Many Useful (If Painful) Lessons
The News Journal reports from Delaware. “From the moment in March 2006 when Melissa and Greg Thomas moved into the $445,000 house they built on five acres in Clayton, they knew they could barely afford it. Because of various problems that arose during construction, the Thomases have been unable to make the full monthly mortgage payment of $4,203 ’since Day One,’ Melissa Thomas said. Initially, they figured the rising housing market would solve their problem. The home would increase in value in a year and they would refinance.”
“But the bottom fell out of the market. When the Thomases investigated refinancing, they discovered they have a huge prepayment penalty provision in their mortgage, which would cost them thousands of dollars. If they refinance, the Thomases will owe more than the house is worth, said Melissa Thomas. As it is, they are racking up more debt every month because they make only the minimum payment.”
“‘You feel like you’re in quicksand,’ said Greg Thomas. ‘We’re going under slowly.’”
“In Delaware, among borrowers who went into the foreclosure process in the third quarter, 21 percent did not respond to calls and letters from their lender.”
“‘Something has caused them to suddenly not have the income necessary to pay their mortgage, and they don’t address it. This is where the shuffle begins — they pay the smaller bills,’ said Nina Heck, director of counseling with Consumer Credit Counseling Service of Maryland and Delaware in Baltimore.”
The Washington Post. “The Perrywood subdivision in Upper Marlboro has long been synonymous with the pride and promise of Prince George’s County. Lately, though, this suburban idyll has been afflicted by the same economic forces that have plagued less prosperous communities.”
“Two of eight homeowners on Bar Geese are in foreclosure, according to RealtyTrac. In the past two years, 49 owners in the 1,100-home subdivision have either received notices threatening foreclosure, gone through auction proceedings or had their homes repossessed. Fourteen of those actions occurred in the past four months.”
“When Kimberly Mitchell first saw the townhouse on Whistling Duck Drive, she knew she had found her next home. Mitchell, a single mother, bought the house eight years ago for $200,000 and took out a fixed-rate mortgage with a 7 percent interest rate.”
“Mitchell left her corporate job in 2002 and started a day-care center in her home. The day-care business and finances were fine, she said, until she decided to refinance her home in 2005 and tap its equity to consolidate bills. Her loan officer steered her to an 8 percent adjustable-rate mortgage, assuring her that she could refinance later and return to a fixed-rate interest loan.”
“She quickly fell behind. She later learned that her property taxes of more than $3,000 a year were no longer a part of her mortgage payments. In October, her rate will increase to more than 10 percent.”
“Now she is stuck. ‘When you call a refinance company, they base it on your credit score,’ Mitchell said, adding that her credit is not good. ‘It’s a no-win situation.’”
“Fighting back tears, Mitchell described the stress she has endured. She said she and her son have resorted to eating noodles and peanut butter and jelly sandwiches several times a week to save money.”
“‘I don’t know the last time I got eight hours of straight sleep,’ she said. ‘I just feel robbed.’”
“Del. Aisha N. Braveboy, who represents Perrywood, said she understands how homeowners can get into mortgage trouble. ‘These are people who have great incomes, but their houses are priced at a point where they can’t afford them,’ she said.”
“Mitchell, who owes $260,000 on her mortgage, said she tried to refinance at a lower rate, but lenders said her credit was not good enough. So she put her house on the market. List price: $350,000.”
“As the housing and credit markets continue to spiral downward, business casualties are rising rapidly in bankruptcy courts across the Washington region.”
“The number of corporations that have filed for Chapter 11 protection to reorganize so far this year in Maryland, Eastern Virginia and the District has more than doubled, compared with the same time period last year, court records show.”
“‘I’m talking to people about liquidating like never before,’ said Bethesda lawyer James A. Vidmar Jr., who is representing a second-generation Montgomery County developer who filed for Chapter 11 bankruptcy after his builder bailed out of a 1,000-lot Delaware project.”
“‘Selling real estate is not a good business to be in these days,’ said Stephen Goldberg, a Baltimore area lawyer who is representing Sandy Spring Bank, which called in its $13.5 million loan to the developer.”
“One case involves a D.C. couple that staked their retirement, investment accounts and home equity on their first development project: a townhouse community on the Eastern Shore that ground to a halt halfway to completion when the real estate market began to decline.”
“Though their lender did not foreclose on them, court documents show the couple filed for bankruptcy after the bank moved to garnish their personal accounts, leaving them no way to complete the project or pay their debts.”
“(At) last weekends’s foreclosure auction at the Walter E. Washington Convention Center…auction ‘assistants,’ ostensibly there to help people bid, wore tuxedos, bow ties and black Air Jordans. Arms flailing and voices whooping, they whipped up the crowd much the same as the cowboys cracking whips stirred up excitement in Kansas City. The auctioneer prattled on like Porky Pig calling the Kentucky Derby.”
“Given the bulging inventory of foreclosed properties that banks need to unload, an auction seems like an efficient, fair way to move the goods fast…But what I saw at the foreclosure auction left me skeptical about the availability of auction bargains. Sellers, the banks that own the foreclosures, seem to be unduly optimistic about the prices they can get for foreclosures, which are, after all, damaged goods.”
“The weekend before, I took advantage of an open house to check out one of those homes, an attractive five-bedroom, four-bathroom brick Colonial in Bowie. The brochure said, without elaboration, that it was ‘previously valued’ at $780,000.”
“It was impossible to try out the heat, plumbing or appliances because utilities had been shut off for the winter. There were large holes in one wall of the basement where a home theater had been removed. The house is in a pleasant neighborhood, where an ice-cream truck made its rounds in late afternoon.”
“Maryland tax records show the home’s full assessed value at $531,450, and that the developer had sold it in 2004 for $460,000. At last week’s auction, bidding started at $289,000 and the gavel slammed down at $530,000. Add the 5 percent buyer’s premium owed on all sales that day, and the buyer will owe $556,500.”
“You be the judge of whether that’s a great deal. In the same neighborhood, two other five-bedroom homes, which are not foreclosures, are listed for sale at $645,000 and $650,000.”
“It’s impossible to know how many of the hundreds of homes auctioned last weekend will go to closing. The banks that own the homes set undisclosed reserve prices for each property. Even after the slam of the gavel, no one knew if the reserve had been met. And lenders still had 14 days to reject any of the deals.”
“With so many homes on the market now, buyers want a bargain on all foreclosures, especially those sold at auction. Lenders seem to be in denial, but they are not in a position to hold out for higher prices. They’re reluctant deal-makers, whether it’s on foreclosures or on short sales.”
The Baltimore Sun from Maryland. “The best immunization against foreclosure used to be affluence. No more.”
