Home, sweet home

I don't know what to make of the fact that housing sales were apparently doing better in September, before the main crisis hit.  Just clearing out some foreclosed inventory, buyer capitulation, or some actual signs of stabilization?  I'm not sure it matters, as I'm pretty sure that next month's figures won't be so rosy.  A broker just told me about a client with several million in other real estate assets and a solid annual income losing a mortgage for less than 3X annual income.

Comments

Psittakos October 24, 2008 2:27 PM

Well, does this person have mortgage debt on the other real estate assets?

wiredog October 24, 2008 2:56 PM

From HTWW:

But there are two numbers that may deserve more attention than the rise in sales.

• The median home price declined 9 percent year-over-year.
  
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According the National Association of Realtors, foreclosure-related sales accounted for 35-40 percent of total sales.

Declining prices will lead to even more foreclosures. If you can't refinance your mortgage because the value of your house has declined, you are more likely to be unable to make your mortgage payments. More foreclosures equals greater overall stress on the economy.

wiredog October 24, 2008 2:57 PM

Wow. The blog software really mangled that one.

K October 24, 2008 5:39 PM

I know of someone who has about $1.5M in three homes. One is a rental. But he owes about $2.3M on them and each is upside-down.

He has a secure and comfortable income. You know what he is going to do. And so do I.

Afterwards he can rent at $3000/mo and live well. In a year he will have banked $100K to buy a $300K home which used to be a $600K home.

Someone will loan him the other $200K next year, but they will be more careful about collateral.

You bet more defaults are coming!

Brian October 27, 2008 7:25 PM

I think we can take a guess that nobody has a good clue as to why the market has plummented nearly 40%. Credit crises? Some are now disputing that there was a credit crises. The Obama presidency? Unlikely a major factor but who knows? The economy going down the tubes? Where exactly? The data is at best spotty.

No one knows what is going on for sure. But it looks like those Republicans that voted down the first $700 billion bailout where not so irresponsible after all.