1 Is it possible forgoing the "free" money, waiting a bit, getting a lower rate and a lower price has a better payoff than taking the freebie?


It had better be, or I'm going to be wicked pissed off I've been working my migrant job saving up a down payment.

2 "It's a trap!"

Could be worse. Could've been a TARP.

3 Dis is youst like catch for clunnkers. De same ting happens dere. Dis iees same gummint bullsit.

4 Is it possible forgoing the "free" money, waiting a bit, getting a lower rate and a lower price has a better payoff than taking the freebie?

Why yes,  yes it is.   It's sort of like the drop in auto sales after Cash for Clunkers ended.    Why anyone would be surprised,  I do not know.

5 Why I cannot be frist, dis once?

6
Crater you mofo! 

I've been waiting forever in PBC.. my wife is eating my friggin head.  My parents are bothering me.  Last night, the stain on the carpet said "IT'S TIME!!! Buy! Buy! Buy!".

I know it's still going down.. but I cannot hold on for much longer.

7

I am so glad I'm too broke to make any major purchases.

8
Remember Geithner's hair-brained scheme for toxic assets that seems to have gone down the ol' memory hole?

9 I did not see this coming.

10

I don't think this a quite as bad as it looks. Last month the applications were up about 9% with everyone getting in at the last minute on the Obama Bucks. This level brings us back to March levels which were still pretty good.

If another million homes are dumped on the market it will hurt but I still believe that homes will increase in value this year.

11 They are surprised because the concept of cause and effect  is beyond their intellect.

12 Same thing happened with Cash for Clunkers: all they did was move existing demand around in response to incentives; they didn't do much (if anything) to increase overall demand because the economy isn't driving new demand. There's still a lot of pain yet to be felt in the real-estate sector. Lots of banks are holding off foreclosure (in essence, letting those in default continue to live in the house rent-free) to keep bad loans off their books for awhile longer. Houses in foreclosure are being reclassed to other asset categories. And owners of "underwater" mortgages are still holding out (completely unrealistic) hopes of prices spiking back up so they can sell without taking a huge loss. Ain't gonna happen. Commercial real-estate is another turd stinking up the balance-sheets of lots of management companies and banks, and many of these losses also have yet to be realized. But this can't go on forever, what what can't go on forever, won't. At some point the losses will have to be realized -- you can't ignore them for much longer. Investors are going to demand action one way or another. Forget the stock market for the time being -- it's running around like a heat-crazed dog. Look at the bond markets, particularly what's going on with LIBOR and the TED spread. Credit is tightening again, maybe as the lead-up to the "sovereign default" phase of the economic crisis.

13 I still believe that homes will increase in value this year.

Hyperinflation will make everyone a real estate billionaire.

14 I did not see this coming. Nod did I.

15 The 9.5% Plunge is Bush's fault. We can prove with housing market data from the Obama Administration.

16 Last night, the stain on the carpet said "IT'S TIME!!! Buy! Buy! Buy!". Um, do fabric stains frequently give you financial advice? And if so, do you take it?

17 Wow, this is a massive decrease in demand.

I have family who bought a year ago without the credit (didn't qualify).

That sucks for them, because they lose the home value and they didn't get the credit.

I used the credit, and I realize the home will lose value now that the credit is over.  It's a shame, but I needed a house and didn't have a choice.  It's more my home than a retirement account, but I realize this aspect is important.

I got a low interest rate.  It's been around 5 % for quite a while, right?  If it goes low enough, I guess I'll refi, but jeez.  I don't think the effect will be too severe.  People were rushing to get the credit, and of course driving up the price of homes, but in a few months things should settle.  We have a massive glut of foreclosure sales.  I have no idea what the solution to that is.  Perhaps these banks should make a company that rents them out and services them, because it's going to be hell to sell these homes.

18 Hyperinflation will make everyone a real estate billionaire.

Zimbabwe here we come.

19 Hyperinflation will make everyone a real estate billionaire.

Except us stupid chumps trying to amass a down payment.  Sigh.

20 I am trading two gold crown molars for a house in the Hamptons. Who fucking knew?

21 In my neck of the woods, New York/New Jersey area, the housing market would have to collapse for me to get in. When the average 1 Family home in a descent neighborhood goes for about $350-$450K and a down payment of 35-40K would get me a mortgage of around $1800.00 a month. Not doable for me.

22 Monty - your full hope and joy this fine spring morning.

23 Lots of banks are holding off foreclosure (in essence, letting those in default continue to live in the house rent-free) to keep bad loans off their books for awhile longer.

