First Time in History Median Home Price is Likely to Decline - Page 5 - Mercedes-Benz Forum

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post #41 of 171 (permalink) Old 04-26-2007, 01:18 PM
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It depends on where you live. For the middle and northern parts of the country, historically they take a bigger hit on a down turn. Then again it is totally understable with the employment opportunities and harsh winter climate.

Around here in the Washington D.C. area, the housing price actually still going up. With the Base Realignment Program of the military, we are getting 15,000 additional military jobs (mostly reconn and intel related) moving into this area, not including defense related and supportive role civilian jobs. The local city councils predicted all told there should be closed to 30,000 new jobs coming to this area in the next two years. They are building office buildings left and right to accommodate the influx of jobs but not much housing for the new comers. That continues to push the demand higher than supply. It is good news for us who live around here as far as home price is concerned. The downside is the traffic and school systems. I have no kids so that does not concern me. The traffic, on the other hand, is killing me. My 2 mile track to the grocery store on the used-to 2-lane country road nowadays takes me 15 minutes. And that's on weekends.

A new 4-bedroom townhouse in my community goes for $850K. I can imagine what $850K can buy in Kansas or Arkansas. My single family home was built in 2000, and it has more than tripled already.

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post #42 of 171 (permalink) Old 04-26-2007, 01:29 PM
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Originally Posted by maine_coon
yep, that's the case.
Same here -- I'm neurotically opposed to owing anyone money.

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post #43 of 171 (permalink) Old 04-26-2007, 01:47 PM
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Fortunately for me (but unfortunately for some), I still owe a little but I have 60%+ equity in my home. I got there buying and selling 2 properties before. No credit card payments, car payments, etc. Just the house.

Lumber prices are down 25 to 30% here, so build out on a home is a lot less, which means the price has to come down or they won't sell. We have a few builders trying to hold the prices up but they're holding on to homes too long. My equity is still holding from last appraisal but I suspect the worth of mine will fall slightly. Better for me, though, is it's a brick home with full basement, a very popular house to have, so they're not hard to sell.

I feel really bad for those who listened to these mortgage brokers hocking the 5 year balloons and 5 year fixed/varible after. There are several here, some I would have considered 'affluent' that have become 'house poor'. They have every dime of their money tied up in too much house in order for them to 'market speculate'. Now they're being strangled to death with payments and high interest. I would never, under ANY circumstances, have a fire dance with variable rate or interest only loans. They, overall, are a bad product and is what's responsible for some of the housing market drops we're seeing today.

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post #44 of 171 (permalink) Old 04-26-2007, 01:48 PM
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Originally Posted by GermanStar
Same here -- I'm neurotically opposed to owing anyone money.
That can be a VERY expensive mistake. I always try to use someone else's money to leverage and multiply my money for myself and my family and my businesses. For example, my equity investments alone last year returned an average 19.3% while the highest mortgage rate was 6.75 and as low as 5.6%. Some investments actually doubled in value. Even in bad years for equities I have always made money--usually a lot of money.

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post #45 of 171 (permalink) Old 04-26-2007, 01:51 PM
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^As I implied, it's a sickness. But it is my comfort zone, so I just roll with it.

"If spending money you don't have is the height of stupidity, borrowing money to give it away is the height of insanity." -- anon
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post #46 of 171 (permalink) Old 04-26-2007, 01:53 PM
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Originally Posted by Jayhawk
That can be a VERY expensive mistake. I always try to use someone else's money to leverage and multiply my money for myself and my family and my businesses.
I think Germanstar is on the money, there. I would never borrow money on my home to finance a stock market investment. Just simply not smart when you consider the risks. While it may be working out for you, there are a dozen to each of you who have been burned doing it. I have a videographer friend who borrowed money to do this and is negative right now and he's still trying to invest his way out of his slump. I'd prefer to sacrifice by placing money into a ROTH, 401K, SARSEP or other. Something that doesn't require me to borrow money.

