Friday, July 28, 2006

Just Take Out that HELOC!

Just take out that HELOC!

61 comments:

  1. He probably has an underwater flip.

    What amazes me is that anyone thinks that the news on homes can be supressed. What we know about homes in the US (and much of the western world):
    1) Overpriced (relative to incomes)
    2) Readily available (they might not be making more land, but they sure built a lot of empty homes)
    3) We've almost run out of buyers (Gone from 55% ownership to 70% ownership)
    4) Do the baby boomers really need that many 2nd homes (We've gone from 25% 2nd home ownership to 40%)
    5) HELOC'd to the max (don't you just love the new BK laws?)
    6) Sales are slowing
    7) Price momentum has halted, even revesed for $/sqft.

    While high end homes are selling, I still find it interesting that Buffet predicted that they'll be hit the hardest when the equity bubble pops. His ball analogy with the clock about to strike midnight is spot on.

    Thus, for the market to continue how it was going we would need to get to 85% home ownership and 55% 2nd home ownership.

    I cannot be the only one to think that *a lot* of 2nd homes will be "for sale" soon.

    Neil

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  2. Yeah, 4.) is shocking, I hadn't heard that one before. Considering that most of these people probably REFI'd their first to get a downpayment on their second, can you say upsidedown²?

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  3. thanks for posting this, David

    i caught it on Yahoo and nearly poo'd my pants as i looked at the whole slideshow

    ...right after I read the story about how 25K cows and 500K poultry MELTED this week in CA and were put in landfills! it's gonna be fun heating and cooling these McMansions!

    Ben isn't going to pause, he has gotta put some discipline in this whole gluttonous binge

    fasten down the hatches ...

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  4. I hope Ben raises once more by 25bps. It is indeed looking les likely.

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  5. from DC.gov

    Address: 0140 Q ST NW
    SSL: 0552 0078
    Neighborhood: OLD CITY II
    Homestead Status: ** Currently receiving the Homestead Deduction*.
    Owner Name: APURVA D ----
    Mailing Address: 140 Q ST NW; WASHINGTON DC20001-1105
    Sale Price: $400,000
    Sale Date: 06/13/2006

    Address: 0223 P ST NW
    SSL: 0552 0115
    Neighborhood: OLD CITY II
    Homestead Status: ** Not receiving the Homestead Deduction
    Owner Name: JENNIFER S ----
    Mailing Address: 223 P ST NW; WASHINGTON DC20001-1927
    Sale Price: $484,500
    Sale Date: 06/12/2006

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  6. I hope Ben raises once more by 25bps. It is indeed looking les likely.

    I have to admit to mixed opinions on this.

    Anonymous. Can you provide more detail on those OLD CITY II units? For those not in DC, are these condos or homes? The fact that one sold for 84.5k less than another is interesting, but without sqft... I cannot make a judement.

    Jim a, that 2nd home ownership statistic has me more scared than anything else. Ok, the mortgage reset rate also raises the hairs on my neck... One of my friends, a person I really care about, owns *three* homes. Ok, she and her hubby have great incomes, but the way she's been eyeing retiring by age 35 makes me think the chickens were already counted... :(

    Neil

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  7. If they were condos, they'd say "Unit 1" or "Unit A" or something like that. Try looking up the addresses on maps.google.com and then getting a satellite view of the neighbrohood.

    They are 100+ year old homes. Probably unrenovated.

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  8. From dc.gov

    Address: 0059 BATES ST NW
    SSL: 0615 0295
    Neighborhood: OLD CITY II
    Homestead Status: ** Not receiving the Homestead Deduction
    Owner Name: HOWSOON ----
    Mailing Address: 50 BATES ST NW; WASHINGTON DC20001-1112
    Sale Price: $700,000
    Sale Date: 06/22/2006

    Address: 0070 R ST NW
    SSL: 3101 0059
    Neighborhood: ECKINGTON
    Homestead Status: ** Currently receiving the Homestead Deduction*.
    Owner Name: SCHAIN -----
    Mailing Address: 10111 DARNESTOWN RD; ROCKVILLE MD20850-3901
    Sale Price: $627,500
    Sale Date: 06/06/2006

    Address: 0047 R ST NW
    SSL: 3102 0054
    Neighborhood: ECKINGTON
    Homestead Status: ** Not receiving the Homestead Deduction
    Owner Name: ROBERT B ----
    Mailing Address: 760 SENCA CT; DANVILLE CA94526-3549
    Sale Price: Not Available
    Sale Date: 06/15/2006

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  9. Assessment Cap Credit

    The housing market in the District of Columbia has caused a surge in the assessed value of residential real property. In an effort to limit the increase of real property taxes for homeowners, eligible homeowners will be provided an Assessment Cap Credit.

