House of cards FINALLY collapsing - Freeze-Frame Radio

Jeremy Riggs · 2011 Super Bowl Champions!

House of cards FINALLY collapsing

Ruby · The Good Witch Of The South

It is that way here too. My neighborhood is LOADED with for sale signs too and no bites. We lucked out moving when we did. We paid 200,000 for our house, but it could sell for about 300 now. BUT then we need to find another comparable house and that just puts us back to square one. It is a big disappointment- they have totally ruined the whole process- and now taxes and insurance are out of control. Not to mention that a lot of people here are being dumped by their insurance companies because of the potential for a hurricane.

All these overinflated houses are scary.

ghostdancer · Ghost In The Machine

I have to agree with you on this JR........the home I live in is just your average every day home, nothing spectacular about it, and every year my tax assessment is rising higher and higher, yet I know if I put it up for sale we wouldn't get what they say we could for it.

Yesterday, while I was out for a walk, I counted how many homes had "for sale" signs in front of them within a mile of where I live........I counted 48 houses. And I know at least half have been up for sale for over a year. Then I drive 4 miles to work, and there are 4 new sub-divisions going in out there.......minimum price for a lot is $80,000....and these are half the size of my yard! In another sub-division five miles from me, there are brand new homes sitting, waiting for someone to buy them........they can't sell them. I know the asking price for most of those are over $500,000, which is an awful lot of money for my area.

Too many homes for sale, not enough buyers. I believe the bubble has finally burst on the housing market.

MzHartz · Permanent Vacation

It's the same around here, and we have a large rental market in our city. Before we moved to Bloomington, 5 years ago, we were considering buying a small house for about $40,000. Granted, we were looking at small fixer-uppers. Here, the same houses we were looking at, are at least $100,000! And that doesn't include property taxes, which are terrible within city limits. And there are houses for sale everywhere.

Instead, we pay $600 per month, plus phone, gas & water, for an 1100 square foot 2 bedroom townhouse. We don't have to fix anything and we don't have to do yardwork. Obviously, there are the usual downsides to renting, but I think it's more affordable than buying a house right now.

Woo Hoo · The Chosen Woo

yeah it's crazy! We want a house really bad. We will now have to wait some more again though. Anyway all the houses that we can afford don't have basements or have a 1 car garage. Why do I want a house payment for what I already have renting?

-- Edited by Woo Hoo at 13:18, 2007-03-13

darleneapd · Cuff 'Em N' Stuff 'Em

I bought in July of 2006 ( I will not tell you what I paid for my 3 BR 1 1/2 bath colonial ) but I do live in the Boston Area.....

My house is probably worth $15,000 less now than I paid for it, due to the market. But on the brightside, I'm not behind on my payments..... but I'm starving, if that's any consolation, since I can't buy food..........

MzHartz · Permanent Vacation

That's a weight loss plan, right?

darleneapd · Cuff 'Em N' Stuff 'Em

Yeah LOL Mz, great way to lose weight... I haven't seen the inside of a restaurant since July......... oh wait, i forgot the gift card for TGIFridays I received for Christmas, I have seen the inside of a restaurant...........

WebGuy · Doesn't Do Windows

Out here where we are, trends/markets are a couple years behind the bigger metro areas. We are still at the peak market right now. I'm amazed when I see houses selling for $100k to $140k when I know just a few years ago the same thing could have been bought for $60k.

I expect to see the same crash coming here fairly soon.

I suppose if we were smart and wanted to take the chance, we should sell our house, put the money in the bank, rent for a while then buy a different house when the market is back down. I don't think my wife would like that idea very well though.

I know my wife wishes we had a nicer house than we do. On the other hand, she is also a banker and she sees people every day that are in over their heads with debt from mortgage, cars, and credit cards, yet they are trying to borrow more money for more stuff. There are many, many people around here that give the impression they are doing great . . . new house on the hill, new cars and pickups in the garage, etc . . . but truth be known, many months these people are within only $20 of financial collapse.