“The number of homeowners defaulting on their loans in the Baltimore metro area last year rose most quickly among the highest- income counties with the most expensive housing - Howard, Anne Arundel and Carroll. Maryland’s income-rich Washington suburbs are feeling it even more keenly, a Sun analysis has found.”
“A year earlier, foreclosure cases in those counties were well below the number in the Baltimore area.”
“‘The demographics have certainly changed,’ said Anne Balcer Norton, director of foreclosure prevention at a nonprofit in Baltimore that has fielded calls for help from homeowners in toney areas such as Roland Park and Bethesda. ‘Everyone’s affected by this.’”
“In Montgomery, where the typical household income tops $87,000, mortgage foreclosure cases rose nearly 130 percent last year. That was the biggest jump in the state.”
“‘I realize I’m not the only one, but I didn’t realize how many people are being confronted … with this kind of situation,’ said LuJuanda Dixon, who is working with counseling group HomeFree-USA to try to save the house in Bowie that she bought with her husband last year for $650,000. Before Danny Dixon lost his job in November, they were making $100,000 a year.”
“BeBe Stokes, a real estate agent in Prince George’s County, is getting a lot of calls from homeowners begging for help to sell before their lenders step in.”
“She understands where they’re coming from. She fell two months behind on her own mortgage recently, pressed by a steep cut in income because of the housing-market downturn and - when she sold investment properties to stay afloat - an unexpectedly high income tax hit.”
“‘It’s like a snowball,’ said Stokes, who bought her Upper Marlboro house for just over $1 million in 2006. It doesn’t help, she said, that her lender changed her loan terms a week before she settled on her home, increasing her monthly payments by nearly $2,000.”
“The share of buyers opting for ‘piggyback loans,’ to cover the full cost of a home with no down payment, tripled in Montgomery County between 2004 and 2006 to three out of every 10, according to a recent study . In Prince George’s, four out of 10 buyers had piggyback loans in 2006 - nearly double the share in 2004.”
“Emily Wade’s lender foreclosed on her Northwest Baltimore house at the end of 2006. Wade had inherited the house debt-free when her mother died. She also inherited property maintenance troubles, she said, and taking out a small mortgage seemed the best solution.”
“But on a monthly income of $840, the $284-a-month payments proved too much even before the adjustable-rate loan reset. When she applied in 2004, she was happy she qualified. Now, she wishes the lender would have raised red flags rather than pushing the loan through.”
“‘I took a chance on the American dream,’ Wade said, ‘and I lost.’”
“The mortgage mess hanging over the country offers many useful (if painful) lessons. First on the list: Don’t borrow more than you can really afford to pay back. Closely related to that is Lesson #2: Don’t blindly rely on industry professionals to tell you what that amount is. Get down and dirty with the math yourself.”
“Ryan W. James, senior mortgage banker with First Horizon Home Loans, said lenders will in most cases allow a debt-to-income ratio of up to 50 percent. If you make $5,000 a month ($60,000 a year), your monthly debt can’t top $2,500.”
“‘If you had a $400 car payment and a $200 student loan and a $60 minimum payment on your credit cards, we know your maximum mortgage payment is only going to be about $1,840,’ James said.”
“In the go-go housing boom days, it wasn’t too hard to push beyond that 50 percent limit, James said. Good credit? Sure, go ahead. But he says it’s much tougher now.”
“Though credit availability has tightened a lot in the last year, with loan products disappearing everywhere you look and lenders requiring better credit scores, today’s debt-to-income limits are still high by historical standards.”
“The traditional rule of thumb was 36 percent, says Christopher Cruise, a mortgage trainer in Silver Spring and a board member of the National Association of Responsible Loan Officers.”
“James says he does a budget analysis with clients that gets beyond the ratios to the nitty gritty. What’s your take-home pay after taxes, retirement plan contributions and the like? How much are you spending a month in addition to debt payments. How much do you want to be able to save once everything, including your mortgage, is paid up each month?”
“Cruise says that Baltimore-Washington housing prices, even with recent declines, remain high enough that buyers may feel forced to choose between the house they want and the lifestyle they’re used to. His advice: Look in less-expensive neighborhoods you might not have considered, cut back on your non-mortgage spending or keep renting while you whip your finances into shape.”
“‘Have some willpower, for God’s sake,’ Cruise said. ‘Buying a home now and getting foreclosed on in a year or two is not ideal.’”
‘With home prices sliding, interest rates falling and worried sellers looking to deal, this may be a good time to become a homeowner. But is it a good time to become a real estate agent?’
‘During the boom, young people — and those looking for a midlife career change — were drawn to real estate. Money magazine listed ‘real estate agent’ among the Top 20 jobs for the ‘young and restless.’
‘David McIlvaine Jr., 25, of Keller Williams Realty found out first hand that real estate agents sometimes are forced to find additional means of employment.’
‘Today you see a lot of part-time agents who are bartending, getting second jobs or looking for other avenues or something constant to hold them off until the business goes back up again,’ he says. ‘It’s like those agents are looking at the real estate business and asking, ‘where is my two-week paycheck?’
“‘Today you see a lot of part-time agents who are bartending, getting second jobs or looking for other avenues or something constant to hold them off until the business goes back up again,’ he says.”
And here’s a case study of the common thread among real estate moonbats; “Happy days are just a few months away. Just sit tight.”
Great article about subprime underwriteing fro jim the realtor’s website:
http://www.latimes.com/business/la-fi-subprime17mar17,0,782997.story
‘where is my two-week paycheck?’
It was invested into Bear Sterns stock.
I got my real estate license a couple of months ago. Interesting to get a look into the world of sales after a long career in health care. These people are very depressed and are trying to create hope whenever they can. Sad.
“Ryan W. James, senior mortgage banker with First Horizon Home Loans, said lenders will in most cases allow a debt-to-income ratio of up to 50 percent…In the go-go housing boom days, it wasn’t too hard to push beyond that 50 percent limit, James said. Good credit? Sure, go ahead. But he says it’s much tougher now.”
OK, I realize I’m a dinosaur at 46, but don’t I recall 28% of income maximum for the mortgage and 36% of income maximum for all debt?
This confusion is one of the reasons we are in this boat today.
IMHO, it’s THE reason that we are in this mess today. Without the credit psychosis, none of this could have/would have ever happened. The credit bubble is what made the housing bubble possible, with that there was nothing to sustain it (not like people were going to cash in their massive bank holding to buy RE!).
Again, IMHO.
“Without the credit psychosis, none of this could have/would have ever happened.
The credit bubble was inevitable, IMO. The wholesale relocation of our manufacturing base to foreign countries and our massive trade deficits meant that we had to make money out of thin air in order to keep people from realizing what was happening to the economy. The lack of regulatory oversight and pure greed is what allowed it to happen so quickly.
