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The real problem : Swingers Discussion 113946
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TOPIC: The real problem
Created by: glendaleazcouple
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As seen on the internets...

"This is worse than a divorce; I've lost half of my assets and I've still got a wife! FPel "

Lakeside CA
 
 
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Let's see 6 months from now....

Glendale AZ
 
 
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Then maybe you need to start looking at the Standard & Poors Housing Index more closely. Our house in Denver has actually been appreciating since this past February when the index data reversed in that region. All regions are NOT the same. The data shows it.

Mountain Ranch CA
 
 
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Keep telling yourself that...

The country is absolutley packed full of "it's different here" locations that have found out that it is no different there.

Glendale AZ
 
 
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"Are these the same bankers and Realtors that, 2 years ago, were convinced prices would continue to climb at 10% a year.'

I know of absolutely NO ONE that thought the bubble wasn't about to burst 2 years ago. Everyone here was expecting it. You have to be an idiot for not seeing it coming out here in California. Luckily things have stopped sliding downwards and there are no foreclosures in our neighborhood to devalue it any further. Most of us in our area work in the entertainment industry which is pretty depression exempt. People still pay to go see a movie and want to escape.

Mountain Ranch CA
 
 
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"Your generalizations are wrong. Bankers and Realtors here don't agree with you. Since they have their pulse on the the day to day activities - I'll believe them."

Are these the same bankers and Realtors that, 2 years ago, were convinced prices would continue to climb at 10% a year.

Go to Amazon and look up "Why the Real Estate Boom Will Not Bust - And How You Can Profit from It: How to Build Wealth in Today's Expanding Real Estate Market" by David Lereah

Lereah was the chief economist for the National Associationof Realtors. His book, published by the NAR, was released 4 months before the peak of the boom.

The bankers were equally convinced the bubble would keep going, which is why they still had hundreds of billions in toxic waste on their books when the crash came.

They were wrong then, and they are wrong now.

They refeuse to admit one fundamental of the real estate market. Prices have to be affordable. That means we'll be lucky to only fall to 2001 prices. My guess is that we'll actually go much lower than that do to massive over building and truely ugly recession that is just getting started.

Again, over the last 15 years: incomes up 20% CPI inflation up 50% Per household debt up 180% non-financial sector business debt up 266%.

Think about those numbers for a few minutes. Consumers have been spending 110% of their income. Just to stop getting further into debt would be an immediate 10-15% drop in GDP, meaning the worst recession since the Great Depression. As that revererates through the economy, it will seem very much like the great depression.

Then think about $5 trillion in losses on $10 trillion of defaults out of the $$25 trillion in consumer and business debt.

And, before you start thinking I'm a nut that thinks EVERY loan is going to go bad, wrong. My guess of $10 trillion in defaults is barely over half of the new debt added in the last 15 years. Total business and consumer debt 15 years ago was $7 trillion, and now it is $25 trillion.

The SUM of all federal budget deficits since Reagan took office 28 years ago is only $5 trillion.

These are the exact opposite of anything close to resembling "normal times".

As everyone on Wall Street and D.C. were saying for the last 2 weeks... we're on the brink of collapse. $700 billion may delay the crash a few months, but will no way prevent what is coming.

Glendale AZ
 
 
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Your generalizations are wrong. Bankers and Realtors here don't agree with you. Since they have their pulse on the the day to day activities - I'll believe them. There are banks here that will lend with 10% down - I just don't want to pay the slight increase in interest to do it. Granted, on a 30 year fixed I could take the slight increase and then 10 years or so when the rates are eventually a bit better refinance, but I don't want to go that route unless I'm forced.

Mountain Ranch CA
 
 
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The real estate collapse started with sub-prime, so started in the outlying areas. But the credit crunch has spread, as you are discovering, to all areas of the credit market. Because of this, the collapse is marching across the metro areas from exhurbs into desirable areas.

20% down is not enough.

The $700 billion will do NOTHING to free up real estate loans. It will be focused on ensuring the few remaining brokerages are able to roll over the short-term loans needed to remain solvent.

This is about preventing money market and commercial paper collapse. It is not about ensuring someone can build their dream retirement home in a resort area with less than 20% down.

Glendale AZ
 
 
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"A construction loan in Los Angeles???? You should be required to put 30-40% down. That market is going to be crashing long and hard for a long time to come. "

No it isn't. It depends on where you live in Los Angeles. It's only the outlying communities that have overbuilt cheap homes that are dropping like a rock. In established sought after neighborhoods around Santa Monica we have only lost 9% of the value of our home in the past year. Thats nothing comparatively speaking. Values have actually stabilized and have held for the past 3 months according to our Realtor. There are no homes for sale within several blocks of our home. There hasn't been any for sale since late last year. However, thats not where we are building our new retirement home. It's up in the sierras near a ski resort sitting on the edge of national forest land. Values have also stabilized up there too and labor is cheap right now.

Mountain Ranch CA
 
 
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"We are trying to get a construction loan and right now everyone wants 20% down. WTF! Thats over $90K in cash we would have to put down. NO flippin way! 10% down is reasonable but not 20% when you have great credit. "

A construction loan in Los Angeles???? You should be required to put 30-40% down. That market is going to be crashing long and hard for a long time to come.

Glendale AZ
 
 
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TOPIC: The real problem