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post #47 of 171 (permalink) Old 04-26-2007, 02:03 PM
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I think Germanstar is on the money, there. I would never borrow money on my home to finance a stock market investment. Just simply not smart when you consider the risks. While it may be working out for you, there are a dozen to each of you who have been burned doing it. I have a videographer friend who borrowed money to do this and is negative right now and he's still trying to invest his way out of his slump. I'd prefer to sacrifice by placing money into a ROTH, 401K, SARSEP or other. Something that doesn't require me to borrow money.
I have never borrowed on my home to finance other investments. All of my real estate mortgages finance day-to-day investment cash flow that I use to make other investments. I've been doing this for almost 30 years and it has been very profitable. There is virtually no danger of losing a penny the way it is invested and allocated among various assets. It is not rocket science, and I have never lost a moment of sleep when it comes to investments. In fact, I often wake up smiling! BTW: A substantial part of my net worth is in a ROTH, 403b, and other IRS-approved investment vehicles.

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post #48 of 171 (permalink) Old 04-26-2007, 02:26 PM
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Originally Posted by Jakarta Expat
'Father' of Securitized Mortgage Market: First Time in History Median Home Price is Likely to Decline



Lewis Ranieri, generally regarded as the "father" of the securitized mortgage market, told an audience at the Milken Institute Global Conference that, in 2007, for the first time in history the median home price in the United States is likely to decline.

He also added that there will be many technical problems in working out problem mortgages, He said the vast majority of problem loans are securitized and that, in the past, problem loans were in individual portfolios. This time around, because of securitization, there are many, many holders of the securities with an interest in a mortgage. This will mean there will be many more parties that will have to agree to everything. In addition, he added, there are more lawyers and accountants in the picture to complicate matters.

He used as an example from the past: when he restructured mortgages with homeowners, he would never send out a 1099 tax form. In current situations, he said, lawyers and accountants want him to send out 1099 tax forms to homeowners who have restructured their mortgages. He asked rhetorically, "You have just restructured a mortgage for people who haven't been able to make their former payments and now you want to send them a tax bill for restructuring?"

He further stated there will be a "political reaction" and he feared that bad legislation could create problems for the entire mortgage sector that are now just limited to the sub-prime area. He fears, for example, that any legislation creating a moratorium on foreclosures would have a chilling effect on the issuance of home mortgages throughout the industry.

EconomicPolicyMonitor.com: 'Father' of Securitized Mortgage Market: First Time in History Median Home Price is Likely to Decline
I like how they are using the term "securitized" to address the clumping of loans for resale on the open market. Kiddies, the term is HEDGE FUNDS. One of the reasons everyone is dancing around on tippietoes on this second tier mortgage issue is the multi Trillion dollar hedge fund market that had a tremendous number of second tier mortgage loans as security for the funds. If the loans start going south, that will domino a shit load of hedge fund accounts.

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post #49 of 171 (permalink) Old 04-26-2007, 02:38 PM
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Originally Posted by Jayhawk
The housing market has seen much worse times than these, and I have a hard time understanding why some here insist on making it sound worse than it is. I remember well the 1980s when interest rates were 15% and the entire Savings & Loan industry went down the toilet. Now those were scary times... But the economy just kept growing and the housing market came roaring back. This cycle has been repeated many times for many reasons over the years, and it will happen again and again long after the current housing market comes roaring back.

This time it's going to be bad... value of dollar is falling, wages declining, exporting of jobs... right now housing market is the only engine that drives economy. Once this starts to fall it's going to be bad. Also I'd rather buy a house at high interest because there's a lot of room for equity increase when rates fall. Plus low prices means low property tax.

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post #50 of 171 (permalink) Old 04-26-2007, 02:53 PM
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This time it's going to be bad... value of dollar is falling, wages declining, exporting of jobs... right now housing market is the only engine that drives economy. Once this starts to fall it's going to be bad. Also I'd rather buy a house at high interest because there's a lot of room for equity increase when rates fall. Plus low prices means low property tax.
I have to disagree: I think our current economy is the strongest we have seen in the past hundred years--maybe ever. And, frankly, the weak dollar has been a good thing. A big reason multinational companies are beating revenue estimates this quarter is the weaker U.S. dollar. And that is what has helped drive the DJA over 13,000! There are, of course, always some trade-offs, but overall things could not be much better than they are right now, IMO and that of most experts. And the idea that the "...housing market is the only engine that drives our economy" is just plain ridiculous. What is driving our economy are jobs (more people are employed today than at any time in the history of our nation), stock market (it is breaking trough one milestone after another making all of us richer), interest rates (at record lows in recent memory), etc... This time is going to be no different than all the others! Try to enjoy it!!

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