These events were long overdue and would have happened anyway. The timing and forcefulness of this downturn is the only thing that is a direct result of this bubble.
That was the numbers when I bought a house! And we didn’t listen to the R-E agent, and bought less house than he said we could “afford.” We paid the house off in 15 years, and now have nothing to worry about but just under $5000/year property taxes. We bought a house that was about 2.8x our combined income. We had no other debt at the time, and had a 20% downpayment. if every person you see with a Hummer in his driveway simply bought used cars when they were first starting out, they could have $100K more in savings today.
Just curious - is that take home or gross income? Any idea?
Gross income, as I recall.
So they are talking 50% of gross income. Perhaps 2/3 of net income? Insane!
WT Economist,
The only way to get back to sustainable is to get back to the old proven rules.
28%/36% is a good start. Its ok to let ‘first time home buyers’ go to 36%. Its also fine to let true jumbo be at 36%.
But 45% for Jumbo? No.
Then down payments… Jumbo should start at 25%, super-Jumbo at 40%. And if you look at PMI’s results… mortgage insurance is about to go up in price.
Got Popcorn?
Neil
When I bought my first house FHA in 1966 ($12,750), I was able to get 95% financing at 5.25%, 30 year fixed with PMI and escrow T&I but ONLY after 3 months of grueling lender background checks in addition to the standard stuff:
- actually contacting my employer for income verification
- statement from my parents that they were not lending any of the down payment
- statement by me (and wife) that we were not borrowing any of the down payment or closing costs
BTW, my income then was a Grand Total w/o OT of $6,760/yr
This is something that I have thought for a long time.. I don’t think that low down payment (or even no down payment) loans are a bad product. The problem is, during the bubble, people combined “risky” loans together to make a truly insane product.
Low/no down payment with excellent credit and verifiable income? I’d make that loan.
Bad credit/verifiable income and 20% down? I’d make that loan.
Excellent credit, no income verification, 20% down? I’d make that loan.
However, what we actually had was a product like this:
Horrible credit, no downpayment, no income verification, and to add a bit more fuel (as if it was needed), 1% teaser rates (negative am)????
That’s a totally worthless lending product, you might as well just send the cash through the chipper; because that type of loan should not (and probably never will again) EVER exist.
I would be more strict than you. Less than 20% down, I won’t make the loan, no exceptions. Bad credit, unverifable income will require double down or 40% down. And that’s once the market bottoms out. In this market, it would be almost 100% down because of how much house prices have to fall.
What, no mention of Oliocity?
Bye Fl
Keep in mind that the FHA is (was) specifically chartered for the purpose that we used it for in 1966. First time homeowner, good credit, stable job, just little down payment available. The PMI added a substantial amount to the payment and was included in the income vs payment evaluation. Note also that we were buying at less than 2X gross income and that in 1966 a wage earner got to keep a biggger part of his earnings than today.
We talk a lot about the big players, but little banks taking big hits adds up…
“‘Selling real estate is not a good business to be in these days,’ said Stephen Goldberg, a Baltimore area lawyer who is representing Sandy Spring Bank, which called in its $13.5 million loan to the developer.”
“From the moment in March 2006 when Melissa and Greg Thomas moved into the $445,000 house they built on five acres in Clayton, they knew they could barely afford it. Because of various problems that arose during construction, the Thomases have been unable to make the full monthly mortgage payment of $4,203 ’since Day One,’ Melissa Thomas said.”
Kent County, Delaware…..Welcome to McMansion Country HBB’ers. A place where massive behemouths grow like crabgrass and living in these monstrosities is normal and typical yet 35k/yr is the local salary. I worked and lived in lower DE late 04-mid06 and without putting any type of positive spin on it, it was flat out booming. Shacks in every direction, signs for 125% financing on every corner and these places were selling. The couple in the article appear to be locals who fooled themselves into thinking they too could pull it off. Most of the people buying were equity bandits and speculators. I have no sympathy for the couple. They gave in to the lie and capitulated.
They couldn’t afford “since day 1″?! Then why wasn’t the reporter a little harsher on them!
I also don’t understand how these people can honestly believe that some Magic Refinace Fairy can wave her magic wand and make an unaffordable house affordable!
Exactly. Refinancing (even if the value had gone up) would not have made this loan affordable to them. They would still owe the money, except now it is a higher amount. Well, duh!
how exactly does one get a $4,200 payment on a $445k home? By my math, that is an 11% interest rate at zero down. What kind of idiot builds a house when they can only borrow at 11%
Maybe that’s the total payment incl. property tax and insurance.
Read the full article. They are adding to the amount they owe and can only make the ‘minimum paymnet.’
That sucker is an option-ARM.
“What kind of idiot builds a house when they can only borrow at 11%”
I know, right? I have a CC that’s 11%, and I won’t allow a balance to sit on that, let alone 1/2 million dollars!
So few people calculate the cost of renting money from a bank. Throw your money away on rent, indeed. grumble, grumble…I guess I should go back to work so I can, uh, make some money myself today!
There were two fairies in the story. The refinancing fairy and the home price appreciation fairy.
Unfortunately, the f*ckup fairy showed up in town!
And bought the house.
Oh, I needed that laugh! I’m buried in paper right now and needed the release…
“They couldn’t afford “since day 1″?! Then why wasn’t the reporter a little harsher on them”
I thought it was strange that they mentioned this: “huge prepayment penalty provision in their mortgage, which would cost them thousands of dollars.”
If they can’t keep up with the mortgage how would they pay it off early? They would refinance to a lower rate, but would be penalized for refinancing? Otherwise I don’t get that part.
Also, prepayment penalties and balloon clauses should be illegal, IMO.
They also indicated that this prepayment penalty took them by surprise and the only found it when they tried to refinance it.
I don’t believe that for one minute! They knew very well what the terms were.
I’d bet if you spoke to them when they started with this house they would have boasted about the killing they were ready to make! They thought they were savvy investment geniuses!