    The Assessment Cap Credit currently provides that a real property tax bill will not increase by more than 10 percent above the prior year's real property tax bill. This credit does not reduce the assessed value of your property on the tax roll or the assessment notice, but it will appear as an automatic credit against your real property tax bill. The credit only applies to the principal residence of the property owner (homestead property) and is based on the total assessment for the dwelling and land associated with the dwelling.

    For more information, property owners may call the Customer Service Center at (202) 727-4TAX (727-4829).

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  10. "Old City" is just an erroneous reference to the DC neighborhood in which the homes are located. Anything south of FL Ave. is considered the "old" portion of the city that was laid out before Le'Enfant was brought in to design the city's expansion. (Le'Enfant is the Frenchman who designed much of Paris, and your nation's capital)

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  11. BTW, now that the National Mall has no more useable space, it's been said that this large tract of land is a candidate site for future Federal monuments and memorials. People like David will know that this site is surrounded by large Victorian-era homes, without a Starbucks in sight.

    "The National Capital Revitalization Corporation Releases Anticipated Public Solicitation for a Land Development Partner for McMillan Development

    Washington, DC— 120 days after Mayor Williams announced the transfer of the 25-acre McMillan Sand Filtration site to The National Capital Revitalization Corporation (NCRC), the development corporation in keeping with its promise, released a public solicitation online today.

    The solicitation, which is available at www.ncrcdc.com, details NCRC’s search for an accomplished land development team with whom it will partner to conduct predevelopment and land-use planning and analysis for the land development phase of the project.
    ..."
    (continued on website)

    Useable land in your nation's capital *IS* a limited resource. 25 acres in the center of DC? That's huge.

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  12. Anonymous said...
    ""Old City" is just an erroneous reference to the DC neighborhood in which the homes are located. Anything south of FL Ave. is considered the "old" portion of the city that was laid out before Le'Enfant was brought in to design the city's expansion. (Le'Enfant is the Frenchman who designed much of Paris, and your nation's capital)"


    you were on the right track about "the old section of the city below Florida Avenue ... ". Then you got off track. Florida Avenue was orginally "Boundary Street" because it defined the northern boundary of the City of Washington with the Washington County (is no more) and the District of Columbia which once also contained Georgetown, Alexandria, and Arlington and Washington Counties. The area below Florida Avenus (but north of the Potomac) IS the area design by Pierre L'Enfant. (The areas south of Potomac reverted to Virginia in 1850s. This was Alexandria and Arlington County ... )

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  13. "HELOC'd to the max (don't you just love the new BK laws?)"


    Is there any evidence of this, or is this just typical bubblehead talking point?

    I know plenty of homeowners. None of them have HOLOCS, and-contrary to another bubblehead talking point-none of them have used the housing "ATM" to buy plasma TVs, boats, or vacations.

    Furthermore, to the extent some peoplse used home equity lines of credit, I think most of these poeple probably paid down higher interest loans (credit cards, student loans) with loaner interest rate, tax deductable, equity lines. Wouldn't this improve their overall financial situation?

    Considering all of this objectively, I don't think bubbleheads should place too much reliance on HELOCS leading to the doom and gloom they predict.

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  14. Yep, I forgot about the McMillan plan:

    The plan of the city of Washington was designed in 1791 by Pierre L'Enfant, and mapped the following year; a design which remains largely in place. For nearly a century, the realization of physical changes to the original plan were gradual until the second important benchmark in the development of Washington's urban plan: the McMillan Commission and its 1901-02 recommendations. The McMillan Commission plans were implemented predominantly during the first three decades of the 20th century, and continued sporadically thereafter. For nearly 100 years, a legal height limit of 160' has preserved the broad, horizontal Baroque nature of the city, allowing light and air to reach the pedestrian level, and resulting in a picturesque skyline pierced by steeples, domes, towers and monuments.

