Tightening Lending Standards Discussed at RCG

[The Tim]

[Eleua]

You gotta love how Ardell masks her fear with BS optimism.

Property prices dropping by 16%, as a result of a stroke of the pen, is not a good thing as far as RE agents go.

Wait until the lenders require a no kidding 20% hard cash down payment and an interest rate in the mid/high 9s.

Now, how much can someone who can afford $2K/mo and $10K in savings afford?

On a side note, wasn't it Ardell that was chiding us on how we never change our tune even as the market moves against us?

It was never about the price action; it was about risk management. Perhaps she now has an understanding of what we were trying to say.

This is just the beginning. WM just put the kabosh on 2/28s and is probably going to terminate the 3/27 soon. No more NINJA loans.

Who is left to buy houses?

[deejayoh]

[Ubersalad]

[carlislematthew]

[carlislematthew]

[aldreth]

"somehow I doubt if the "bubble" bursts, most of you bubbleheads would still argue and wait for the lowest price point. then the price cycles back, and you're all back where you at right now."

Bubbleheads? I'm not quite sure what this term refers to, perhaps since we are trying to be educated before purchasing, that we are somehow ignorant? I just don't understand how waiting for a price to reset, (to what it has traditionally), is cause for a Bubblehead title. Calling names makes you what? Better than a "bubblehead" ? I will go out on a limb here and bet that you are in the middle of selling... right? Upset that the market isn't so grand? Therefore it must be "bubbleheads" that are causing this grief? Sorry but I am well educated and I will not be purchasing anything until prices are inline with inflation. If that means I have to wait 5 years so be it, if it means I am priced out forever, then fine. I really don't mind renting. All liabilities are off my shoulders when I rent, and I get to pay a minuscule amount comparatively. I am currently trying to sell a Condo that I am going to lose a lot of money on. Do I care? Not really, I just won't be the guy who makes the mistake of waiting too long to sell again. I only wish I would have learned that before I found myself in a situation like the one we have mounting now. Label me a bubblehead, I could care less, but don't assume to know anything about price cycles, or where we will be. You should focus on the mess you are in and why you feel such labeling is necessary.



"I think some (not all) confuse "overpriced" and "overpriced for me"."

As far as overpriced and overpriced for me. When median house prices out pace median wage... It's pretty obvious what overpriced is. Seattle has a median house price of about 440k. With the "HOUSEHOLD" median being about 70k. Does this strike you as odd yet? ... Lets break that down...
228k you need to make 61k to afford
332k you need to make 89k to afford
440k .... you do the math

I think its rather depressing to see the state of Seattle right now. Everything is overpriced, groceries, housing, renting, clothing, blah blah blah. This town isn't even affordable any longer. Oh wait I forgot, we all work at Boeing and Microsoft.
Boeing = 70,000 employees
Microsoft = 35,000 employees
Population = 1,860,000


pfft

[B]

Consider the prices in 2002-2003 (I was ready to buy in 2002, but didn't due to family circumstances) as reasonable, for the sake of this example.

Consider that long-term, real estate prices grow at a rate just slightly higher than that of inflation. Let's say 4% consistently to be generous.

Extrapolate that smooth growth pattern (again, ignoring the stagnated wages during the current decade) out to 2008, and I think THAT is what many posters here would consider a reasonable price based on "fundamentals".

Note that this requires ignoring short-term market distortions like liar-loans, cheap/easy money, and public manias. Therein is the problem.

When you hear someone who derives income from schlepping real-estate talk about "strong fundamentals" (as if thoroughly average numbers of population influx and corporate hiring drove the mania) take it with a gigantic boulder of salt. This market is disconnected from fundamentals, and that is what causes many people to view the frenzied markets of 2004 - 2007.5 (housing bubble, R.I.P.) as unsustainable, unrealistic, and overdue for a correction.

Reversion to the mean is a b*tch.

[rose-colored-coolaid]

[wreckingbull]

[Eleua]

[mike2]

Wow, Ardell seems awfully freaked out.

7. ARDELL - July 19, 2007
That makes no sense, really. How can someone have to qualify at 11.125? Rhonda, is that true? I find that hard to believe.

Then she goes on to say that qualifying people at the fully indexed rate doesn't make sense under other circumstances because they won't be living in the house when the rate adjusts.

Oh Really? You don't say.

[Matthew]

7. Eleua - February 27, 2007
Ardell,

Hi, it's me, your "center," and I was just wanted you to know that I'm still thinking of you.

I too have a feeling in my bones. I smell a banking crisis. Do you have any friends in the industry, and what are they telling you?

All the best,
E



Ardell - February 27, 2007

E.

Stay on topic Banks in Real Estate? We can talk. Bank's generally...sorry, I don't give a RA.

[Matthew]

18. Eleua - February 27, 2007
Ardell,

Banks that lend to the Great Unwashed so they can buy the homes you are selling are a subject you need to give a lot more attention to than just a RA.

If a bank books 2/3 of it's profits on money it has never seen, and that money is subprime and will likely not be paid back, it is a BIG, BIG, BIG deal.

Requiring good credit, ample cash down payments, and very tight ARMs or fixed only mortgages on higher interest rates will make RE (even King County RE) gap down faster than the DJIA did today at noon.

Banking problems are nuclear winter for real estate. No amount of feeling in your bones will keep prices up.

22. ARDELL - February 27, 2007
E.

Not gonna happen. Not going there with you. Talk Real Estate here. I was in the banking business way too long to listen to the banks all going under stories. In 1984 they said there would only be 5 banks in the Country by 1990. Didn't happen



you guys can read the whole thing at

[Matthew]

E-

was that the conversation that got you banned from RCG? Rereading some of my comments in that thread I'm surprised that I didn't get a talking to as well. Dustin, aka Captain Censorship deleted about half of my comments in that thread. I can't wait until the end of the year and repost the link to that thread over at RCG.