Real Estate Crash thread

**Benny Profane** · 05-26-2006, 12:30 AM

Well, I'm not allowed to delete this post, but, I can say, go fuck yourselves, everybody!

**ak_powder_monkey** · 05-26-2006, 03:56 AM

sweet soon I'll be able to buy some land and start my way to baronhood

Squatch · 05-26-2006, 04:42 AM

Originally Posted by ak_powder_monkey

sweet soon I'll be able to buy some land and start my way to baronhood

bwah!

although i think you need serfs.

**skiing-in-jackson** · 05-26-2006, 07:11 AM

But Alan Greenspan is not the MAN any more:

http://en.wikipedia.org/wiki/Chairma...ederal_Reserve

13. Alan Greenspan² (August 11, 1987 – January 31, 2006)
14. Ben Bernanke (February 1, 2006 – )

So I take it he made these remarks as a private citizen? Currently Ben Bernanke is the most powerful man in the world. I agree that Greenspan could still make markets tumble if he wanted to, but ... he ain't in charge anymore.

**Theodore** · 05-26-2006, 07:36 AM

What an awesome time to start a new line of work as a mortgage broker!

**Hutch** · 05-26-2006, 07:42 AM

I was hoping that Delta would fold so all the pilots and flight attendants would have to put their Park City condos and houses in old town on the market at the same time. I was willing to forfeit all my Delta FF miles for this. Unfortunately, it didn't happen last time it looked close, but hope springs eternal.

**steve** · 05-26-2006, 07:43 AM

Originally Posted by skiing-in-jackson

But Alan Greenspan is not the MAN any more:

http://en.wikipedia.org/wiki/Chairma...ederal_Reserve

13. Alan Greenspan² (August 11, 1987 – January 31, 2006)
14. Ben Bernanke (February 1, 2006 – )

So I take it he made these remarks as a private citizen? Currently Ben Bernanke is the most powerful man in the world. I agree that Greenspan could still make markets tumble if he wanted to, but ... he ain't in charge anymore.

Well, TFA did say "post-retirment speech."
One thing I will tell you - even now, he's got a lot more insight than any of us do, that's for sure. He's probably got more insight than Bernanke..

**iceman** · 05-26-2006, 08:08 AM

Benny's got the schadenfreude machine working again I see.

So I'm guessing the ex got the house, Benny?

**Benny Profane** · 05-26-2006, 08:23 AM

bingo. but she can't touch the 401k.

**RootSkier** · 05-26-2006, 09:36 AM

Originally Posted by Theodore

What an awesome time to start a new line of work as a mortgage broker!

Really, though, it might be. Hammer on the people with ARMs. They better refi and quick.

**ride550** · 05-26-2006, 09:44 AM

great blog on current real estate conditions

http://thehousingbubbleblog.com/

**Benny Profane** · 05-26-2006, 09:46 AM

Originally Posted by RootSkier

Really, though, it might be. Hammer on the people with ARMs. They better refi and quick.

"The next big thing to worry about: foreclosures. It doesn’t seem like a source of anxiety yet, but the numbers are climbing. Keep the scale in perspective as you look at some of these articles from across the country. We are coming off a low base.

Sacramento: “We’re not seeing a lot of people at that foreclosure stage yet, but we’re sure seeing a lot of people who are headed that way,” said Jeff Tarbell, president of Sacramento-based ATM Mortgage.

Las Vegas: “Assistant Clark County Recorder Charles Harvey calls the spike in foreclosures significant. He said, ‘As the interest rate increased, we have seen an increase in the number of foreclosures.’” (Tip courtesy of Ben Jones at the Foreclosure Report blog. )

The economists I’ve talked to say that the bulk of adjustable-rate mortgages don’t start to trigger until next year. That’s when the nail-biting begins."

**Tippster** · 05-26-2006, 09:57 AM

Originally Posted by Benny Profane

bingo. but she can't touch the 401k.

OK, that's some funny shit.

**Theodore** · 05-26-2006, 10:13 AM

Originally Posted by RootSkier

Really, though, it might be. Hammer on the people with ARMs. They better refi and quick.

The company I work for has been around since before the boom, but the # of employees peaked around '04. Lots of refi's then and the buying boom. All those 3 year ARM's are going up and now there are 4 of us. My soon to be project is to go through all the files and try to get all those people into something better for them.

**Cono Este** · 05-26-2006, 10:24 AM

vegas bad, very bad

**RootSkier** · 05-26-2006, 11:08 AM

What kind of moron ever thought the Vegas market could hold out?

Where I am, in MT, there is currently a serious biotech boom going on, one federal and one private, it is a big retirement/second home community, and the market never got as crazy. I think we are looking at a slight slowdown but no major crashes here.