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  15. Anon 9:49-

    You ask for evidence, and then provide your own with "I know plenty of homeowners...". How about I know "plenty of homeowners" who did HELOC out their equity to pay for stuff they didn't need? Is that as convincing as your "evidence"? The fact is that MEW and cash out refi's were all the rage throughout 2004 and 2005. It really doesn't matter what it was used for, although it's obvious that was the main support of consumer spending and consumption. Now that that source of money is gone, people stil lhave to pay back those loans now that their home isn't doing that for them. Some, maybe even many, will be OK. But the few who wont' and have to sell set the prices for all, as prices are indeed set at the margins.

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  16. "You ask for evidence, and then provide your own with "I know plenty of homeowners...". How about I know "plenty of homeowners" who did HELOC out their equity to pay for stuff they didn't need? Is that as convincing as your "evidence"?"

    Still not convinced.

    So you want me to provide the evidence that a bubblehead statement is incorrect?? I'm not the one making these broad, unsupported statements that all homeowners are ""HELOC'd to the max." And I'm not the one espousing any arguments based on these unsupported statements either.

    My point is that I don't know any homeowners who HELOC'd all of the equity out of their homes. Sorry, that's all I have, but that’s all I need to know that bubblehead’s broad assertions that all homeowners have irresponsibly used their homes as “ATMS” are not supported by fact.

    You, on the other hand, allegedly know some homeowners who did HELOC out their equity, and based upon this, what I presume to be very small sample, you are comfortable with bubblehead creed that homeowners are HELOC’d to the max.

    So, the fact that you know people who did this, it seems, is all of the evidence you have. Maybe that’s all the evidence you need. That makes some sense since much of the bubblehead creed is detached from historic precedent and present reality.

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  17. Nikki,

    By the way, neither of your links support the claim that homeowners have HELOC'd out all of their equity. In fact, the first link is about equity extraction, which by definition includes homeowner profits from sales of their homes.

    Furthermore, the number of HELOC's by homeoners has no relation to whether the HELOC has been maxed out. I wouldn't be surprised if a lot of people, even after HELOCs, still have a lot of equity, and thus the bubblehead assertion that people with HELOCS are or will be underwater on mortgage is not supported by the overall number of homeowners with HELOCS.

    The statistics I recall reading, and I don't remember where and I'm not going to try to find them, is that homeowners' overall amount of home equity today is greater than before HELOCS became "all the rage." This strongly suggests that homeowners have not HELOC'd to the max, since they still have a lot of equity.

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  18. The upsurge of refinancing in past years was simply homeowners locking in relatively better interest rates. It would have been foolish for a homeowner not to lock in lower rates. I'm sure any bubblehead, if they had owned a home with mortgages from the 80s or early 90s, would have refinanced to obtain lower interest rates, and dramatically lower mortgage payments. I don't see how the number of refinanings can be interpreted as a sign of homeowner irresponsibility, and definatly not as evidence that homeowner's have HELOCed all of their equity.

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  19. anon 11:08 But interest rates haven't really gotten any lower than they were in the summer'03. That's when I got my 4.875% 15yr fixed. I don't think I'll ever see that again.

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  20. Lance, and when they amalgamated the police departments they formed the "metropolitain police department."

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  21. If we're talking annecdotal evidence, then I'll add mine to Nikki's. I think I was the only one at my work who didn't do a cash out refinance. The bank was very disappointed that they couldn't talk me into taking out at least a slightly higher loan. One of my colleagues used his cash out refi for a down payment on a second home in NC -- then tapped both homes' equity to build his wife's 'dream home'. He, at least, had a high income and possibly a high net worth. Two others (both single) earned no more than $40,000 and both did cash out refis to finance 'investment' property. One of them urged me to 'treat' myself when we sold, telling me what a kick it was to be able to buy a BMW and that motorcycle he'd always wanted for cash.

