Please eat some brain food and make a coherent post.
I wasn't paying attention to the rest of the baiting but this line is funny.
Please eat some brain food and make a coherent post.
I wasn't paying attention to the rest of the baiting but this line is funny.
Me neither. I think the original poster was referring to his personal experience and he was working out bad mortgages. Things are bad but the "badness" comes form the lack of confidence in the financial system. Depositors are withdrawing their money. Pension funds are not buying mortgage-backed securities. Banks are afraid to make new bad loans. They have been lied to before and they are gunshy.
It is this "confidence game" that is the fundamental problem.
So why is the banking sector rebounding? This makes no sense to me.
Glucose. The brain requires glucose == pie with ice cream.That did make me wonder. What really constitutes as brain food. Should he be eating proteins? Or shall he have a nice piece of pie with some ice cream.
Glucose. The brain requires glucose == pie with ice cream.
Audrey
I agree, and I was speaking from my personal experience with challenging loan to value issues. 2001-late 2007 lenders could work through bad loans. For example, help the borrower improve their credit or just wait 6 months for the property value go up. With decreasing borrower equity, it is extremely hard to fix loans suspended or returned by investors.
This downturn gained more and more steam as home values dropped. Not only were lenders loan portfolios performing poorly, investors drastically curtailed their appetite for these loans. Lenders without sufficient cash to fund their portfolios went belly up.
Who is to blame:
Many Lenders
Many Borrowers
Many Investors
Greenspan
Bernanke
Better yet, why waste your time blaming anyone and learn from the experience. When something is too good to be true, usually it is. For those that purchased their home 10 years ago, they have done quite well. This market correction was well overdue.
As for why the financial sector is rebounding, investors are forward looking and are anticipating the bottom. I don't think we are near a bottom, but I also thought the market would peak in 2003. Hard to say where the market is going, even with historical home value data showing homes are still over valued.
A couple things... when you talk about financials rebounding, it is forward looking. Them crashing was too... look at the writedowns (lack thereof) when the financials started going down the tubes... they were all having ridiculously high P/E (ttm though), and were looking forward to the writedowns and mark to markets that were inevitable. The stock market looks in advance, so that right now the market may be predicting how they'll recover in 12, 18 or 60 months... I don't know.
Also, I understand the gravity and severity of the whole subprime / Alt-A loans, but I feel you overstate the crisis too much. Like CFB said, to be 40% under you would need to buy RIGHT at the top with 0% down in the highest bubble areas. Most of the areas in the country have dropped less than 10%, and when you think of the number of people who have loans older than 3 years ("most" of the people... getting back to that word), the people who are underwater is not a large(it is a significant) segment of the population. The people who will default on their loans will bring other property values down, which may have a slight self-feeding cycle, but the extent to which you think that it will crash I feel is slightly overstated.
P.S. I still don't think there will be a big real estate "recovery" for 2 years (but then again real estate is local, so it may be very different for different people)
P.P.S. Heartfelt apology to CFB for quoting someone on the iggy list.
With the caveat that plural of anecdote is not data, let me share one.
My 29 year old niece and her husband recently bought a house in Riverside, CA which is pretty much ground zero for the bubble bursting and foreclosures. It took them almost 4 months because twice they were outbid on houses in foreclosure. It is true that the houses that had sold for 500-600K were now being listed at 1/2 that price but the bids were over that.
On there 3rd attempt they were successful. The house is 4 Bdr 2 bath 15 years old and just about 2,000 ft. It is in a nice neighbor with only a few foreclosures in the neighborhood. It within walking distance for the oldest of their 3 kids to walk to elementary school and good schools by Riverside standards.
They put 20% down (having previously sold a house in Arrowhead near the peak) fixed 30 mortgage in the 5.75% range. So here is the question for you real estate experts, what is their household income?
CFB owns property in the Stockton area and I understand the pain. Many of the people that work for me bought homes in this area in 2006-2007 are 40% underwater.
Ooh I missed that part. Man, there were a lot of good opportunities...darned ignore list.
I missed the part where I own property in the stockton area. Stockton is about 2.5 hours drive away from where I live. Is that still considered "in the stockton area"?
I think what we had here is someone who got THEMSELVES in 40% underwater ltv, and probably talked all their employees into making the same bad decision. So to make that situation more palatable, its best to believe that MANY people are in the same situation.
Stockton and Modesto have been hit by a triple whammy: a general softening in housing overall, the popping of the bubble in California and the devaluation of real estate in the exurbs where long, expensive commutes are required for most decent jobs.Ooh I missed that part. Man, there were a lot of good opportunities...darned ignore list.
I missed the part where I own property in the stockton area. Stockton is about 2.5 hours drive away from where I live. Is that still considered "in the stockton area"?
I think you guys are pessimistic because you live in areas that have WAY overpriced real estate. Where I live, housing sales are 11% down fron last year, but the area had an overall appreciation of 1%. What we really need is the gov to quit bailing out everyone who makes bad financial decisions..........
Stockton and Modesto have been hit by a triple whammy: a general softening in housing overall, the popping of the bubble in California and the devaluation of real estate in the exurbs where long, expensive commutes are required for most decent jobs.
When gas was cheap people flocked there while holding jobs in Silicon Valley or San Francisco, able to buy a house for half the price (or less) of a house in the Bay Area proper. Now that gas prices have conspired to make the overall cost of living in these far-flung areas less attractive, look out below...
Stockton and Modesto have been hit by a triple whammy: a general softening in housing overall, the popping of the bubble in California and the devaluation of real estate in the exurbs where long, expensive commutes are required for most decent jobs.
When gas was cheap people flocked there while holding jobs in Silicon Valley or San Francisco, able to buy a house for half the price (or less) of a house in the Bay Area proper. Now that gas prices have conspired to make the overall cost of living in these far-flung areas less attractive, look out below...
They put 20% down (having previously sold a house in Arrowhead near the peak) fixed 30 mortgage in the 5.75% range.
They put 20% down (having previously sold a house in Arrowhead near the peak) fixed 30 mortgage in the 5.75% range. So here is the question for you real estate experts, what is their household income?