LOTS of that going on in my development.  Easily 30% of the joints here are in deep trouble with their mortgages and stopped paying long ago.  Actual evictions are still scarce, but there have been people obviously working for some bank poking around to try and determine if a joint in trouble is occupied.

I'm guessing they're going to go after the walk-away and midnight move-outs first since there's no backlash in moving on those.

24 "If another million homes are dumped on the market it will hurt but I still believe that homes will increase in value this year."

Haha, another fucked buyer.  Got something against houses becoming affordable again?

25 McLovin,

I live in NY, we bought a townhouse in a complex on SI for less 300k (back in 2006). There are some very good deals on SI, especially in the townhouse complexes. Just suggestin'.

26 I wonder how all the previous buyers will feel a couple of months from now who took the $8K giveaway?

Depends where they bought. Less-inflated and less-foreclosed markets were at or near their foreseeable bottoms during the rebate's eligibility period, and rates were low, so people with decent credit who bought cheap places where places are cheap, and bought with plans to stay there, made out swell.

Everyone else is chumps.

27 Got something against houses becoming affordable again?

I can set you up with a fancy double wide SubZero fridge box cheap, and we'll even paint the cardboard so it doesn't fall apart too quick.

28 Thanks Penfold. I've been looking on SI near the Verrazano. I've seen nothing for less than 400K. Still looking.

29 If the banks don't get those home occupied, sold, etc. - they risk the Government doing something they won't like. Forced low income/section 8 rentals, condemnation, uninhabited property tax riders, etc.

30 heatherradish,

It indeed sucks to be you.

It's so easy to be irresponsible, and at the end of the day, that punishes the responsible.  Your taxes bail out the bad mortgages.  Hell, they probably gave $8k to help start lots more.

Maybe a USDA loan, if you can live in such an area, and a buying now as the market softens before inflation sets in? 

31 Monty - your full hope and joy this fine spring morning. The words of the Preacher, the son of David, king in Jerusalem. Vanity of vanities, saith the Preacher, vanity of vanities; all is vanity. What profit hath a man of all his labour which he taketh under the sun? One generation passeth away, and another generation cometh: but the earth abideth for ever.

32 Cash for clunkers, like the housing tax credit, are manipulated schemes to make banks look healthy. That was the real intent.

Money creation, via debt, is the only way banks can repair balance sheets and enable the 9-1 fractional banking that makes them look healthy. That they booked all this new wealth and still can't lend is indicative of a banking sector still woefully fucked and a gummint running out of tricks.

33 McLovin,

Have tried the South Shore at all, that is where a number of complexes are located, plus, close to Jersey for cheaper stuff. I live off of Rte 440, and my commute is about 50 minutes on an average day, but i work in downtown Manhattan.

34 Anyone try getting a small business LOC recently?

35 This is really bad timing for the democrats.

Perhaps they will try to extend everything yet again to go beyond the next election, or perhaps they are resigned to losing power and want the economy to implode so they can blame the GOP.  Or perhaps they really thought this would somehow improve the economy in a lasting way?

The latter is the scariest possibility.

36

Barry: This information is a distraction, a diversion. Epantstipate yourselves! Epantstipate yourselves!!!!

37 I took the credit.  I figured I was paying for it so I might as well take it.  It did leave me feeling a little bit dirty, though.

38

And owners of "underwater" mortgages are still holding out (completely unrealistic) hopes of prices spiking back up so they can sell without taking a huge loss. Ain't gonna happen.

Monty: That would be true for investment property, but most underwater mortagees are toughing it out because they are underwater in their own homes. After all, where else are they going to go? Assuming the Obamunists don't ruin the economy further and the mortagees don't lose their jobs, they will stay put and soldier on.

39 it will get much worse, FANNIE reported a 22% increase in reo inventory, yep 22%. Uncle Sam will be the biggest landlord in the country by the time they get around to addressing the GSEs,

 thats a feature not a bug

40 Any word on the default rate for HELOCs?

41

Hyperinflation will make everyone a real estate billionaire.

Except us stupid chumps trying to amass a down payment.  Sigh.

Gold, Heather, gold.

42 mim - so at some point the USG is going to have to have a firesale or will they redistribute those assets to Soros?

43

Any word on the default rate for HELOCs?

Wouldn't that trigger a foreclosure since that is tied to the home as well. See also second mortgages.

44 The banks letting people live in the homes instead of forclosing doesn't help their performing loan status. They still have to show the loans non performing after 60 days and in default after 90 days. They can forclose or not it's up to them unless a bank regulator is taking an interest in them. They are still listed as a bad loan on the banks balance sheet though.