    And anonymous, it doesn't take all homeowners tapping HELOCS or doing cash out refis to cause a bubble. A relatively small number of people 'livin' large' and exciting the envy of their neighbors, and a few 'investors' making a quick $100,000 for next to nothing is enough to tip the psychological balance and spur demand enough to cause prices to shoot up. Just as a relatively small number of people losing houses, going bankrupt or having to bring money to the table at closing is enough to incite fear and cause falling prices on the other side of that see-saw.

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  22. "But interest rates haven't really gotten any lower than they were in the summer'03. That's when I got my 4.875% 15yr fixed. I don't think I'll ever see that again."

    Just so you know that, due to this exotic loan you have, you'll be bankrupt soon. Or at least that's the bubblehead thinking on the matter.

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  23. This comment has been removed by a blog administrator.

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  24. There was information on this while back...- for example, something like 40% of all mortgage starts were refis the past few years - that is typically how people extract equity...

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  25. Dammit, the links aren't working!
    -----------------------------------

    Hah! This quote takes the cake:

    "My point is that I don't know any homeowners who HELOC'd all of the equity out of their homes. Sorry, that's all I have, but that’s all I need to know that bubblehead’s broad assertions that all homeowners have irresponsibly used their homes as “ATMS” are not supported by fact."

    So because you don't know anyone who did it, it can't be true. Way to come back with facts. Can you show me where anybody said that "all" homeowners irresponsibly used their homes as ATMs? No, because no person who wanted to have any credibility would make a generalization like thatponly somebody trying to prove their point without providing any data but who tries to call out others for nt providing the same. Here you go , straight from CR.

    "Rising rates have also made an impact in refinancings (refis), and Nothaft anticipated that the decreasing appeal of refinancing will drive a 10-12% decline in single-family originations in 2006, with the refi share of originations shrinking one-third in 2006 (from 44% in 2005). Nothaft pointed out that families are refinancing for different reasons now than in the past: either to tap into accumulated home equity with a cash-out refi, or to avoid a pending rate adjustment on a hybrid ARM. Cash-out home equity lending reached unprecedented levels in 2005, at roughly $250 billion, and Nothaft expects that they will total about half that in 2006 at $130-$140 billion." Does that make you happy, or would you like a month-by-month breakdown? Your problem is that I can dig and find what you're asking for, so you keep asking for more. This is tiring.

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  26. Anonymous said...
    "But interest rates haven't really gotten any lower than they were in the summer'03. That's when I got my 4.875% 15yr fixed. I don't think I'll ever see that again."

    Just so you know that, due to this exotic loan you have, you'll be bankrupt soon. Or at least that's the bubblehead thinking on the matter.


    Anonymous-- just so you know-- a 15 year fixed rate amortizes over 15 years. It's not an exotic loan-- on the contrary, it's one of the most sensible, conservative loans you can get. In 15 years, Jim A is going to have his mortgage entirely paid off.

    I hope you haven't been buying houses, anonymous. You really should understand something about mortgages before you get one.

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  27. How about these links that indicate that cash out refinancing was at historically unprecedented levels?

    There's even a quote here that says "Almost no one is refinancing to reduce their interest rates in today's environment. In fact, the first quarter of 2006 is the first time in 20 quarters in which the new mortgage rate was higher than the old one for more than half of refinancing borrowers."

    Cash out refinance activity rises as rates rise

    Cash out refinancing and the housing crash

    Cash-out refinancing at highest level in 15 years

    The fact that this is occuring now, as opposed to 2004 and 2005 actually means even more trouble, because these people took out lots of equity at the very very top of the market, so anyone relying on appreciation to sell and pay back these loans could very well find themselves underwater.

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  28. I almost missed this quote in the second link!
    "In the first quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced were for loan amounts that were at least five percent higher than their initial balance, according to Freddie Mac’s quarterly refinance review. The percentage is the highest since the third quarter of 1990."

    Wow, 88% were for more than the original balance! But nobody is taking cash out, right? Right? Go ahead, focus on the "maxed out" comment, if that's all you have to grasp.
    "So, the fact that you know people who did this, it seems, is all of the evidence you have. Maybe that’s all the evidence you need. That makes some sense since much of the bubblehead creed is detached from historic precedent and present reality."

    What say you now? Obviously I'm not the only person who knows people who took equity out of their houses.

