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  1. #31
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    Quote Originally Posted by ptgatsby View Post
    Hmm, can anyone in the US say if you guys have mandatory mortgage insurance?
    Yes...No...Yes

    We did on anyone that put down less than 20%, but that was removed at some point to make it possible to make even bigger loans for people with incomes that could just barely pay the payments. We had zero-down, interest-only, negative-am loans being given without requiring insurance not too long ago (this is because nobody could afford these houses at all anymore, so they had to come up with creative mortgages. Basically, the prices were rising so fast that to someone at the lenders this seemed sensible because if someone flat sat on a house for five years from 2002-2007, provided projections continued, and sold it, they'd actually make money without paying a cent in principal...it spread to many more).

    Up here in Canada, we have to pay a premium on the mortgage if we put less than 25% down. But also, mortgages aren't excused the same way in foreclosure - you don't get to walk away as easily as you do in the states. That'll be a significant difference as well.
    Bankruptcy was raped here, too, so they don't even have a safety net. While you can walk away, you can't declare and get left with the house like they used to do, unless you somehow fit the very strict requirements for the type of bankruptcy required. The only kind most can get now is a type that nobody in their same situation would have selected before the change in the laws.

    Not that insurance will cover the market. It's just a transfer of risk - the end result will still be a dramatic shrinking of the money pool. I'm not sure how bad it will be, but it'll range between "minor recession" to "crash and burn baby". There is a slight chance of hyper inflation and such and a high probability of the US dollar losing another 10-20% of its value (from equity injection, lack of confidence and economic shrinking). In the worst case, these would come together and shatter the dollar further.
    Right now we're being propped by massive foreign holdings in countries that are growing. We print them paper, send it over there, and they hold it to give their currency value. Not too long ago, even your country was a major holder.

    But I'd rank the probability around 40% mild recession, 30% moderate, 15% strong, 10% dollar value drop >20%, and some combination of 5% crash and burn. The dollar bit isn't very likely because the US will impact on other currencies.
    China has us by the proverbial testicles. If they squeeze, they can financially crush us (and for that matter, anyone holding our currency) just by releasing their lock with our currency, let alone if they dumped their holdings. The only reason they might not is the fact that they really can't recoup the losses in such a case without a military confrontation where they capture our land, because we don't have anything else to pay them with.

    So real estate will drop in the states... I expect it to range from mild (5-20%) in smaller areas and those that didn't rise the same way to extreme (60-80%) in areas with rampant sub-prime speculation (Florida, Las Vegas).
    It's very random here. This area is looking at 60+% to return to sensibility, Vegas is at least 75% (Much of the property there was pure speculation, bought and sold sight-unseen by people that have never been there. Some friends live on a street in a subdivision that was built ultra-tight way out in the middle of nowhere likely mostly for "investors". They paid a demented amount for a house way out in the burbs, and both the houses next to them have never been occupied since they were built.)
    I predict that where I lived will drop 40%. There are even some weird rural areas where there was a ramp for some inexplicable reason, like Bozeman, MT, that I know will drop massively to come in line with northern Wyoming (don't use Cody for reference - it is also hyper-inflated), which is so hyper-inflated that it's looking for a hard crash, too... Go surf zillow in MT and WY. While these prices may look okay to us on the coasts, these people make half to a quarter as much as we do. Is there any reason their housing is more expensive in relation to their incomes than ours? Wyoming is covered in 300-500+k houses in areas outside Jackson Hole...this is lunacy.

    In Canada - Vancouver, I'm expecting the peak of the probability curve to be around 20%, with the still-possible peak ends around +5% to -45%. The market here is still very tight and clearly in the sellers area.
    Last time I was up there I recall reading about the ramp-up there as well, but apparently they were somehow slightly suppressing it. Some of it may have been just the change in value between the currencies across the border, though.
    I 100%, N 88%, T 88%, J 75%

    Disclaimer: The above is my opinion and mine alone, it does not mean I cannot change my mind, nor does it guarantee that my comments are related to any deep-seated convictions. Take everything I say with a whole snowplow worth of salt and call me in the morning, if you can.

  2. #32
    Senior Member Lateralus's Avatar
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    Quote Originally Posted by Wolf View Post
    Yes...No...Yes

    We did on anyone that put down less than 20%, but that was removed at some point to make it possible to make even bigger loans for people with incomes that could just barely pay the payments. We had zero-down, interest-only, negative-am loans being given without requiring insurance not too long ago (this is because nobody could afford these houses at all anymore, so they had to come up with creative mortgages. Basically, the prices were rising so fast that to someone at the lenders this seemed sensible because if someone flat sat on a house for five years from 2002-2007, provided projections continued, and sold it, they'd actually make money without paying a cent in principal...it spread to many more).
    Loans by sub-prime lenders that were not backed by Fannie Mae are not required to have PMI. PMI is still in existence for any federally backed loan.
    "We grow up thinking that beliefs are something to be proud of, but they're really nothing but opinions one refuses to reconsider. Beliefs are easy. The stronger your beliefs are, the less open you are to growth and wisdom, because "strength of belief" is only the intensity with which you resist questioning yourself. As soon as you are proud of a belief, as soon as you think it adds something to who you are, then you've made it a part of your ego."

  3. #33
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by Wolf View Post
    We did on anyone that put down less than 20%, but that was removed at some point to make it possible to make even bigger loans for people with incomes that could just barely pay the payments. We had zero-down, interest-only, negative-am loans being given without requiring insurance not too long ago (this is because nobody could afford these houses at all anymore, so they had to come up with creative mortgages. Basically, the prices were rising so fast that to someone at the lenders this seemed sensible because if someone flat sat on a house for five years from 2002-2007, provided projections continued, and sold it, they'd actually make money without paying a cent in principal...it spread to many more).
    Ouch. That's going to be a serious problem. Does that mean that there is no national control on the transferring of mortgages? Meaning, sub-primes are sold with open risk to the larger banks? I had still assumed they had to be insured, although in theory if they pool enough anyway, it wouldnt' matter. That's worse than I thought, if so.

