<p>I think that the media has vastly overstated the tumult in the housing market (slow news weeks, I guess), at least with respect to the NYC suburbs. </p>
<p>As someone who is currently hunting for a house right now (in the NYC suburbs), I know that there are mortgages available at very reasonable interest rates (below 6.75% with no points) for those with good credit, and who are looking for 30-year fixed mortgages after putting (gasp!) 20% down. </p>
<p>While I realize that 20% of an incredibly appreciated home price is a lot, isn’t that they way that the mortgage market always worked until recently? Perhaps I’ve missed some step along the way, but I was always under the impression that to buy a house, you saved your money, and then put 20% down or you had to purchase mortgage insurance (obviously all of these variable rate and no-money-down no-documentation loans changed all of that). Even when refinancing, you couldn’t finance more than 80% of the appraised value of your home. Perhaps we are simply moving back to a more conservative mortgage market. In my opinion, that may be for the best.</p>
<p>As far as housing sales go, in the last couple of months, I have seen well priced homes that we have liked get scooped up by buyers after only a few days on the market, and I have seen homes that have repeatedly had their prices lowered. At some point, the price of these homes will be low enough that that home, too, will be scooped up, and I have seen this happen again and again. There are some great deals to be had in the housing market right now, so those with good credit and some money saved may find some great opportunities, especially if “moving up” from that starter home to the dream house (a bigger, more expensive house will lose a lot more value in a 10% price drop environment than a smaller, less expensive home).</p>
<p>While I agree that some people overextended because they wanted more than they could afford, here in Southern California where 1200 square feet, 60’s era stucco boxes were priced at 450000 in an LA exurb is a real, painful, affordability problem for the working/middle class, not a case of wanting too much IMHO. Prices are down 20-30% from peak already. Which brings its own pain, but in the long run affordable housing will be a good thing.</p>
<h2>Doug Krizner: It was the summer of subprime sludge, a huge mess created the mortgage market by the collapse of risky loans. The consequence has made getting a mortgage more difficult and expensive. That’s especially true here in LA, as Stacey Vanek-Smith reports. </h2>
<p>Stacey Vanek-Smith: Gone are the days when you could land a home loan with less-than-sterling credit and no money down. Mortgage lenders and big banks have gotten very finicky in the last few weeks. </p>
<p>Mitch Ohlbaum is a mortgage broker in Los Angeles. He says if you want to get a decent interest rate now, you’d better have great credit and be prepared to put down a big chunk of change. </p>
<p>Mitch Ohlbaum: For now, the standard is really going to be 10 percent if you want to buy something. Which in the real world’s not so bad, it’s just a little bit more difficult where we live, where everything’s a million dollars. </p>
<p>Ohlbaum says 10 percent down is unrealistic for many of his middle-class and working-class clients, even those with steady incomes and good credit. The result? They can’t get the loans they need to buy in L.A. where the median home price is well above a half-million dollars."</p>
<p>If people can’t come up with the 10% downpayment, they can’t afford the homes and they shouldn’t buy. Why are people entitled to buy something they can’t afford?</p>
<p>Five years after we bought our current home it had doubled in value. If we’d been starting from scratch (without another inflated house to sell) we’d have been out of luck. Dh’s salary didn’t double in that period. I do feel sorry for buyer’s in this market, but I also don’t understand people who think that zero percent down and ARMs with balloon payments is a risk worth taking. We’ve always put 20% down to avoid the private mortgage insurance.</p>
<p>I have no problem with people buying McMansions if they can afford it. Just don’t ask me to subsidize it! LOL</p>
<p>I saw a Househunters episode recently where a young couple was purchasing a home with an interest-only loan and paying more than my monthly mortgage. That’s insane and it should not be allowed by lending regulations. I thought there were guidelines that had to be followed?</p>
<p>The problem with housing and the underlying cause of the bubble is the preferential tax treatment of money invested in the housing market. Things are going to get much worse before they get better.</p>
<p>America has lost the will to sustain itself. What happens to you suburban exurban McMansion if the price of gasoline suddenly goes to $9 a gallon? You are living 30 miles from your job with 2 SUVs, a Dodge Caravan, one kid in college and another in HS. You don’t have any public transportation in your pick a direction suburb because that brings the wrong element out from the city - which by the way made it necessary for you eldest child yo attend very liberal very ivy covered Old U so he/she could actually see a carefully vetted pick the minority of your choice.</p>
<p>You hate blood for oil, heartless conservatives, and subsidizing the rich unless of course it is the federal flood insurance on your beach house, the tax free endowment al Old Ivy Covered U, the huge preferential tax treatment of your mortgage, or the illegal non tax-paying alien putting a new roof on your house or cutting you grass.</p>
<p>Of course you are certain civiliztion as you know it cannot collapse in the twinkling of an eye because surely there will be someone out there willing to protect you and yours from things that go bump in the night. You yourself don’t actually believe in anything other than your unalienable right to live comfortably and have others do the dirty work, and of course your own moral superiority. But who could doubt it? It has always been this way. It will always be this way.</p>
<p>The tax breaks for real estate have been around for many booms and busts. To blame them today is like blaming the sunshine or rain. What drove the market was cheap financing and the price gains attracted more investment–just like in the stock market.</p>
<p>The tax breaks for eal estate have gotten juicier and jucier over the years, especially the capital gains treatment. Can I buy stocks or bonds on credit and write the interest off? Can I sell securities without paying capital gains? Is there a Fannie Mae or Freddie Mac for day traders?</p>
<p>As I said, the writeoff of interest on home loans (with limits) has been around as long as I can remember. The capital gains treatment was eased some but you always could avoid the tax if you bought another home as most people do. If you are a straight home investor (landlord) the benefits are much more limited. The have very low income limits for deducting any operating losses. It has been that way for at least 50 years.</p>
<p>You need Adobe or Excel to open the files. Numbers are current through July 2007.</p>
<p>The regional differences are striking.</p>
<p>I wondered what adjustment you would need to make on the median current price to make it as affordable (in terms of monthly income-20%) as it was back in 2004. Back-of-the-envelope answer: a 16% drop. Actually, prices would need to be a little less than they were then even though median income has gone up over that time, due to the increase in interest rates.</p>
<p>I find the comment about the above article interesting.</p>
<p>“Congress needs to quickly pass those trade bills so we can bring back some jobs that actually produce something. The selling of paper investments and being a services based economy for the world might have worked the last 20 years but going forwar…”</p>
<p>Gee I don’t know why wages wouldn’t be keeping up when there are 20 million illegal aliens in the country. Now of course half the truckers in the country are going to lose their jobs with the Mexican truckers now allowed to haul their beat up trucks all the way to the Canadian border.</p>