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  29. Sarah in DC: I actually think (well optimisticly hope anyway) that Anon 11:57 had his tongue firmly in cheek when he made that comment.

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  30. This comment has been removed by a blog administrator.

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  31. ANON 11:12 said:
    "You, on the other hand, allegedly know some homeowners who did HELOC out their equity, and based upon this, what I presume to be very small sample, you are comfortable with bubblehead creed that homeowners are HELOC’d to the max."

    Guy ... they're surrounded by fellow renters ... How many people do you think they know in a position to take out a HELOC ... never mind draw on it?!? (And no, parents don't count 'cause they wouldn't want you to know if they are eating up your inheritance or not!)

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  32. I'd like to think so, Jim A, but considering the clear difficulty that so many of our anonymous commentators have with basic reading and math skills I'm afraid I can't share your hopefulness. ;)

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  33. Sarah in Ballston equates her name to an advanced degree from an accredited university.

    Tell us, Sarah in Cleveland, where did you end your formal education? Considering that you log into blogspot.com before posting here, I'm guessing at least a Master's from Stanford?

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  34. Cedric in WyomingJuly 28, 2006 4:54 PM

    Since I'm using both my name and a reference to my approximate geographic location (very rough approximation), it is clear that my academic skills are superior to yours, anony-moose.

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  35. You Yanks crack me up.

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  36. So do tell, Lance, do you have any answer to Nikki's links on the incidence of cash out refi's -- or just more of your usual snobbery about us poor, median-income riff-raff?

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  37. Sarah in DC said...
    "So do tell, Lance, do you have any answer to Nikki's links on the incidence of cash out refi's -- or just more of your usual snobbery about us poor, median-income riff-raff?"

    Sorry, I've not been much following this thread today. You'll have to ask the posters you've been arguing ... uh, I mean communicating with today. Your post to me though does support my premise stated a couple days ago that you are jealous of anyone more successful than yourself, resorting to mud-slinging and sympathy-seeking rather than true rational debate.

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  38. Jim A said:

    "Lance, and when they amalgamated the police departments they formed the "metropolitain police department."

    Thanks for the interesting tid bit! I'd guessed it had something to do with the Washington force being extended into the "suburbs" (i.e., areas beyond present-day Florida Avenue), but couldn't find any info on it when I Googled it. Thanks for the clarification ... It makes sense. So, when some day the District's jurisdiction over all lands within the close-in counties and cities takes place, we can leave the name of the police force unchanged!

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  39. Sarah in DC
    Nikki,

    This isn’t Lance, but it doesn’t require his level of intelligence to answer your question.

    This debate stated with a bubblehead, in one of the very first posts, asserting that homeowners are HELOC’d to the max.

    This is standard bubblehead mantra. Part of the bubble’s going to burst theory is premised upon bubblehead’s belief that homeowners are HELOC’d to the max, that they will be underwater on their mortgages as a result, and that this will cause “fear” that will further cause the market to plummet. (See Sarah in DC’s above post for an explanation of this HELOC and fear theory).

    Anony questioned whether this bubblehead mantra-that homeowner’s are HELOC’d to the max-is supported by any evidence. Anony especially doubted the validity of this mantra since he didn’t know anyone who had irresponsibly maxed out refis or HELOCS.

    Nikki responded by posting various links, all of which show that the number of HELOCs and refis have increased in overall number. However, NONE of Nikki’s links prove or even propose that homeowners are HELOC’d to the max. NONE of Nikki’s links say anything of the like.

    Nikki, aware of this absence of evidence central to her bubblehead creed, attempts to deflect attention from this deficiency by stating “Right? Go ahead, focus on the "maxed out" comment, if that's all you have to grasp.”

    Nikki misses the entire point, again, and concedes that she has no support of her premise. This entire debate is whether homeowners’ HELOCs are maxed. This is, after all, central to her premise. There’s no debate over whether the number of HELOCs and refis have increased.

    Of course the number of HELOCs and refis increased, due to very rapid and large rates of appreciation and historically low interest rates.

    What Nikki and Sarah in DC don’t seem to understand is that 1) just because someone has a HELOC does not mean that the line of credit is drawn at all, and does not mean that the line is drawn to the max; and 2) just because a homeowner refis does not mean that any equity was taken out, much less max equity.

