage defaults.

[Fandango 1,440]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

It would be if there were any buyers.

You're kidding, right?

[w¡n9Nµ7 §£@¥€r 123]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

It would be if there were any buyers.

You're kidding, right?

Well, in my neck of the woods, unsold inventory represents a 9 month inventory of homes at current closing rates. It was 4 months back in 2005.

Sure, there are buyers, but there are a lot more sellers. Lots of expired/withdrawn listings lately.

[Mr. Big Dog 10,747]

Everyone needs to remember....when it comes to your primary residence, the only houses that really matter are the first one you buy, and the last one you sell. Everything else is just transferring equity. Think about it....you sell low, but you also buy low....you sell high, you buy high. It matters when you get on the property ladder...but this is a perfect time for that.....and when you sell your last home...hopefully it's a seller's mkt!

right now it seems to be a buyer's market though.

It would be if there were any buyers.

You're kidding, right?

Hence, the " "

It is a buyers market for the lack of buyers (relative to sellers), though.

Edited September 4, 2007 by Mr. Big Dog

[Hilarious Clinton 452]

This is good news for me. I am soon in the market for a house and this means the prices will come down for a short time and then go back up. Instant equity!!! :dance:

Me too!!! Houses are very affordable up here in Richland, WA too.

new house

[Fandango 1,440]

Well, in my neck of the woods, unsold inventory represents a 9 month inventory of homes at current closing rates. It was 4 months back in 2005.

Sure, there are buyers, but there are a lot more sellers. Lots of expired/withdrawn listings lately.

People need to stop comparing everything to 05. 05 was not a normal market. We should all, actually, be quite happy 05 is over. If things continued to escalate, can you imagine the cost of housing in 4 more years and the ripple effect of such?

A lot of sellers don't want to acknowledge that it's no longer 05, and some agents get sucked in to listing a property's priced based on what the homeowner thinks, which is based on 'my house is the greatest in the world!!!!!!'. So then you have homes that don't sell, because they're overpriced...and then they get stale. 'Oh that house has been for sale forever!' people will say. I personally don't take overpriced listings, and I've walked away from several listing appts telling the HO that no, I won't list their home...because it's not priced for the mkt...and instead of faffing about wasting his time, my time, my money, etc....either go with someone who tells you what you want to hear, decide not to sell in this mkt, or think it over and call me back when you're really ready! I don't dictate the value...the market does. So if they want a dose of reality, here's your margin between x & y & I show them the market analysis which arrived at those figures. Many HO's won't like that figure...and yeah, it'd be great if I could sell THEIR HOUSE for $1 MILLION. *holds pinky to mouth* But I can't. And I tell them the truth...this is what's happening. Then you see them list with someone else for a ridiculous price and the house just sits. HO is happy cos he's already counting that money, agent is delusional at that point cos why take it if it's got no hope of selling??? And the house sits.

9 month inventory is not insane if you don't wanna price your home for a quick sale. More sellers than buyers doesn't mean there are no buyers. They're all over the place. I can't tell you how many serious, qualified buyers I'm currently working with. Now is the time to buy!

[Fandango 1,440]

Hence, the " "

that's a ####### 'hehehe' I would say that was more of a '#######?' or 'I'm stoned' look

[Jeraly 4]

Well I must say it will suit me when I move over and we start looking to buy - hopefully by the time we move on the house prices will have picked up a bit - we are going to be living in SoCal at first but then we want to move back East a bit although we haven't decided where yet