My brother-in-law was of the same mind. He purchase a $360,000 no down ARM on 7/29/2005 foreclosure was completed on 1/30/2008. Here’s the rub and I no this to be true I do his tax’s their income combine was $48,000 in 2005. I told him how are you going to make the payment his answer was I will just refinances I said duh you can’t afford it know how the hell will you pay and even higher loan principal. He never understood the cost and penalties involved in doing a refinance plus any cash out that he got just meant you loan payment went up not down. I sat him down explained he was going to pay at least 1% just to fund the loan and then all the other title and processing fee which was his equity being eating up. Will anyway his first default was six month later. I guess they did a mod for him because he never paid property tax but all of sudden his tax where paid up. However eight month later he need to borrow some money just to pay the cable and the power that was turned off for about a week. So summer 2007 comes and this guy takes his wife and three kids on a Disneyland vacation WTF. I guess this is when he capitulated to the mortgage because his wife said payment went up to $3700 month about the same time. What really need to be explain to these young couple is every one can’t own the home of there dreams, it is not possible income do not match these home prices. My first home in 1973 was $54,500 wife and I made $28,000 a year and we had to prove everything we made, owe, had owe and still barely got the loan it was like the pope giving his blessing when that loan officer call we where kissing his ring trying to please that man. I literally hated that guy, but when it was all done and once we sign the document he laugh and said he was just doing his job. Young people need more professionals like that, not just order taker that are out there now…
LOL I hope I see the day again when buyers are kissing the lender’s butt in order to get a loan for 2x their income with 20% down and decent credit. That will just mean very low house prices for us!
Your BIL is so dumb, he refused to listen, now he loses his house 6 months later! People have told me dumb things, like the fact I could “afford” a $150k house instead of $50k on a $30k gross annual salary. I just laughed at them. My first house is going to be under $50k, maybe even $20k
“They gave in to the lie.”
Amen brother! History never seems to ultimately matter when it comes to learning the lessons to be had, once again, for what is truly valued and what are trinkets or distractions.
Live not by lies…
“‘It’s like a snowball,’ said Stokes, who bought her Upper Marlboro house for just over $1 million in 2006. It doesn’t help, she said, that her lender changed her loan terms a week before she settled on her home, increasing her monthly payments by nearly $2,000.”
And you needed a MILLION DOLLAR HOME because?…
Have a couple I know who moved in to a million dollar home..WHY?..because the spouse said, “Well honey, I already live in a million dollar home I have to move to another million dollar home?..result…”original million dollar home” not sold and now worth about $599K going for foreclosure…new million dollar home in dead zone empty community…but hey, “YOU LIVE IN A MILLION DOLLAR HOME FOR NOW!”…I think?????
Just the stupid “I have to keep up with the imaginary joneses”..oh by the way..the other homes in the new community I checked..the few buyers(joneses) that came in did so with 70% downpayments! This couple 100% FINANCING!
“Fighting back tears, Mitchell described the stress she has endured. She said she and her son have resorted to eating noodles and peanut butter and jelly sandwiches several times a week to save money.”
I eat PBJ’s minus the jelly and noodles 2-3 times a week. And I don’t have a mortgage or any debt. Geeez!
No kidding. And mine is with homemade bread (we do that daily here) and quality PB + J. I have no idea why PB&J got such a bad rap.
Homemade noodles are also worth the effort, but we’re in the groove with daily bread.
Getting way off topic here, how do you handle the rise? I can bake a mean loaf of bread but I don’t know how to time it right. I’m out of the house by 7:00am and not back until 6:00pm - do you wake up early and let it first-rise in the fridge throughout the day, or . . .?
Refresh the starter in the morning (no store-bought yeast)
@ 6:30p, mix
first rise 1:30 (in oven initially heated by turning it on for 1 min)
shape & second rise 1 hour (same deal with oven)
Bake, and it’s the only part of my life that’s not half-baked.
Ah okay so it’s an after-work deal and you have your bread by around 10:30pm. Awesome
Thank you!
Ooh, ooh, ooh.
Another sourdough-meister!!!
Yay, us!
“I have no idea why PB&J got such a bad rap.”
Because PB & J is gross. Why ruin a perfectly good peanut butter sandwich, or a perfectly good jelly one? It’s like mixing chocolate sauce and ketchup.
But, yeah, PB sandwiches and noodles are perfectly edible. What was that FB eating before, caviar? Now that’s really gross.
I dunno… beluga caviar, creme fraiche, a little red onion stacked on a bilini, then washed down by some fine, ice cold Russian vodka is a little slice of heaven!
Another MSM cliche. So, according to the MSM one would think that ___% of housebuyers in recent years were single parents: 80%?, 85%?, 90%?
Does the MSM have a special “single parent yellowpages” or something?
BTW, that’s a slam on the MSM’s exploitation - not single parents. Come the (bleep) on, they beat that cliche into the ground already. If they think there were a lot of single parents before this bust - they should wait to see how many there will be after this bust.
I don’t know why “single moms” think it’s some sort of amazing accomplishment, something to be proud of!
To me, it’s not surprising that someone who doesn’t have the sense to be married when raising children (or to stay in a marriage), will also have trouble figuring out how to manage finances.
easy. never judge why someone’s a single parent until you know the full story.
took the words out of my mouth.
reuven you are walking a fine line
people make mistakes
my mom was a single mom and me and my sister are fine
she married a jerk and got out
However, it makes perfect sense to judge that single parenting is likely to be fraught with heartache, disappointment, unhappiness and - if the myriad studies are to be believed - likely to result in children with more problems.
This is not to blame those who have no choice (someone close to me did not), but rather that we should not fool ourselves about the problems that can and often do result.
smug.
Not necessarily so. Didn’t do so well with the marriages, but raised damn excellent daughters and came out with no debt, low overhead and my sanity.
Reuven, you often come up with good thoughts, but this was not one of them.
I’m with reuven on this one. If you’re a single parent, you either chose wrong or acted wrong.
Mitchell, a single mother, bought the house eight years ago for $200,000 and took out a fixed-rate mortgage with a 7 percent interest rate. It was her first house, and, as a young woman earning $90,000 a year at a job in sales,
Longing for a chance to start her own business and spend more time with her son, Mitchell left her corporate job in 2002 and started a day-care center in her home. The day-care business and finances were fine, she said, until she decided to refinance her home in 2005 and tap its equity to consolidate bills
She acknowledged that she was too trusting and did not read all the paperwork,
Kimberly Mitchell, who owes $260,000 on her mortgage, said she tried to refinance at a lower rate, but lenders said her credit was not good enough.
So she put her house on the market. List price: $350,000.
Sorry but SHE CREATED HER PROBLEMS
(1) She quits a $90,000 a year job so she can stay home and babysit??? We are NOT talking a high paying job when we are talking about pouring fruit juice for rugrats.
(2) She runs up credit cards (real meaning of ‘consolidate bills’) and then mortgages her home even more to pay for the junk she bought on credit cards?
(3) How much had she blown on stuff?? She ran the mortgage up another $60,000!
(4) She didn’t read the loan documents. Uh huh….well at least her former employer isn’t paying this fool $90,000 a year. Anyone who doesn’t have the brains to read what they are signing or seek legal advice if they don’t understand sure isn’t worth $90,000 a year.
