jrzy: Just giving you a hard time. It's a shame it happens.

 

Tis True..

 

When the real estate bubble bursts next year, there are going to be a lot of Americans who rue that day that they used the equity in their residence(s) as an ATM.

This is not the case in Canada as we can't write off mortage interest on our income tax and make every effort to pay our home off ASAP.

If you thought the recessions of the early 90s and early 80s were something, you ain't seen nothing yet!

 

Hello Frank.

Are you reading what you typed? I understand HELOC well since my wife to sells them. You are saying that you are only paying interest only for the first 10 years during the draw period, then you have to payback interest on the draw plus the priciple, which you have another 15 years (base on 25 year HELOC at ADJUSTABLE interest, which could be capped at 18% plus margin, which means your $154/mo payment isn't fixed). Yes the interest is tax deductable, but your Max will be 25 years old when you make the last payment; if the HELOC is solely for the purchase of the Max.

Have a nice day, Frank. Intelligent discussion .

BTW, $154/mo I/O is based on about 6.5% interest at $30k priciple (tie to Prime rate, which Greenspan has been raising regularly). Imagine your payment w/ interest at 18%

 

It could very well be at 18% once the Chinese stop loaning us and our pork-barreling government money.

 

MORTGAGE BANKER HERE ... and a mananger by the way

 

This thread has gone OT 40+ posts ago.

 

No offense bobo, but I'll believe that when I see it

 

House prices doubling on a nationwide basis every 5 years is not sustainable. If you believe that, then in 5 years (2010), the average house price will be $450,000 when income will only have gone up by 10%. That means that by 2015, the median house price will be $1 million and income will be maybe $50,000/yr.

There's no kind of creative financing that will allow someone making $50,000/yr to buy a $1 million house. You can't go against the fundamentals forever.

 

Ahh, good point. It's just that I don't believe the market will crash within a year. I hope the prices calm down though.

 

Crash is such an ugly word. Correction is a much more friendly word.

 

Correction is a more accurate word as well. Because of the herd mentality, markets tend to take things to extremes. In other words, they tend to under and overvalue assets. Corrections are a neccessary part of all markets to make them more efficient and to clear out excesses.

After a big upswing or downswing in a market, you can use fibonacci numbers to accurately predict the level to which the market will correct to.

http://www.chartfilter.com/reports/c14.htm

We've gotten way off topic. It's prolly time to let this one die.

 

well our company is a DIRECT LENDER we are not a broker, there are no middle man and no broker fees. We are the Bank!!


sorry i dont mean to spam, but back on topic.

if you want a nice car and dont have the cash on hand, loans are perfect, thats what their there for. Just like credit cards, to get something you want but you dont have the cash for right away.

 

The majority of the world is not like Austin TX or Ohio, I doubt that too many people in DC/Northern VA/NJ/NYC are losing sleep over it. When a typical 2200 sq. ft home is over 800,000 on avg., how much equity does one actually think they are gonna lose on paper when this imaginary crash comes along? 10%? The most foolish thing a person can do, and there are some fools who did it, is try to time the mkt. i.e. sell the home and move into an apartment and wait. Real dumb move. Haters always scream the sky is falling, same thing happened with the stock market in 2k1. When you're 25-30 yrs. old, you have a lot of time to stay in the game.

After driving the G35 sport suspension on Sun., I wouldn't even want a Maxima for $154/mo. Nissan products just can't handle! FWD or RWD period!

 

A 10% retracement in home prices is just a start - try a 38.2% retracement which is the first Fibonacci line as referenced above! A lot of successful people have sold and rented for a couple of years in the past.

Buy your much touted BMW, Frank Fontaine.

 

Those that didn't time the market and kept their long positions in 2000 got screwed. Those who buy in the end of a bull market get screwed. Those who sell in the end of a bear market also get screwed.

The dumbest thing you can do right now is buy in bubbleland with a interest only, negative-amortizing loan that is an ARM with nothing down. Watch your interest payment go up by 50% when the interest rate adjusts from 5% to 7.5%. If house prices don't go up you won't be able to refinance with a fixed rate mortgage. If you lose your job and need to sell, it'll be hard to sell when you owe more than it's worth. And with the new bankruptcy law, you won't be able to file Ch. 7 and rid yourself of that debt.

If you buy in the middle of a bubble and plan on selling in the next 5 years, you will get screwed. If you're in it for the long haul and don't plan on selling for 10-20, you'll be fine.

There's a consensus that there will be a downturn in the housing market. No one knows exactly when it will happen, but it will. Bubble markets often go on further than most imagined and get to the point where it is obvious to everyone that they're too high. Even the father of the bubble, Greenspan, has now realized the monster he has created.

My guess is late 2006 or 2007 is when thing will really hit the fan. That'll be the time when a lot of the ARMs start adjusting and when principle repayment begins. The best we can hope for is a soft landing where house prices are stagnant for a decade while incomes catch up with house prices.

Japan has a lot less land than we do and a lot of people in a small amout of land and real estate prices there have been DECLINING for 15 consecutive years. As the baby boomers retire, they will sell their McMansions and move into retirement homes/communities. This will push down the price of real estate in general.

You want the handling of a Porche 911 for $30,000???? Most people buying a G35 or any car for that matter, want a soft and plush ride. The reality is that us Orgers make up a very small part of nissan's market.

 

1. Japan, Hong Kong, Shanghai, different markets altogether.

2. "The vast majority of homeowners have a sizable equity cushion with which to absorb a potential decline in house prices," spoken by AG on 9/27/05.

3. Solution to a poor man's woes in the handling dept. is a 325i with sport package, leatherette.

 

What's your point?????
We have a lower percentage of equity in our houses than at any other time in history. Homeowners' equity is 55% of housing value, down from 72% in 1986, according to Federal Reserve data\

According to the National Association of Realtors, 42% of all first-time buyers and 25% of all buyers made no down-payment on their home purchase last year. If you are buying a house with no down payment, you'll have about -3% equity to start with.



in August 2005, Greenspan observes that “America’s economic imbalances, most notably the large current account deficit and the housing boom,” could end in “more-wrenching changes in output, incomes, and employment.” He then goes on to say that, “The rising prices of stocks, bonds and, more recently, of homes, have engendered a large increase in the market value of claims which, when converted to cash, are a source of purchasing power.” Greenspan then warns, “Such an increase in market value is too often viewed by market participants as structural and permanent. But what they perceive as newly abundant liquidity can readily disappear.”

Any onset of increased investor caution elevates risk premiums and, as a consequence, lowers asset values and promotes the liquidation of the debt that supported higher asset prices. This is the reason that history has not dealt kindly with the aftermath of protracted periods of low risk premiums.
The 325 is overpriced and underpowered.