45 And in other news - how about that tax deficit, eh??? http://bit.ly/cU6IDD Yeah, I'm sure we can deficit spend 13% of GDP, forever. Right? Rock solid recovery we got here. B+, at least. Solid.

46 37

Barry: This information is a distraction, a diversion. Epantstipate yourselves! Epantstipate yourselves!!!!

Posted by: TheQuietMan at May 12, 2010 03:18 PM (1Jaio)

He needs to leave his pants on for a change, thank you very much.

47 Ha ha....this didn't affect ME AT ALL!!! neener neener!

48

The banks letting people live in the homes instead of forclosing doesn't help their performing loan status. They still have to show the loans non performing after 60 days and in default after 90 days. They can forclose or not it's up to them unless a bank regulator is taking an interest in them.

I have neighbors like this. I think the banks are deciding that (1) It is easier to try to work with the borrower because foreclosure is such a pain in the ass, and / or (2) they are hoping for the HAMP program to bail them out.

49 Didn't take gummint money. Fully expect to recoup via favorable rates and a vast supply of man caves with plunging prices.

Trust this advice. Whatever gummint is trying to get you to do, do the opposite. You will be victorious. Standing by this philosophy, I cashed a 401k knowing full well that gummint is going to try and raid this last bastion of wealth, 13 trillion, before its over. The 10% penalty is going to look awful cheap in the not so distant future.

50 Any word on the default rate for HELOCs?

Posted by: Jean at May 12, 2010 03:20 PM (PjevJ)

The only thing I have heard as that the HELOC lenders losing out bigtime. The only way they can get their money if you stop paying them is to forclose on your HELOC and take a first position regarding your mortgage. In the case of an underwater mortgage they don't really want to do that because they have to pay off the first which could cost them more than the HELOC is worth.

51 I'm putting in a plug for Drhousingbubble.com. He's good...he's very good.

52 I wish I knew whether to sell my Cisco stock now or wait and see what happens after the close when they announce.

53 robtr - wow, more free money

54

Anyone try getting a small business LOC recently?

hahahahaha you keed, no?

55 Garcia tora bora. Muybueno. Bookmarked it.

56

 robtr - wow, more free money

yeah maybe, they could also just sue you but they run the risk of that pushing you over the edge and going bk which puts them back in their original delimma.

57 Once the tax credit is removed, the housing market will come booming back and the Democrats will take 1500 seats in the House, 400 seats in the Senate, and My President will be proclaimed leader for life.

Everyone knows that tax hikes boost the economy. What will you rethuglikkkans do when the Dow goes to 100,000 points, attack poor Mexicans?

58 56 Garcia tora bora. Muybueno. Bookmarked it.

Posted by: Lunatic, What Comes From the Fringe at May 12, 2010 03:31 PM (uFdnM)

It's my lunch hour...gotta go Lunatic. But rest assured there are MANY of us out here. We need a leader. Nice to meet you!

59 Assuming the Obamunists don't ruin the economy further and the mortagees don't lose their jobs, they will stay put and soldier on. This presumes that they can "soldier on". If they're out of work or working reduced hours, "soldiering on" may not be an option. For many who are in reduced circumstances, moving to a cheaper premises is a necessity because the mortgage payment is simply beyond their means even with a reduction. (This is exactly the case for many beneficiaries of "liar loans".) These folks are natural renters who were deluded into thinking they were buyers, and are now saddled with a vastly-larger liability than they can support -- now, or in the future. The only way a lot of these people will be able to repair their personal balance-sheets is to move to cheaper lodgings (rented lodgings, more often than not). Which is going to lead to a huge glut of unoccupied single-family homes in lots of overcapacity areas like SoCal, Arizona, and Florida. Expect a lot of "blight" in years ahead as these houses slowly rot into the ground. Think Detroit, only on a larger scale. Depreciation will help, but not solve, the problem: areas with high repo rates also have high unemployment rates. It won't help to buy a cheap house if you can't find job nearby.

60 Here are some questions I have:

With all of the vacant homes,  why is Habitat for Humanity still building houses rather than buying them on the market?  (Three built in my small town near Indianapolis this spring.)

How many of these foreclosures or near-foreclosure homes were owned by illegal aliens who have gone back to Mexico?

How many of these properties are going to be purchased by foreign firms from countries like China?

My house is,  I am sure,  underwater.  Since we aren't going anywhere I don't worry about it,  since there is nothing I can do.