    So Nikki and Sarah in DC have still not offered any proof in support of their claim that homeowners are HELOC’d to the max. Rather, a link provided by Nikki that at best contradicts their claim. Nikki cites: “In the first quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced were for loan amounts that were at least five percent higher than their initial balance, according to Freddie Mac’s quarterly refinance review.”

    The key language is 5% and initial balance. Obviously a homeowner with a mortgage from the early 1990s with a refi of 5% of the initial loan balance (i.e. from the 1990s) would most likely still have a very large amount of equity left, given the appreciation of property since the 1990s and the down paying of the loan since the initial balance.

    So, again, the question is, what proof do you have that homeowners are HELOC’d to the max. The numbers of refis and HELOCs cited in your links don’t address this issue, since the numbers of refis and HELOCs have no relation to whether homeowners have tapped any equity.

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  40. lance said... Guy ... they're surrounded by fellow renters ... How many people do you think they know in a position to take out a HELOC ... never mind draw on it?!? (And no, parents don't count 'cause they wouldn't want you to know if they are eating up your inheritance or not!)

    Oh, forgive me, it's me who's resorting to mud-slinging, of course. How could it be otherwise? By your own account you're so much richer than I am, after all! :) And, as we all know, money equates perfectly to success. That's why real estate investors are so much more admirable than teachers, firefighters or any of the rest of us earning less than the $100,000 a year that you imagine to be the median family income...

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  41. Tyler in BrooklandJuly 28, 2006 5:56 PM

    Isn't it $1 Schlitz nite in your perfect rental neighborhood, Sarah in Potomac? Go get blitzed.

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  42. Lance said...
    “Guy ... they're surrounded by fellow renters ... How many people do you think they know in a position to take out a HELOC ... never mind draw on it?!? (And no, parents don't count 'cause they wouldn't want you to know if they are eating up your inheritance or not!)”

    Further more, if we take the Lance approach to RE:
    Inventory, ARMS, and Foreclosures mean “absolutely NOTHING”

    And:

    Lance said...
    …… that there is never a bad time to buy if it is a home you are buying….

    HELOC’s are another moot point for Lance. Matters not if it’s 5%-10%-50%. The only trends we need to follow are………



















    Lance said...
    “….I do believe that for a prospective homeowner (or longterm investor) there IS…. no bad time to buy”

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  43. tina in brooklandJuly 28, 2006 6:10 PM

    Tyler, baby, is that you? I got a whole six-pack for you right here in the 'fridge! You don't need to be hangin' out there with no other woman!

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  44. "Further more, if we take the Lance approach to RE:
    Inventory, ARMS, and Foreclosures mean “absolutely NOTHING”"

    As for ARMS, this is another bubblehead mantra-that ARMS will reset, causing a tidal wave of defaults, foreclosures, and general aiding of the bursting of bubble.

    Just like the "homeowners' HELOCs are maxed" mantra, the "resetting ARM" theory is unsupported by any evidence.

    Seriously, do you have any evidence or proof that massive numbers of homeowners have ARMS that, when the reset, the homeowners will be unable to meet the payments???

    Don't you think that the fact that mortgage lenders approve ARMS only after concluding that the mortgage holders will be able to continue to repay the loan AFTER the reset is strong evidence that realization of your theory is improbably in reality?

    Don't you have any idea of how sophisticated banks have become in analysis of mortgage lending applicants? I don't think any of them are losing any money long term, so they must not be making large numbers of mortgages to people who are unable to make their payments.

    Don't let this lack of proof inconvenince your little fantasy though, Robert.

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  45. that is correct, there is never a bad time to buy unless you are a flipper. and those people like robert who do not understand this, will always end up with the short end of the stick ... be it for housing, be it for jobs, be it for anything. they simply lack the self-confidence (and/or perhaps capabilities) to look out for themselves and instead depend on timing it right and/or having it given to them.

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  46. Anonymous said...
    “Don't you think that the fact that mortgage lenders approve ARMS only after concluding that the mortgage holders will be able to continue to repay the loan AFTER the reset is strong evidence that realization of your theory is improbably in reality?