Our house payment is $370/month and we "only" owe $21,500 on it. Our 13+ year old cars are paid off and their taxes are low. We're not the envy of our neighborhood, but (most days) we're ok with that.

darleneapd · Cuff 'Em N' Stuff 'Em

WebGuy wrote:

Out here where we are, trends/markets are a couple years behind the bigger metro areas. We are still at the peak market right now. I'm amazed when I see houses selling for $100k to $140k when I know just a few years ago the same thing could have been bought for $60k.

Ahhhhhhhhhhhhhhh, if only......................... try doubling $140K to find a fix er upper out here..........

WebGuy · Doesn't Do Windows

Yeah, but I think its all relative. Our city cops make $10 - $12/hr. A typical secretary/office job is about $8/hr. Not exactally stellar wages.

Ruby · The Good Witch Of The South

Thought this was pretty ironic!

Late Mortgage Payments Reach High

By JEANNINE AVERSA, AP Economics Writer

3 HOURS AGO

WASHINGTON - Late mortgage payments shot up to a 3 1/2-year high in the final quarter of last year and new foreclosures surged to a record high as borrowers with tarnished credit histories had trouble keeping up with their monthly payments.

The Mortgage Bankers Association, in its quarterly snapshot of the mortgage market released Tuesday, reported that the percentage of payments that were 30 or more days past due for all loans tracked jumped to 4.95 percent in the October-to-December quarter.

That marked a sharp rise from the third-quarter's delinquency rate of 4.67 percent and was the worst showing since the spring of 2003, when the late-payment rate climbed to 4.97 percent.

The association's survey covers 43.5 million loans.

The latest snapshot of the mortgage market comes amid mounting concern on Wall Street about troubles facing subprime lenders who make loans to people with poor credit.

The percentage of mortgages that started the foreclosure process in the final quarter of last year rose to 0.54 percent, a record high. The previous high, 0.50 percent, occurred in the second quarter of 2002 as the economy was recovering from the blows of the 2001 recession.

Delinquency and foreclosure rates were considerably higher for higher-risk "subprime" borrowers, especially those with adjustable-rate mortgages.

Lenders to subprime borrowers _ people with blemished credit histories _ have been battered. Rising interest rates and weak home prices have made it increasingly difficult for these borrowers _ especially those with adjustable-rate mortgages _ to keep up with their mortgage payments. Delinquencies and foreclosures in the subprime mortgage market are spiking.

The late-payment rate for all subprime loans jumped to 13.33 percent in the fourth quarter, up from 12.56 percent in the prior period and the highest in four years. The delinquency rate for subprime borrowers with adjustable-rate mortgages was even higher _ 14.44 percent, also the highest in four years.

The rate of all subprime loans starting the foreclosure process at the end of last year was 2 percent, the highest in three years. The percentage of subprime adjustable-rate mortgages entering foreclosure was 2.70 percent.

Doug Duncan, the mortgage association's chief economist, suggested that borrowers having difficulties making payments contact their lenders as soon as possible to work together on the problem. "It is in everyone's interest to keep the homeowner in their home paying their bills on time," he said.

Concerns about risky mortgages are making investors jittery. Those fears also contributed to a worldwide stock meltdown on Feb. 27, where the Dow Jones industrials suffered a 416-point plunge.

Worried about defaults on high-risk mortgages, federal bank regulators earlier this month called on lenders to use caution in making subprime loans and strictly evaluate borrowers' ability to repay them.

New Century Financial Corp., which was the nation's second-largest subprime mortgage maker, is scrambling to stay afloat after all its bank lenders cut off funding or informed the company of their intent to do so because of its failure to make payments. The Irvine, Calif.-based company already has stopped accepting all new loan applications.

Jeremy Riggs · 2011 Super Bowl Champions!

I've really gone back and forth on the owning/renting thing.

On one hand, I understand the concept of wanting to build equity. But at the same time, while that $200,000 house will have value when it's paid off you'll also have paid more than twice it's value for it by the time you've paid off a thirty year mortgage.

Then, when and if you FINALLY pay it off at a ripe old age of 55 or 60 or 65 you're still going to have taxes, which on a modest house are usually around $300 a month here right now (quite a bit more for better neigborhoods or nicer houses), so in essence you're still paying rent for the rest of your life.