61 How many of these properties are going to be purchased by foreign firms from countries like China? Probably none. Why would they want a rapidly-depreciating asset like that? Even commercial real-estate stinks if you're a foreign investor these days. My house is, I am sure, underwater. Since we aren't going anywhere I don't worry about it, since there is nothing I can do. Unless you're planning on selling sometime in the next five years, don't worry about it. If you paid a somewhat-sane amount for yourself, and you don't live in Detroit or one of the "bubble zones", the value will probably bounce back up to a reasonable level. Real-estate markets are local, and when the economy ticks back up, so will property values. (And if the economy doesn't tick back up we'll all have bigger fish to fry anyway.)

62

Is it possible forgoing the "free" money, waiting a bit, getting a lower rate and a lower price has a better payoff than taking the freebie? Yea, it is.

It depends. I took advantage of the existing home buyer credit and unloaded the old house before the government freeibies expired becasue I knew that once the party ended, it would be nearly impossible to unload my old place.

So ... ditched the old place. Got a 3yr old house at below market prices in a lovely neighborhood and terrific school system on a 20% down, 5% interest 30yr mortgage. Uncle Sugar will send me a check for $6500 in a couple of weeks.

I'll make my payments weekly, which will shave about 7 yrs off my loan and save me around $50,000 in interest payments.

I'm pretty happy with my decision.

I don't think new buyers should wait too long for prices to drop further. They will, but interest rates are going up, up, up very soon. They may be higher than 6% on a 30yr mortgage by years' end.

63 Is Habitat for Humanity subsidized by the government?  I notice they had their logo plastered to a census ad telling me how I should support the count because of the money money money (rather than the more reasonable reasons).

They really should just buy a crummy house from a bank.  I'm sure some deal could be reached.  Have you ever seen a Habitat for Humanity house 5 years after it's built?  It's a sad thing to help on one of those, only to come back in a few years to admire your house and realize it's not been taken care of and probably should be condemned.

64

With all of the vacant homes,  why is Habitat for Humanity still building houses rather than buying them on the market?  (Three built in my small town near Indianapolis this spring.)

Habitat takes a bunch of their donations in the form of free labor, materials and land as opposed to cash so they are able to build a new home where they might not be able to purchase an existing one.

 

65 "How many of these foreclosures or near-foreclosure homes were owned by illegal aliens who have gone back to Mexico?"

HMMMMMMMMMMMM

66 Jeebus Ms Marple, you ask good questions. I can't put you any knowledge on account of I don't even know where to find it.

Just trust common sense. Whatever gummint is trying to get you to do, do the opposite. That is completely safe and loving advice. And don't sell ur gold teeth yet. Hang onto them.

67

It was a payoff to homebuilders to help them, sell their bloated inventory, and to help them transfer some of their losses to the American taxpayer.

Privatize profits, socialize losses.

68

These folks are natural renters who were deluded into thinking they were buyers, and are now saddled with a vastly-larger liability than they can support -- now, or in the future.

The single mom who bought my old house falls into this category.

She put 3% down on a FHA loan. No one who can't afford to put a larger down payment than that has any business buying  a home.

We left the place in great shape (new roof, new flooring, rebuilt deck ...etc), but it's a 35 year old house that needs a lot of maintenance and upkeep.

Hell, I used to take vacation just to get the damned deck stained when it needed it.

No way will she be able to keep up with it. the place is going to fall apart. I went by there the other day and she still hasn't moved in, even though she has posession. The lawn is now 3 weeks past due for a mowing and the weeds are already creeping into the flower beds.

Oh, well. Not my problem.

I'm glad that the credit allowed me to unload my house, but we sure aren't doing these kinds of people any favors. Lower income single moms, as a general rule, should NOT be encouraged to buy homes.

 

 

69 Privatize profits, socialize losses.

Thread winner.

70 I took the credit, now I'm trying like hell to sell my condo. Someone buy my effing condo! Please!

71

I'm a single, one-income, no-child renter in an area with an insane tax burden. 

I massively upped my 401K contribution to avoid looking like I have income because of the massive onslaught of taxes I know are coming.  But now they're going to come for my 401K.

I have junk furniture, I'm sleeping on a 20 year old mattress and have no TV. I've been putting off these purchases because I'm financially responsible.  But likely the VAT will go into effect and I'll be paying 20% more for all this stuff.

I've been mulling over an elective operation since I was a teenager.  Now Obamacare is going to be in place, and I'm feeling pressure to get it done because I don't trust our new socialized government to cover the procedure.  If they don't I might be be stuck with an ugly (but not life-threatening) deformity for the rest of my life.