(5) $350,000 in a seriously falling market? HA ha ha ha. She is going to fiddle about still hoping to make a profit on the place and not get it sold before foreclosure. She thinks she is going to find a buyer who has at least $35,000 in cash and an income of $96,000 a year who wants a condo/townhouse that is falling in value?
By the time the prices finish deflating and get back to reality, there will be no way that the condo/townhouse gained 75% in value over 8 years. That is over 9% a year. Don’t think so.
Using historical appreciation rates, it is worth around $250,000 – 265,000 max when the bubble inflation is discounted.
(6) Here is an idea – she can quit playing the ‘stay at home mom’ with the half-baked job and go back and get a REAL job that pays real money. Or how about handing the kid over to his father while she takes a 2nd or 3rd job instead of whining about the fallout from her poor decisions?
BTW, this “single mother” stuff is getting REAL OLD.
So what? It doesn’t excuse her stupidity or dumb decisions. In fact, it just goes to show that she has a pattern of making stupid decisions. To end up a ‘single mother’ she either (a) got pregnant and had an illegitimate kid, (b) married, had a child and then rather than sticking out a less-than-perfect marriage because it ‘wasn’t fulfilling’ or ‘she wasn’t happy’, she divorces or (c) married, had a child and it turned out that she married an idiot who (i) beat her or the kid (ii) gambled away their money (iii) drank away their money or (iv) refused to get a job or (v) deserted her to play with bimbos – in which case it would make sense to divorce him but on the other hand she PICKED HIM. The only way that she could end up a ‘single mother’ that would or should generate sympathy is if she had been widowed.
I seriously doubt she was really making 90k. It sounds like a good number to grab when you’re BSing someone - “I was making like 90 thousand dollars a year! And I gave it all up to go into DAYCARE.” ROTFL
I suspect that the $90K was the income “stated” on the mortgage app, and the reporter was too lazy to check to see what here REAL pay was. What was her actual job, as opposed to being “in sales?”
Mortgage broker?
Well I gave up an 86K job to become a teacher. And I work with a couple of former attorneys. Making alot of money isn’t everything to everybody.
As a parent,a nd especially a single parent, your choices should be to provide for your child. Your “happiness” is now secondary to the secuirity and well-being of your child. It’s not all about you anymore. If you wanted to do that, then you shouldn’t have had kids. Nowadays, no-one in the developed world HAS to have children if they don’t want to.
I doubt it, but none the less it is a possibility. Does not excuse leaving the well paid position. On the other hand, have you seen what a daycare these days charges for a kid??? Depending on the location/construction/zoning/special use permit, etc. she maybe making that kind of moo-lah pouring juice for wee-ones. It is easy to spend $900-$1200/mo on childcare for ONE kid, plus paid time off, etc.
Makes close friends and relatives look appealing, eh? Another reason young families are reluctant to “vote with their feet”. But like that comic said, “Americans can’t get rid of their SUVS… they have fat kids!”
No wife nor children for me! I love being single and free and my hard earned money is mine!
When you are 62, you won’t think the same.
There’s a 50 - 60% divorce rate. That leaves a lot of single parents. Must be nice to have a great marriage (well, if you are married), but you should realize you are in the minority. Chill a little on slamming people raising kids on their own. I agree MSM needs to stop playing it like a pity card, but I don’t think they deserve the bad rap being given on this thread. Especially those who are honest, hard workers, not sucking off every bit of government assistance they can, etc.
Sorry but while I refused to do divorce law (loathed listening to the whining over who gets the microwave of women and kiddy law), I knew a lot of people who did. IIn discussion about the reasons for divorce, they said 90% of them were the ‘oh I’m not happy’, ‘oh we just don’t get along’. ‘oh we have different interests and I hate his hunting buddies’ kind of thing. Very very few were because of real physical abuse (as opposed to the whining ‘he is mean to me’ kind) or the spouse landing in prsion with a felony conviction or other real reasons.
Now the person whose spouse pulled the “i’m not happy and want to go fulfill myself’ divorce can’t really stop it - and they have been snookered by their partner. They get a little sympathy - but not a lot unless it came out of the bluse after 20 years of marriage.
As for the one who files for such a reason? They deserve what happens to them in the divorce settlement and the finncial consequences thereafter.
Sorry but the divorce rate in my grandparents’ day was 1.87 per 1000. Now it is like changing the TV channel.
Frankly people who have children should not be permitted to divorce unless there is a real physical danger from their partner until the children hit 18.
And if they insist on having illegitamate children and can not afford their financial obligations, they should not receive any assistance such as TANF. If they can’t provid for them, they should lose custody.
We’ll just have to agree to disagree. This is not the forum for a debate. But I’d love to meet you for a beer some day and play point / counterpoint.
“Frankly people who have children should not be permitted to divorce unless there is a real physical danger from their partner until the children hit 18.”
???
FInally, someone who makes sense! Speaking the truth is unpopular these days.
I disagree with you on this one Ann. I wish my mom had divorceed my dad. Staying together for the kids did not make a happy household for me or my siblings, believe me.
I know quite a few single moms, who own homes, they can afford, work hard, bake cookies and attend every baseball game that their kids play in…One left a abusive marriage…and is doing quite well!
Whoa Ann: I am not one of those that bashes you, but I have to partially disagree with you on this one. 1st marriage gave it 13 years, 2nd gave it 7 years - didn’t jump in or out quickly or without thought. You can’t assume because the idiot didn’t handle her financial obligations correctly means all single women are selfish idiots. It’s too broad a generalization
I also eat PB & J sandwiches for lunch at work and my meals are paid for by my employer! I also love chicken noodle soup even at home.
Mmmmmmmmmmmm a peanut butter and jelly sandwich.
I was raised on peanut butter and jelly sandwiches. Still love a good PB&J sandwich. My favorite PB&J is wheat bread with mixed fruit jelly and crunchy peanut butter.
My brother and sisters to this day love PB&J. My mom thought we would hate them when we became adults since we had so many of them in our younger days.
Being the type who likes anything fattening, I am a big fan of PBJ. I have a day off today and I think I’ll have one for lunch!
“resorted to eating noodles and peanut butter and jelly sandwiches”
Is is just me, or have we as a country become spoiled and self indulgent? Renting is not the end of the world, nor is eating noodles or peanut butter and jelly sandwiches. There are people, even in this country, that would like just a roof over their head and a predictable meal.
If renting and eating “cheap food” (ever tried fruits and vegetables?) is good enough for my family, it’s good enough for yours.
Actually, Peanut Butter is a really healthy food, and great for Diabetics.
Add a cooked, cut up, Chicken Breast to Chicken Noodle Soup, and you get a good mix of carbs and proteins.
We’ve become of nation of Prima Donnas, I agree.
