I was referring to Factoria/Summerset and Shorewood as the hinterlands not Capitol Hill :-)

Here’s another factoid, also courtesty Aubrey Cohen in his PI blog. He talks about a report by mortgage insurer PMI Group. Most of Cohen’s focus is on their price predictions (make of them what you will). But a few paragraphs in, check this out:

Mortgage insurer PMI Group based its report on second-quarter data from the Office of Federal Housing Enterprise Oversight….Looking at prices, interest rates and incomes, PMI said Seattle-area homes were 1.1 percent less affordable than they were in the first quarter. (Emphasis added.)

Prices are falling, but does that mean they’re more affordable? Guess not.

When I started posting here I took a lot of heat for pointing out that even if prices feel substantially, they’d still be out of reach for median-income earners, i.e., most people still will be priced out forever. And that was assuming that the median remains unchanged, which I’m guessing it won’t. Tim, I hope you’re keeping an an eye on the work by those people at, what is it, WSU? The affordability index people.

You are dead on, mortgage rates on a 30yr fixed seem to be hovering right around 6%. LIBOR has skyrocketed this week. It appears that the slight bump downward in mortgages rates has been erased since the Freddie/Fanny bailout.

Where did that troll go that was predicted a boom in sales due to the new low rates from the bailout of F/F? I don’t think he has been posting since mortgage rates have shot back up to 6%.

Old Rules: Don’t offend the seller with a lowball offer.

New Rules: Don’t offend the buyer by pricing it too high.

I really don’t feel sorry for people that bought in the past few years. They should have recognized a bubble market and sat on their hands and rented. There was no reason to buy right away. That mentality was encouraged by the hysteria created by realtors and the news. When I buy a house in the next year, I’m shooting for the moon; 10% off asking is the highest I’ll go. I have no sympathy for stupid people.

This really is rocket science.

The late 90’s were just a hiccup in the market. This is going to be full scale bust like the early 80’s (45% nominal decline).

“- They get a fresh start on equity
- payments are reduced to comparable to renting

Sure they give up 50% of equity growth going forward, but at the new lower starting price they are starting their gains at a much lower level. So if it goes back up to their original price, that’s a 50% windfall.”

I have Mortgagee Letter 2008-29 sitting right here.

“The Act provides that, in the event of refinance, sale or other disposition, HUD receives the following percentage of initial equity:

During year 1 100% of equity paid to HUD
During year 2 90% of equity paid to HUD
During year 3 80% of equity paid to HUD
During year 4 70% of equity paid to HUD
During year 5 60% of equity paid to HUD
After year 5 50% of equity paid to HUD”

All existing subordinate liens are extinguished ( existing second mortgage holder must simply waive all rights to existing debt.)

If there’s a first payment default, the loan is UNINSURABLE. This means the lender doesn’t receive an FHA Mortgage Insurance Certificate and cannot sell the loan. This would be a big turn off for any lender right off the bat, especially with homeowners who are already in financial distress.

If anyone wants a copy of the mortgagee letter, send me an email with your fax number and I’ll send it over. jillayne at schlicke dot com
warning: 13 page fax

As his business dropped off dramatically in summer 2007, he did the math. With one of the loans, an adjustable-rate mortgage, about to increase by $1,000 a month, he realized he no longer could make the monthly payments, which totaled $4,000.”

What goes around comes around, though not usually so fast. This charlatan’s website (thanks Joel!) is priceless. My favorite part:

“Most business professionals, especially those in sales, will never experience abundance in life and business as a result of not knowing the “why” behind what they do.”

Almost took a condo right on Georgia street with Marina slip. I guess it won’t be $600k but $400k soon when I get to buying mode there.

I win! The name is mine! Maybe you should try Bob, or Dan, or Steve, or…..

Still,
Dave

Vancouver Winning Race Down

In that way # 13

So a question & a challenge for The Tim and the media in general: What can we do to educate the general public that a housing price correction may actually be beneficial?