    Last time I was up there I recall reading about the ramp-up there as well, but apparently they were somehow slightly suppressing it. Some of it may have been just the change in value between the currencies across the border, though.
    I think you might be underestimating the prices here - they aren't comparable to the most expensive places in the world, but adjusted for income, it's very high. The SFH average in Vancouver has broken 700k (which is about 655k USD)(Average household income map (PDF).) And worse than that, the price peaks in the US are more dramatic - prices all across BC are extremely high. And of course, we still get the high end - the place just down from where I work, ie: downtown waterfront, is selling for 2100/sq foot.

    Course, we could compare a lot of North American with Japan, where prices are still insanely high, even outside Tokyo, relatively speaking.

    And of course, comparable to places like LA and the like, our own "high end" areas (Southlands, Vancouver MLS search here)start in the millions - and unlike the states, are still selling. Or you can look at places like Kerrisdale, where the cheapest SFH (at 950 sq feet and only 81 years old) go for nearly 900k. The saving grace is that people here don't like apartments, so they haven't become crazy - I got my small place in the city for about 200k (yahoo! 200k for less than 600 sq feet! :confused: ), but I wasn't going to shell out 650k for a 1200 sq ft home just behind the same apartment. Not in this market!

    My hope is that prices will crash greater than 40% and less than 75% here. In those cases, I'll be able to buy the home that I want and pay it off over a pretty short period of time, giving me the best of all worlds. I just hope it waits about 1.5 years before crashing! That'd be the optimal outcome for me.

  4. #34
    Member Llenyd's Avatar
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    Quote Originally Posted by FMWarner View Post
    If only this alleged crash would actually COME. I live in Los Angeles, and I can't afford a tool shed. Most of my friends, including married couples, can't afford a house in a neighborhood where you don't need to carry a gun. Everyone keeps threatening that the bubble is going to burst, yet two apartment buildings on my street just went condo with selling prices starting at $400,000. And these aren't luxury multi-story condos. These are run of the mill one and two bedroom apartments with the standard amenities.
    Forbes recently ranked LA as the least affordable housing market in the US. Lucky you.

  5. #35

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    Quote Originally Posted by Llenyd View Post
    Forbes recently ranked LA as the least affordable housing market in the US. Lucky you.
    Yeah. I'm actually paying $1050 in rent for a one bedroom apartment in a ho-hum building. I know if I lived somewhere more sane, that could be a mortgage payment on an actual house with several bedrooms.

  6. #36
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    Quote Originally Posted by FMWarner View Post
    Yeah. I'm actually paying $1050 in rent for a one bedroom apartment in a ho-hum building. I know if I lived somewhere more sane, that could be a mortgage payment on an actual house with several bedrooms.
    On the other end of the spectrum, here in eastern North Carolina I'm paying about $600 per month, including escrow for taxes and insurance, on a frame-built house of about 1800 sq. feet, three bedrooms, on a quarter-acre lot in a pretty good older residential neighborhood.

  7. #37
    Senior Member darlets's Avatar
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    This is going to get messy.

    The number of loans per month that get trigger to the higher interest rates is going to keep increasing to September next year.
    "The time you enjoy wasting is not wasted time."
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  8. #38

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    Quote Originally Posted by darlets View Post


    This is going to get messy.

    The number of loans per month that get trigger to the higher interest rates is going to keep increasing to September next year.
    :eek:

    What about people who bought well within their means, got a fixed rate loan, and were planning to live there for life, if possible?

    Are they screwed too?

    I'm angry.

    Accept the past. Live for the present. Look forward to the future.
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  9. #39
    Senior Member darlets's Avatar
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    Quote Originally Posted by ygolo View Post
    :eek:

    What about people who bought well within their means, got a fixed rate loan, and were planning to live there for life, if possible?

    Are they screwed too?

    I'm angry.
    To quote the boy from Temple of Doom (whilst on the bridge towards the end)
    "Hold on lady, we go for ride!"

    Some people have bought within their "current means" however if/when a recession occurs times are tough for everyone. If these tough times involve losing your job then that has a big affect on ones "current means". Make sure you have a secure job would be my suggestion.

    How much of a scare did the "credit crunch" put into the share market? It knocked 12% off the Australian market which has now been recovered, but it looks like they'll be one off these crunches approximately every 6-8 weeks of increasing severity for the next year.

    Nobody nows where the bad credit is or how much of it there is. The only way of finding it all is waiting for them to explode. Now there might not be as much as people think but there also might be a lot more than people think.

    The imploder is up to 160
    The Mortgage Lender Implode-O-Meter - tracking the housing finance breakdown, related to Alt-A and subprime mortgages, lending fraud, predatory lending, housing bubble, mortgage banking, foreclosures, debt, consolidation, lawyers, class-action lawsui

    It was revealed yesterday that 30% of Australians are using/maxing out multiple credit cards to keep their heads above water. Which is like throwing gasoline on a fire to put it out. I'd be curious to know how many in America are doing the same?
    "The time you enjoy wasting is not wasted time."
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  10. #40
    Senior Member ptgatsby's Avatar
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    Quote Originally Posted by ygolo View Post
    What about people who bought well within their means, got a fixed rate loan, and were planning to live there for life, if possible?
    They should be fine.

    Except the whole going go hell in a handbasket stuff that everyone will be going through...

    I don't mind too much, since I get to reconsider my honeymoon in vegas idea! It's at a 30% discount so far!

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