PB on whole grain bread is a great source of complete protein. We make our own PB - easy to just grind good raw peanuts in the Cuisinart.
I have to confess an addiction to Top Ramen. I know it’s terrible for you.
Go to a Vietnamese restaurant and get Pho. I love rice noodles.
I have to agree..I am quite happy brown bagging it with hubby..I rather use that money to go the movies on the weekend with the kids…
I am disgusted with our whining society as a whole. This lady should shut up and continue feeding her overstuffed face with the good ol pb&j. It could be much worse.
well-said
i am a “bitter renter” but my fridge is full of food
and if i do not feel like cooking i pick up the phone
but i am a lower class renter so what the hell do i know
See - us “low class, bitter renters” are the only ones still propping up the economy!
i bought dog food and major food shopping this weekend
i did my part. i even filled up my tank $37 for a 4cylinder
thank god it is only 1 or 2x a month tops
That’s why ill never marry. Firstly, current marriage laws are misandrist, they favor the female and harm the male. I don’t need any arguements, go Google it up. It’s to your benefits ladies. I see men moving to other countries to marry where the laws are fair or actually favor men.
Second of all, over 50% of marriages fail. Might as well just be boy/girl friends.
Happy to hear you’ve opted out of your children inheriting the Oil City house.
I thought Bye Florida children were going to inherit the property in the NW part of Penn?
ByeFL said:
“I see men moving to other countries to marry where the laws are fair or actually favor men.”
Saudi Arabia, Afghanistan, or Sudan?
I’m having a hard time mustering up any sympathy.
…LuJuanda Dixon, who is working with counseling group HomeFree-USA to try to save the house in Bowie that she bought with her husband last year for $650,000. Before Danny Dixon lost his job in November, they were making $100,000 a year.
Why would anyone think they could afford a house that’s 6.5x your annual salary? The way I see it, they’re merely sleeping in the bed they made.
6.5x an annual salary that is far beyond what is typical for the locale. It really makes me wonder just WTF are these people thinking????
That’s 6.5 before income tax, and not counting little things like property tax and insurance. Oops!
And visa payment, truck payment, car payment, daycare fee, broadband/phone/cable bill, fuel oil bill, electric bill, obligatory vacation, etc etc etc etc. Property tax is extremely cheap in DE and no sales tax.
oopz. That was the Marlyand commentary. Ok… Add property taxes to the rest of the monthly bills.
There is no income tax, the Govt. has waived their responsiblity to pay it since they’re sure to be busy paying all their earnings to the bank.
We do appreciate you paying your taxes though, so that our kids can get a good public education. It’s all for the kids you know, the ones they also get deductions and tax credits for and who sleep in 200sq ft bedrooms.
100K a year for 2 people is totally different then a single 100K salary. That’s 2 people making 50K each, which is not even CLOSE to buying a 650K home. A single person with NO debt at all MIGHT be able to swing a 650K home on 100K a year, assuming they want to eat Ramen and sit in their McS**tbox with all the lights and AC off all the time. But with 2 people?? Not a chance in he**.
And, just as an indicator, when I went to rent my current home, the REtard ran the numbers on an “affordable” home for me. They came back with a number a little over 9X my current household income.
9X!!!!
I laughed in her face; I couldn’t help myself.
I have had people tell me I could afford around 6x my gross annual $30k income on housing. Maybe with neg-am loans and HELOCs, but today no way!
I just cannot understand why there are so many homes out there priced like this. I, personally, think $100k / year joint income is somewhat respectable. Not “rich”, but certainly much more well off than many others. So why on earth are there so many $600k “ish” homes? Really, isn’t it a fairly small fraction of the population that can afford those using traditional affordability calculations?
And it’s people like this who bought into it that kept the prices soaring. Ugh.
That’s about what the wife and I make here in the ‘Burgh. People wondered why we only spent 1.5x on our house when we could “afford” so much more. My response has always been, “affordability is in the eyes of the loan owner.”
Some loan owners that are now FB’s are just blind.
We have opposite problem..people wonder how we could afford this house..simple..sold at the height of the market…put all the money down as huge downpayment..no car payments..no credit cards…if we can’t pay cash..we can’t get it…
eastcoaster,
I know you’re from the Philly area.
Yesterday I went to 3 open houses - and there were only two names on the sign up sheet at the close of the day. The places I visited are still asking unreasonable prices, even though they’ve backed off a bit. (about 3-5%). I know you’ve been waiting a long time, resisting a lot of pressure to buy a house etc. But it looks like this year’s not the year to buy, unless you find a really motivated seller.
I’m going to ask my attorney if any distressed situations come across his desk, to call me. Sellers on the MLS are still in la-la land.
Hi, phillygal!
Yeah, I can see this won’t be the year to buy - at least not in our area. Unless lowballs start working. The 3-5% price declines are a joke, aren’t they? Curious - what % drop do you think the area needs to get back to reality-based affordability?
I don’t even go to open houses anymore. Besides having no interest in buying presently, it’s almost sad to watch the realtor’s desperation when a potential sucker walks through the door.
As far as reality based affordability, check out the HHI for your zip on Melissadata. You can use that as a benchmark.
Also look at the National City data, right now they have PHL metro at about 13% overvalue. But remember, there’s usually an overshoot on the down side after a bubble.
Some of the houses I’m looking at, I’d be happy with 10% off, so I’d offer 15% off and see what happens. But I’m not submitting any offers because right now I’m not ready to be a homeowner.
LuJuanda Dixon, who is working with counseling group HomeFree-USA to try to save the house in Bowie that she bought with her husband last year for $650,000. Before Danny Dixon lost his job in November, they were making $100,000 a year.
__________
They could NOT afford that house even before he lost his job!
$650,000 = approx. $4880 per month or $58560 a year in payments, insurance and taxes
A $4880 payment a month takes a $189,000 a year income if it is affordable (not more than 31% of gross income to taxes, insurance and mortgage.)
They could only afford $2583 a month and that is a $343,000 mortgage 30 years 6%.
Don’t think they came up with a $307,000 downpayment.
They were greedy. 6 1/2 times income - no way.
The house would be almost affordable, if they were both making 100K. Almost, but not quite.
Buying a house like that on 100K combined income? It makes free market economics look bad. Too many idiots making dumb choices that hurt everybody else.
But 650k and they got granitie coutertops and a sub zero
they had to have it!!
maybe they can live in the box from the sub zero
2x income max for this cowboy and not a penny more
Even at 200K HH income, 4880 a month is not easy to swing. You CAN do it, but would you want to? 200K a year, and still shopping at the thrift store? That’s not my idea of almost a 1/4M dollars a year annual income.