The media has been excessively positive for too many years. It’s now time to focus on the realities of what these price corrections are doing to the assets of the financial markets.

Things are getting desperate in the city so I don’t how Real Estate agents can justify some of these prices in the hinterlands…

2425 E Aloha St, Seattle, WA 98112

Purchased for $780k on Mar 15, 2007
Current Price is $700k and falling

Well, I wouldn’t exactly call Capitol Hill “the hinterlands” – but I remember looking at that house in 2005 before it was “rehabbed” and going for $530k. I thought it was overpriced then. I couldn’t believe they found a sucker to buy for $780k. Not surprised they’re not able to find a buyer at $700k.

I’ve been posting on this blog for most of this year — so that makes me first. Besides, if I need a new name, I’d like it to be: “BetterDave”

- They keep their current home
- They avoid the hassle of moving
- They get a fresh start on equity
- payments are reduced to comparable to renting

Sure they give up 50% of equity growth going forward, but at the new lower starting price they are starting their gains at a much lower level. So if it goes back up to their original price, that’s a 50% windfall.

I just looked through the new FHA Hope for Homeowners guidelines. I can’t think of how utilizing this program would be good for most homeowners in financial distress. I DO see how it’s going to help the banks continue to push their loan losses out further and further.

By the way, I have noticed recently that there are far fewer comments from Realtors and lenders lately blaming the media on the housing crisis.

Hopefully we’re getting some folks working their way through the “blame” part of the cycle. I was stuck there myself in 2007.

Since I was #14 to your # 32 I win.
You may use Dave1, DaveA, Dave1A…etc.

There can be only one!
Dave

It has interesting effects. In my neighborhood it lead to a glut of much nicer rental properties. As these rented out, the median rent per property type climbed substantially. “Rents are skyrocketing!” the Realtors cried.

Yeah, the average rent paid on this new inventory was higher, but what you could get for the same amount of money improved as well. If I haven’t found a good deal on a house by the time my lease runs out, I’ll definitely be looking to move into a newer, larger place for the same amount of rent.

Hey, you stole my name! One of us needs to change — this blog ain’t big enough for the both of us!

Main Street — High Noon — Be There!!!

I’m pretty sure that no bailout will result in banks taking on the same risky loans all over again and without them it’s depreciation time. So waiting for some sort of bailout to rescue inflated home prices does not carry very good odds this time around.

2425 E Aloha St, Seattle, WA 98112

Purchased for $780k on Mar 15, 2007
Current Price is $700k and falling

Now you understand how desperate the sellers are.

I mentioned to a friend at the beginning of summer that when the end of the buying season came (that would be NOW), those that have had their house on the market all summer would really begin to panic.

And I expect the worst holiday sales season in history this year. I honestly think it will be unprecedented.

The parcel for the Factoria condo: http://www5.kingcounty.gov/kcgisreports/property_report.aspx?PIN=6389950450

To quote the good Dr. Doom today:

“…Roubini predicted the current crisis back in 2006.

He thinks US Treasury Secretary Henry Paulson’s rescue package is too late — and furthermore, it’s “totally flawed”….”

No hope for Seattle real estate prices even with a $700B Entity.

I hear mortgage rates rose to 6.1% today.

Bought October 2000 for $460,000
Original asking: $929,000
Current asking: $749,950
On the market: 157 days.

Just for kicks, my pricing calculator says their current value is about $680,000. Will be interesting to see what they eventually get for it.

Crispy…That comment was made today by Jim Willie here:
_____________________________________

Thanks!

I think that’s why there are so many fans of this site. There are many of us who are benefiting from the housing downturn. I’m in the same boat as your friend. We’re a single-income family of four. I decided to rent a year ago, and I’ve got a great location 8-15 minutes from work. The farther the prices fall, the smaller chance I’ll end up buying a house in the boonies with an hour commute.