**RootSkier** · 05-26-2006, 11:11 AM

Originally Posted by Theodore

The company I work for has been around since before the boom, but the # of employees peaked around '04. Lots of refi's then and the buying boom. All those 3 year ARM's are going up and now there are 4 of us. My soon to be project is to go through all the files and try to get all those people into something better for them.

I only know enough about lending to be dangerous. What exactly happens at the five year (or whenever) stage of an ARM? How much will interest rates go up, and how much are people paying now? Are there other costs that come due?

We have two mortgages (separate houses), one at 5.875 and one at 6. I would be shitting if my rates were going up but my property values weren't.

**Theodore** · 05-26-2006, 12:57 PM

Originally Posted by RootSkier

I only know enough about lending to be dangerous. What exactly happens at the five year (or whenever) stage of an ARM? How much will interest rates go up, and how much are people paying now? Are there other costs that come due?

We have two mortgages (separate houses), one at 5.875 and one at 6. I would be shitting if my rates were going up but my property values weren't.

ARMs are set up so that the rate, in your case 5.875 and 6, stay the same for a set time period. 2 or 3 years is most common. These are reffered to as 2/28 or 3/27 ARMs. Fixed for 2 or 3 years, then variable with the market for the remainder of the mortgage.

Different ARMs go off of different indexes for their rates. These can be t-bills, CD's, COFI, or LIBOR. In recent history(last decade or so) the COFI has been the most steady.

When the "fixed" period is over, they start adjusting. This usually means up, especially now, since most people bought or refi'd a few years ago when the rates bottomed out. They usually adjust every 6-12 months on a set formula for the new rate. A lot of them have limits or caps. This limits how much they can adjust in 1 period and also limits the lifetime adjustment.

For instance take a 2/28 ARM with 3/1/6 caps.

That means the first time it adjusts, it can't go up or down more than 3%, each adjustment after that can't move more than 1% and over the lifetime of the loan it can't vary by more than 6% of your original rate.

No other costs should come due. Only thing that should change is taxes. If your loan has a prepay clause in it and you prepay, then you pay a penalty for that, usually a sizable one at that.

Looking into a fixed rate might not be a bad idea with the market cooling off. Might want to talk to a local broker and see what they can offer. This should be free, and more knowledge never hurt no one....

Hope this helps.

**ak_powder_monkey** · 05-26-2006, 01:09 PM

Originally Posted by Squatch

bwah!

although i think you need serfs.

thats where china comes in, I'll be a globalized baron

although I'll feel bad for taking away all the good serf jobs from americans

**Theodore** · 05-26-2006, 01:29 PM

Originally Posted by ak_powder_monkey

thats where china comes in, I'll be a globalized baron

although I'll feel bad for taking away all the good serf jobs from americans

Slave master. Wait til the boys on teh ihatewhiteguys.com forums find out about this...

**RootSkier** · 05-26-2006, 01:31 PM

Originally Posted by Theodore

Looking into a fixed rate might not be a bad idea with the market cooling off. Might want to talk to a local broker and see what they can offer. This should be free, and more knowledge never hurt no one....

Thanks for the info. Ours are actually fixed. I wanted nothing to do with an ARM.

I guess my question was bad, though. What happens with an interest only ARM at 3 or 5 years? At some point, don't you have to start paying the principal? At that point, wouldn't your payment go up dramatically?

**Tippster** · 05-26-2006, 01:47 PM

30 year fixed at 5 1/8. I'm happy.

According to the analysts we interviewed the crashes will be in the smaller markets, with NY, Boston, LA, DC, SF etc. still seeing gains, altho more modest than before.

Since I don't plan on moving out of my house until I retire I don't care, really. We're already up 30% in 3 years, which helps with the Home Equity line we'll need eventually for renovations, but other than that I don't need my house to make a shitton of moolah.... my first one did that!

**Theodore** · 05-26-2006, 02:05 PM

Originally Posted by RootSkier

Thanks for the info. Ours are actually fixed. I wanted nothing to do with an ARM.

I guess my question was bad, though. What happens with an interest only ARM at 3 or 5 years? At some point, don't you have to start paying the principal? At that point, wouldn't your payment go up dramatically?

Just asked my processor since he knows more than I. He said most are 10 year interest only. At that point you are essentially looking at a traditional 20 year amortized loan. Essentially you are paying $ for the sake of paying $ to live in a house. You make no headway into your debt at all. The shorter the term a mortgage is amortized over the less interest you pay, but the higher the payment(obviously).

So, those poor bastards who got into a house for the sake of getting a house and have their financial picture set using their interest only loan are in for a painful wake up call when they start eating into the principle.

**LeeLau** · 05-26-2006, 02:12 PM

Vancouver market is insane. Up 80% in 5 years. I'm on track to be mortgage free in 3 years - I want that financial security. Planning on dumping other RE holdings and taking my profits. Maybe go buy some Dynafit Comforts or something.

Its just too nuts.