Renting my apartment the last six years drives me nuts knowing I'm throwing $605 a month out the window. But then again, those taxes are included in my rent and ANYTHING that goes wrong is another persons problem. In six years I've needed a new furnace, a new water heater and had a new roof and a new central air unit put in as preventative maintenance. Seems to me I'm getting a pretty good deal.

For the first time I can ever recall I have started to read and watch "experts" say owning is not necessarily the way to go. The big dividing line is if you have kids. A single guy like me, or even a couple with no kids, renting might be the better financial move.

If you have children and you want to pass along a windfall of cash equity to them when you die then home ownership might make sense. But even then, you have to assume and hope your children will have made their own lives by the time you pass. There's also life insurance for that.

I know if I ever do buy a house it won't be in the Milwaukee market. Unless of course somehow I'm rolling in cash and can afford to buy it and pay it off in a very short term loan.

MzHartz · Permanent Vacation

And it used to be assumed that your first house won't be your only house. But now, I don't think we'll buy a house until we find one we want to be in for life. We know we're going to want to move someday, and a house doesn't seem like a wise investment in that case.

Jeremy Riggs · 2011 Super Bowl Champions!

That's a very good point.

I know my parents bought a "starter" home when I was 5. It was sooooo tiny and so run down, but they fixed it up and they've lived there ever since.

The value of the house is probably over 100,000 but I can't imagine anyone ever buying it. Every room is so small. They thought they'd move on but I guess with mortgages and expenses in fixing it they never really had the ability to do that.

Cheeselvr · Better Than Cheddar

We live in a smaller home- maybe like your parents?- but I still appreciate that it's ours even if it isn't an oversized show-off mansion. I can say that it has almost doubled in value since we bought it in 2000. I wouldn't be able to afford it now like I could've 6-7 years ago. I don't even know where we'd be able to afford to live if we did sell. For now, we're here but if we have another baby, we'll probably have to move.

But like so many of you mentioned, many people are in serious debt & I'd hate to be one of those just to say I live in a big house.

I'd rather have a little bit of something than a whole lot of nothing!

Jeremy Riggs wrote:

That's a very good point.

I know my parents bought a "starter" home when I was 5. It was sooooo tiny and so run down, but they fixed it up and they've lived there ever since.

The value of the house is probably over 100,000 but I can't imagine anyone ever buying it. Every room is so small. They thought they'd move on but I guess with mortgages and expenses in fixing it they never really had the ability to do that.

-- Edited by Cheeselvr at 23:39, 2007-03-13

Tennessee Gal · Chairwoman Of The Board

I probably should have let this one stayed buried, but... Ex and I owned three different houses in our 14 years together. We've made about a 20% profit on each house. I know that the Nashville Metropolitan real estate market has done well, but even if we had just maintained our value, we've still had the benefit of writing off our mortgage interest each year when we itemize our taxes. That's worth thousands each year. According to the investment books that I've read, real estate is one of the most historically appreciable assets out there. I'd rather be paying for my home than having the nice car, boat, motorcycle, camper, vacations etc. I wouldn't want my whole networth to be solely real estate, but I definitely like having a percentage of it in my home. My job may disappear, my stock portfolio may tank, but once my house is paid for, I'll be breathing easier. I won't have the fear of wondering how I'm going to pay my rent on social security.

Jeremy Riggs · 2011 Super Bowl Champions!

But how is your tax rate?

My problem with home ownership (not just flipping houses, but finding one to retire in) is that our tax rate is so high that it's approaching the 50% mark of what it costs to rent.

That just really bothers me.

Why pay $300 a month for my home AFTER I buy it? I understand the need for property taxes, but the percentage they take keeps increasing, and with home values going up and up (in many cases artificially because they over-assess to further increas tax rates) it's getting so that a lot of retired people live in near poverty because all they have is social security and a home they bought 40 years ago.

My next door neighbor was a great example of that. She had her home for 60 years! It was a duplex she chose not to rent out because she couldn't handle the hassle. Her taxes were enormous.

I should point out though that Wisconsin is widely known as a tax hell, and almost all of our taxes are in the top 5 in each category.

It just seems wrong.