[mEDITate-OR:
miss reading a very good summary of where we all are, this week...
may not cover everything, but tis close.
-----------
May 30 10:59 PM
While we agree with you about Steve's article, it is very good - may we share some "strategic default" thoughts - all SD's were not created equal, and are not now.If you want to know where SD are most likely to occur, and why; read and answer the following:
See if you can find THESE numbers = the percentage of the Wall Street created securitized RE loans: A. in the "sand states" = Cal, Nev, Fla & AZ; B. during the "dead zone" years - 2002 to 2007; C. of the ARMs created - no doc, liar, interest only, & low down loans; D. of the RE loans "pushed" by WAMU/Chase, Countrywide/BkOAmer, Wells/Wichovia, and IndyMac/BK, and now being written off, very slowly, by them; E. of the total "underwater" RE loans owed by U.S.; and F. as in a failing grade, of the RE loans that have already been foreclosed, PLUS those 10% of all current RE loans that are either IN foreclosure or in a past due status.
-----------
May 30 10:50 PM
First, this statement is half wrong: "Unfortunately, incentives seldom create a new demand but simply time shift the purchase."
While it obviously is true that the start and the end of the Buyer Tax Credit did shift purchases forward twice; the statement that incentive seldom create new demand is, in this case, simply false. The tax credits did drive sales. Some would have bought anyway, true; but many would not have, over the last year, without it. Look at the sales numbers.
Second, you must know that not all of the animals are equal - specifically, that new home builders and strategic defaulters in the Sand States ARE very different - before, during and now after the collapse. You, too, need to read this story: New homes being sold again in distressed Gilbert area @:
www.azcentral.com/news...
Notice: "Developers can buy the finished lots for a fraction of what they sold for a few years ago, and the cost-per-square-foot to build a house has plunged" ! No permits to buy & wait for, no land to develop, no utilities to pay for & install, no amenities to pay for, no or very low upfront costs. Just find a buyer with a pre-approved mortgage to pay for it, and build to their specs.
What THAT means is that existing homes - sold in sand states, during the dead years, and very much underwater..., are NOW being undermined by newly constructed homes as much as they were/are by "foreclosures". THAT probably will force far more walkaways/strategic defaults, bcuz your home will never, EVER be as affordable as these new homes are now. Depressing the AZ housing economy, for years!
While it obviously is true that the start and the end of the Buyer Tax Credit did shift purchases forward twice; the statement that incentive seldom create new demand is, in this case, simply false. The tax credits did drive sales. Some would have bought anyway, true; but many would not have, over the last year, without it. Look at the sales numbers.
Second, you must know that not all of the animals are equal - specifically, that new home builders and strategic defaulters in the Sand States ARE very different - before, during and now after the collapse. You, too, need to read this story: New homes being sold again in distressed Gilbert area @:
www.azcentral.com/news...
Notice: "Developers can buy the finished lots for a fraction of what they sold for a few years ago, and the cost-per-square-foot to build a house has plunged" ! No permits to buy & wait for, no land to develop, no utilities to pay for & install, no amenities to pay for, no or very low upfront costs. Just find a buyer with a pre-approved mortgage to pay for it, and build to their specs.
What THAT means is that existing homes - sold in sand states, during the dead years, and very much underwater..., are NOW being undermined by newly constructed homes as much as they were/are by "foreclosures". THAT probably will force far more walkaways/strategic defaults, bcuz your home will never, EVER be as affordable as these new homes are now. Depressing the AZ housing economy, for years!
May not be true where you are, but in the Sand States it is true.
--------
Economic Flavor of the Day: Housing, GDP and More
==========
========
No comments:
Post a Comment