Thread: Buying House...
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Old 05-09-2009, 03:36 PM
mrane1 mrane1 is offline
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Quote:
Originally Posted by maximus777 View Post
Absolutely a good time to buy if you have the cash reserves and your job is in health sector.
This is a classic false bottom in the housing market. There are a few factors affecting it. The biggest one being foreclosure moratorium enforced by Obama late last year. So bank held off sending default notices etc. It ended last month and notice of default has sky rocketed. It typically takes a few months from the time of NOD to foreclosure. There is a huge shadow inventory that banks are holding... any sign of better market and banks will flood these homes in the market. Besides, everyone knows that spring time is always better than the winter for home sales. So instead of looking at mpnthly data you need to look at YOY. And finally the option ARM reset. The subprime problem is now behind us... However alt A and prime are now beginning to unfold. The ARM reset problem was takled by govt by reducing the rates... However, opton ARMS is a different animal altogether... There were huge number of interest only loans made in 05 and 06... These offerms were very enticing in the beginning. For eg just $1500 for the first year then extra $100 every year till the 4th year.. Then the principal kicks in, increasing the payment from $1900 to $3800. That tsunami has started hitting in March of 09. That is why lot more prime homes are coming in the market. The only thing I agree is the RATE of decline has decreased... However, the prices will keep declining for few more years... The bottom in terms of prices will probably be 2012... And even after that houses are not going to start climbing rapidly like they did in the early part of this decade... Here is an interesting chart that ypu might want to look at:
http://3.bp.blogspot.com/_nSTO-vZpSg...e-Resets-1.png
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