Frankly, I think that 3X salary (at least in high cost areas) is probably too much for most people to pay. As you move to the 200K+, I guess you can do it….but how secure are you with that 200K a year job? And do you really want to live like that; especially when you can likely rent the house for about 1.5-2.5K a month?? Why do that to yourself?
Well, if they really like the house, they can wait until the bank finally lets the price fall to 2X their income level!
Patience! (and rent while they wait)
Lehman Brothers just reiterated that its “liquidity position is strong.” Which is code to mean that they are about to go down the toilet like Bear did.
Waiting for someone from the company to say “this is ridiculious, absolutely ridiculous”
As a general rule whenever someone tells you everything is fine, it is time to get worried. If things are fine they speak for themselves, when you need reassurance it is usually already to late to stop the impending disaster.
How is it that the NYSE is down about 170 points, while the Dow is only down 3?
Oops..”Someone gave me the “Bear Sterns” script..”
“…the $284-a-month payments proved too much even before the adjustable-rate loan reset.”
I’m sorry if I sound like someone who lacks compassion, but if you can’t afford a $284 monthly mortgage payment, it’s time to take a 2nd job. There’s absolutely NO excuse for that. 40 hours per week at the local gas station will pay you more than $840 per month. Come on! You can’t blame the lender here!
If you had the slighest idea of the level of income of those who are disabled, you would have spotted it in a minute.
I will give you odds on that she has been declared permanently disabled by Social Security (not an easy process nor an easy standard to meet.) The average Social Security Disability payment is $930ish - and out of that comes Medicare B ($96), Medicare D and the 20/50% copays of Medicare unless the household income is below 150% Federal Poverty Level.
The income number is just way to precise to be anything else.
And that $284 payment is considered “affordable” (ha haha) because it is less than 30% of gross income. (BTW, with SSD, gross it up by dividing by .8).
If I am right and she is disabled, no way is any employer going to hire her. They have a million lawful reasons for the refusal to hire.
So that means she is homeless because she can not afford housing on her income which is insufficient and she can do nothing about if she is disabled.
I have been disabled for 8 years and my SSD is only 734 not even close to 900 they base it on what you used to make its about 66 percent of what you used to make so no being disabled and on SSd is no picnic and the prices today are killing us.
I think there should be a check on realt-whores also as they still keep on giving false information to make their buck. I saw a house last weekend and it was a foreclosed home. The realtor wanted me to bid immadiately as they had 2 other offers on it. I told her that here is my phone number and get back to me after you are done with your other offers. I cannot get into the price bidding in this stupid market and in a place like Martinsburg which is no way DC suburbs, 2 hours commute to DC and all houses owned by people who could not buy in DC between 2004-2006.
If real estate agents’ advice was regulated, say, the way brokers’ advice is regulated by the NASD, what a different world this would be.
Amen!
So [question to HBB] how has the real estate industry managed to stay unregulated?
Why isn’t there a federal version of the SEC?
“The mission of the U.S. Securities and Exchange Commission is to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation.”
http://www.sec.gov/about/whatwedo.shtml
I’m not a fan of gubmint regulation but in my 50 something years I’ve never been concerned about a bubble taking down the whole economy before now.
Did she ever call back? “Guess what, the other offers fell through…..Its a great time to buy”
SFBAG,
Are you drinking coffee again?
Tom my man,
Yes. Once again sitting at my computer, looking out the window at the coastal hills.
Dang coffee and this blog are my only addictions. Coffee right now being the last legal high.
“Coffee right now being the last legal high.”
& sugar.
I’ve learned not to drink and read this blog at the same time. Poses too much danger to my keyboard and monitor.
I’m addicted too but lately I have been trying to seek help.
You should eat chocolate, it’s a safe, legal high for women
;) 
My dad always picked out huge boxes of candy for my mother on Valentine’s Day. He just HAD to help eat them, too (do you really think brownies, cake and candy is only eaten by women?), of course.
flint,
My dad had a sweet tooth that wouldn’t quit. He looked forward to Halloween more than all of us. All that free candy that in no way we would be able to eat.
“Ryan W. James, senior mortgage banker with First Horizon Home Loans, said lenders will in most cases allow a debt-to-income ratio of up to 50 percent. If you make $5,000 a month ($60,000 a year), your monthly debt can’t top $2,500.”
Since when? I remember when the rule of thumb lenders applied as an upper limit on debt to income ratio was 30 pct. But then we entered a New Era, where real estate always went up and homes always became less affordable. In order to prevent their customers from getting priced out forever, lenders pretty much had to raise the debt payment ceiling to 50 pct of income.
All Bear Stearns employees out of work. Bye Bye Manhattan RE prices.
They said hedge Funds will hire these guys. I say, hedge funds are in trouble!
Did you read about the realtor who was handing out business cards at the Bear H.Q. this morning?
Now who are the vultures, REIC?
that is alot of homes coming to the market
bsc employees will be motivated sellers
any banks worthwhile ?
I think anyone on this board would have gone to a 5 or 10% down formula in 06
“… the Thomases have been unable to make the full monthly…”
Sorry, I could not resist:
“… the dumbasses have been unable to make the full monty…”
I remember predictions make like this.
http://www.cnn.com/video/#/video/us/2008/03/17/gutierrez.campground.living.cnn
When I was a young pup, I did a lot of traveling by bike. During the early 1980s, I met many down-on-their-luck people who were living in campgrounds.
In fact, one homeless family took pity on me because I arrived at the campground on my bicycle. They even offered me dinner.
Knew a family who lived at the Illinois State Park in Zion, in a tent for a year during the 1980’s. Those days may be coming back.
I lived in Gallup NM in the mid-1970’s. Went for a walk one pleasant evening through the hills at the edge of town. Found an encampment on BLM land with several families living in tents, couple of old pickups, no roads to the spot, just tire tracks. They had been there quite a while, the place looked well-used, but neat.
““Mitchell, who owes $260,000 on her mortgage, said she tried to refinance at a lower rate, but lenders said her credit was not good enough. So she put her house on the market. List price: $350,000.””
Gee and you wonder why only REO foreclosures are selling? She is going to be another foreclosure stat.
““Cruise says that Baltimore-Washington housing prices, even with recent declines, remain high enough that buyers may feel forced to choose between the house they want and the lifestyle they’re used to. His advice: Look in less-expensive neighborhoods you might not have considered, cut back on your non-mortgage spending or keep renting while you whip your finances into shape.””
Don’t catch a falling knife, do not buy a house unless it’s in a non bubble state. Rent only if the rent isn’t a ripoff.
“Don’t catch a falling knife, do not buy a house unless it’s in a non bubble state. Rent only if the rent isn’t a ripoff. ”
do not buy do not rent?
