Guest blogger Richie is back for an encore. Grim is heading away on vacation again, so I’m filling in part time to keep the conversations going here.
I just came across this great piece from the Associated Press; the title says it all! What I like about this article, is that they FINALLY blamed the slowdown on the sky-high price of housing, although they did toss in the interest rate card again…
Farewell to the flippers: Home prices are falling
There you have it; it’s in print Home prices are falling. If people follow the “news on the street” then we should see some more interesting articles coming out soon… Some notable quotable’s in this article include:
Rising interest rates and sky-high home prices have cooled real-estate investment, “particularly in high-end markets in some juiced-up parts of the country where speculation was most rampant,” said Mark Zandi, chief economist at Moody’s Economy.com.
…
With land prices falling in some areas, Hovnanian has walked away from about $5.6 million of deposits on land parcels it had options to buy, lopping 5 cents a share off the company’s second-quarter earnings.
…
The national median existing home price was $223,000 in April, according to the National Association of Realtors. While that was a 4.2 percent increase from April 2005, the organization predicts that prices this year will rise only 0.8 percent.
Others aren’t so sure they’ll rise at all.
…
The Fed’s target short-term rate is currently 5 percent. If it passes 7 percent, “then things get very tricky,” Zandi said. “Many home owners will have trouble making payments. We’ll see significant mortgage credit problems develop.”
By the end of 2004, 35 percent of buyers had adjustable-rate loans, up from 18 percent the previous year, according to the Federal Housing Finance Board’s interest rate survey.
What gets me is the last quoted paragraph.. 35% of the buyers for ARM’s in 2004. We all know the 2004 prices were out of hand, but what about 2005? It seems that as the prices rose, so did the number of people using ARM’s to get their properties.
-Richie
Hi, Richie:
Great post. I was hoping somebody could start a thread about personal experiences they’ve heard about associates with unbelievable (to them) mortgage increases.
I mentioned elsewhere that on Saturday, someone I know decided to list their home this week because their mortgage increased in May well above what they can pay.
The pain was obvious. So was the surprise.
These were not rubes. Kluger mensch – typically people “in the know.”
Pat
I think most people are blind to the market and really are going to be in for a big surprise when they find out their home isn’t worth what they paid for it 1-2 years ago…
-Richie
Remember folks, it`s NOT yet a BUYER`s MARKET until we saw at least 30% price reduction in home prices…imho !!!
Don`t believe in the hype of the Realtors who want to make money… they don`t care who will be buying as long as they earn COMMISSION on every home sales !!!
Looking for guys to join my Fantasy League for football if interested contact Big Mike by posyting in the forum at
Offshorebettor2.com
Where’s “RE investor”?
RE investor, how many properties are you currently holding? Are they single family? Condis? Renovations? Tear downs?
an Ad ARTICLE AT
Asbury Park Press
Sunday May 28, 2006
p.G3 !!!
“Kara Homes advises active adults to purchase homes now” !!!
Why buy homes when you knew that New Jersey home prices is way overpriced according to the latest report and Housing prices is now cooling if not CRASHING !!!!
http://tinyurl.com/l26s8
HUD rules. A little late to matter, at this point, or a big help?
Pat
unrealtor-
maybe reinvestor101 is busy “UNINVESTING” his realty and reinvesting in gold!!
hehe
g’nite