I've been saving up for a down payment, but the price of real estate hasn't even budged where I live so home ownership is a pipe dream.

I don't know what to do.

Right now I've decided to go with the furniture and the surgery as sure bets.

72 Lower income single moms, as a general rule, should NOT be encouraged to buy homes. Sure, but that goes against every cultural impulse American society has had since the end of World War II. The "home ownership" has been part of the fabled American Dream for so long that we find it hard to cast off, even when the results are as patently harmful as we now see them to be. The whole theory of government-subsidized home-ownership was based on the faulty social-engineering principle that owning a home fostered more stability and personal responsibility in the owner. Well...not so much. What it really made people do was treat their home like an investment rather than a roof over their heads, and to cash out when the market was up. But sixty years of being told that we deserve our own house has bred an entire country full of people who will get soggy and hard to light when someone tells them they can't afford to buy a house.

73 Semi-OT, but the April budget deficit was a record for the month as the snapdragon recovery roars ahead.

74 Screw the furniture, invest in - health, real education, transportable tangible assets - in that order. Buy property way-the-hell out, call your rental (you should move to make this work) a work related expense and write it off (prepare to get audited).

75 I don't care how low the prices and the interest rates.  If, like 99% of us, you depend upon your job to make house payments, how can you say with confidence that your job will be there a year from now?

76

I don't know what to do.

Right now I've decided to go with the furniture and the surgery as sure bets.

Posted by: La Mauvaise New Yorkaise at May 12, 2010 04:02 PM (8uZ8A)

Hookers are kind of fun. Kidding, I would take care of your health first. A 401 K is a better write off than a house so if you are contributing all you can to it and it is not maxed out than I wouldn't worry about a house.

77 I can haz the mortgage!

The whole theory of government-subsidized home-ownership was based on the faulty social-engineering principle that owning a home fostered more stability and personal responsibility in the owner. Well...not so much. What it really made people do was treat their home like an investment rather than a roof over their heads, and to cash out when the market was up.

Government subsidized housing makes home owners treat their home like its a bank.  Can you blame them though?  The banks treat the government like its a house they can leverage into a bank.

It seems that the first one to leverage now controls the biggest guns.

78 Doesn't our financial system look like the dumbest bankers in the room are actually the smartest ones?

It appears if the bank that finds the worst people to lend to is actually quite prescient in securing trust where none exists.

I wonder who is loaning to Africa right now.

79

Hookers are kind of fun.

The male hookers in my neck of the woods are gay.  But thanks for that suggestion. 

80 Standing by this philosophy, I cashed a 401k knowing full well that gummint is going to try and raid this last bastion of wealth, 13 trillion, before its over. The 10% penalty is going to look awful cheap in the not so distant future.

What are you holding though?  A bunch of US Dollars?

I told my parents that my guess is Uncle Sam is going to seize 401ks and IRAs in the next five years after they've inflated the Dow to 12000.

81 Early this year I had a meeting with the manager of my bank to open a savings account for my grandchildren and to park some money in a 401K account to lower our taxes. (A pure CD type of account,  no stocks).

He started talking about all of my options and I told him most of my friends thought that Obama was going to seize 401K accounts.   He looked at me like I was insane.

Now,  when I stop by the bank he is very respectful to me.  He obviously thinks I am some sort of financial insider,  which is hilarious.   I was simply predicting what the ladies of the class of 1966 luncheon thought,  and we were right!  we always think of what the worst case scenario is,  and Obama does it every damn time.

82 In my previous post,  I should have said an IRA account that I opened.  The 401K is in my husband's company,  which is (ta-da) GOLD mining.

83 Regarding Habitat for Humanity,  it seems to me that sweat equity could be worked out on existing homes with repairs,  painting,   maybe-re-roofing,  and landscaping.

Of course,  it doesn't make for as good a photo op,  but still,  it seems wasteful to me.

84 @6

Wait, IreneFingIrene is a dude? That puts a whole new light on you, IreneFingIrene.

85 Miss Marple, indeed, that would be a terrible photo op.

Because we would clearly see what it's like not to take care of a home.  The nitty gritty of ripping out a few walls and fixing this or that, and the certainty that a lot of the homes they do this to would need it again soon, is just not as sexy as building a house outside with fresh lumber.

Now, I think Habitat is an awesome charity and a great place to spend some time helping your fellow man.  I have tons of respect for people who get off their ass to improve their situation, too. I have no problem with it.

But there's a lot of showbiz involved with everything these days.