UM i like a roof over my head and indoor plumbing and yes the rents in nyc are a ripoff but the jobs are here so it is a trade off
Despite all of this, let me say unequivocally, the bubble has only just begun to deflate here in the metro areas of the mid-Atlantic. Prices are for the most part less than 10% off peak. Realtors have no interest in hearing about how much something should cost according to historical norms (e.g., 2000 prices adjusted for inflation). Banks have little interest in accepting short sales. And with the exception of FBs who bought in the outer burbs, no one is really willing to say that their home is worth less than it was 2 years ago.
There is great selection right now, interest rates are still at historical loans, you’re throwing your money away on rent, NOW IS THE TIME TO BUY!!!
It will be another 6 months or more before the LasSanOrlando implosion effect hits our area… after the spring RE bust and excuses about silly recession nervousness fade away, then we move on from denial to anger… and the real fun begins. I don’t want popcorn, I want a plastic sheet to protect me from the splatter when the sledge-o-matic starts going into overdrive.
“no one is really willing to say that their home is worth less than it was 2 years ago.”
And in a related question, what about the stock market? During 2004, the S&P 500 index hovered around 1100. Last year it briefly hit 1576. Right now we are at 1258. With all of that HELOC money (that was more and more plentiful during 2005-2007) drying up, isn’t it somewhat reasonable to expect the S&P 500 to go back down to the 1100 range again? (And that’s without factoring in a recession).
That’s what I’m thinking, Arroyo if not much lower (heaven forbid 2002 levels.)
Oh, but we’re all different here in the Mid-Atlantic region. Didn’t you get the memo?
Yeah, things are going to get real interesting here in the DC Metro area when Mr. and Mrs. Yuppie Lawyer inside the Beltway discover that the alligator is very hungry and probably insatiable.
median income now is the same as it was in 1998. Stands to reason that everything else must go back to 1998 levels.
“And with the exception of FBs who bought in the outer burbs, no one is really willing to say that their home is worth less than it was 2 years ago.”
Very true. Most people I know have written off 2008, but believe that the RE market will be back to “normal” in 2009. And they define “normal” as double-digit appreciation, year after year, forever.
During a recent breakroom chat with some of my coworkers I mentioned that historically, real estate appreciates at about 1% above the rate of inflation. My coworkers looked at me like I was from another planet. The mantra has changed from “real estate never go down” to “real estate never goes down for long.” It’s going to take years to correct this sense of entitlement.
I’ve tossed similar facts into conversations here in Tucson. And I like to add a special sauce, which has the “Real Estate Can Go Down for a Long Time” flavor.
If my audience is still listening, I offer to e-mail a link to charts like this one. I haven’t had to e-mail too many links. Yet.
Back in the good ole days of fibbing and jiving when “cute as a pin!” “incredible views!” and “steal of a deal!” were phrases of the velvet larceny, times were good. Word on the street back then - got a dress shirt and a vehicle that runs? Join us in Real Estate! It’s the best gig going. Assess homes? We can deal! Lender? Let’s dance together for fun and profit!
After the sight of another color ad consisting of a posed group of Realtors wearing matching black outfits underlined by a agency moniker suggesting “exclusivity” and I was really in need of a stiff shot of gin to clear my eyes of the horrid sight.
“Drop by for a chocolate chip cookie” the ad said. After the past history of pumping inflated housing prices (with those ubiquitous back slaps & winks & nods & smirks passed from one home selling huckster to the next cohort) can anyone ever view this business in a favorable light again?
These days the smiling mugs of Realtor/Lenders/Appraisers have replaced the faces on the old “Wanted Dead or Alive” posters in many peoples minds, but this time try anything sneaky, and we’ll be the ones ambushing you.
p.s. Of course you’re probably reading this and thinking, “..but I was one of the reputable ones!” - yeah, right. Tell it to your pastor or priest.
I have to admit I visited a few open houses over the weekend on a whim, with the intention of just seeing how the housing market was first-hand. We were the only people in all three. Of course, it didn’t help that all three were still outrageously overpriced. The last one was a REO with an asking of 649k. On my way out, he winks and says, “it’s a great time to buy. I have the feeling the bank will settle for less than 600k”. I thought I was out of earshot when I chuckled to my wife that it would eventually go for less than 375k. Ooh, the look he gave me. Thank goodness he didn’t have heat-ray vision.
I too am astounded by the high prices. I keep track of sales vs pending sale prices, and it’s only about -10%. It should be 30-40%. That’s why sales are low. Oh well.
Attended a St. Patty’s party on Saturday and one of the partygoers was saying how excited she was about moving into her own house in a couple of weeks. I asked her how much downpayment she put down, she said ‘none’. That this was done through a CAL FDH loan?
WTF?
Gee, we are far from the bottom if people can still buy with zero down. She will lose her house soon.
she will lose possession of the Bank’s (or unknown derivative blackhole investors’) house soon.
“In Montgomery, where the typical household income tops $87,000, mortgage foreclosure cases rose nearly 130 percent last year. That was the biggest jump in the state.”
Its different in the beltway! Prices always go up!! It’s just a small blip!!!(regarding current market) Are you planning on being a renter forever? All things I’ve being told or asked over the last four years. It would be nice to be a homeowner, but its not something that would or should define you. However, during the housing frenzy it seemed as if everyone was defined by their latest acquisition - a new condo or townhome.
To be quite honest, it was difficult going against the advice of friends, but I’m pretty darn independent and the numbers just did not add up. Its why I moved from DC to VA. The fact that I’m a contractor and subject to the whims of Fed contract, didn’t hurt with making the decision.
The denial that continues in Baltimore/DC area is astonishing. I hear it all the time from panicked people who bought in the past 5 years; they agree that things are bad but then say perkily, “Oh, things are always slow in the summer, this Spring you’ll see, we’ll sell it! We’ll sell it fast for a great price! Then you will be proven wrong again, bitter renter!”
One woman I know used to regale me DAILY with the millions of dollars she and her hubby were going to make flipping all these fabulous properties and openly laugh at me for continuing to rent — I saw her the other day and asked her sweetly how things were going because I knew that they never sold a SINGLE property, and that instead of making millions, they actually lost their gorgeous, hand-built, paid-for home because they sold it to sink the profits into their real-estate “empire” and now live in an overpriced crudshack (one of the flippies they couldn’t flip–well, “You know how it is, real estate comes and goes in cycles! This one will be back up soon!”
Good grief. Or my favorite: “BRAC will save us! Oh holy BRAC!” I really wonder what it will take for these people to see it. BRAC will not save us, nothing will. Prices will have to come down to where they were when I moved here 10 years ago — i.e., $100K for the tiny little crudboxes, not $350K.