    Don't you have any idea of how sophisticated banks have become in analysis of mortgage lending applicants? I don't think any of them are losing any money long term, so they must not be making large numbers of mortgages to people who are unable to make their payments.”

    Little late in the game there Anon. We’ve already gone over how these folks are 100%, good to go, no problems qualified to own their homes:

    http://tinyurl.com/lpqu7
    http://tinyurl.com/guss8
    http://tinyurl.com/psp7o

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  47. And anon, you’re partially right. We “bubbleheads” see all the “negative” numbers and anecdotal evidence that RE is dropping and plan accordingly.

    “Don't let this lack of proof inconvenince your little fantasy though, Robert.”

    So, take this time and show us the “positive” numbers and evidence that RE is strong, it never goes down, they aren’t making any more land, and if we don’t buy now we’ll forever be priced out.

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  48. Lance said...
    “……and those people like robert who do not understand this, will always end up with the short end of the stick ...”

    What I do understand Lance, is that you are locked in to your long term investment by buying at the peak. No matter what happens to your neighborhood, your job or any other life changing event, as median prices (slowly) fall while inventory continues to skyrocket, you have indeed solidified your long term commitment to your long term investment.

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  49. "there is never a bad time to buy"

    Thanks, Lance. With that, you have forever cast in doubt your statement that, you are not, a real estate agent.

    Now, in DC, is perhaps the worst time to buy since the early 1960's. Good luck with your listings, Lance. There is hope in that there's a sucker born every minute, after all.

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  50. Robert said:
    "Little late in the game there Anon. We’ve already gone over how these folks are 100%, good to go, no problems qualified to own their homes:"

    actually, I don't remember your opinion getting general agreement from the posters here. in sum, I think most of us on here felt that the anecdotal "scare stories" on the news or elsewhere as just that since statistically, the foreclosures are still insignificant in the overall picture ... and would continue to be even if they quadrupled (which they haven't) because like the old song goes "nothing times nothing makes nothing." I.e., when these numbers are insignificant enough to start, they can increase by a high factor and still be relatively approaching zero.

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  51. Robert said:
    "as median prices (slowly) fall while inventory continues to skyrocket, you have indeed solidified your long term commitment to your long term investment."

    I hate to break the news to you, but they "ain't" building no new houses down in my neck of the woods in downtown DC .. actually hardly a new house has gone up in over 100 years ... and inventory ... including existing houses ... isn't growing. houses are still getting sold nearly as fast as they get listed. Like I've been trying to make you understand, their is NEVER a bad time to buy ... just unskilled buyers who instead of relying on their own intelligence and business skills choose to wait for that sure time timing of the market when they are "buying low" so that they can later "sell high" ... Gamblers ... one and all ... gambling with the very roof over their heads ... all based on pure chance ... Chance with low odds to boot.

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  52. their is NEVER a bad time to buy ... just unskilled buyers

    Ah, so enlighten me further, Lance. A skilled buyer demonstrates his skill by buying at... how many multiples of income? Using what kind of loan? Oh-- that's right. None of that matters, because it's impossible to overpay.

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  53. Lance said...
    “actually, I don't remember your opinion getting general agreement from the posters here. in sum, I think most of us on here felt that the anecdotal "scare stories" on the news……”

    How could there be any agreement Lance? Foreclosures, inventory, any number of indicators tracking the market down and we get the “no bad time to buy” spiel.

    You have no benchmark on the market, except to buy. The entire sum of your RE perspective is to buy. No other points to make, no data to show.

    Try this Lance:

    Lance said…
    Buy now.

    Simple as that. Makes for an easier read and it doesn’t take up much blog space.

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  54. And Robert your mantra is like the little train that couldn't .. "oh! I can't make it up that hill .. I can't make it up that hill! I need for everything to just fall in my lap by pure chance so that I can make it up that hill!" ... Yes, you're waiting for a not-gonna-happen catclysmic burst "bubble" because its a lot easier to think things will just be handed to you than to actually go and find a good fixer-upper, explore financial options such as ARM or an I/O if they will help you, etc etc. I understand that all involves work, but if you really wanted a house you'd be doing the work required rather than just sitting back complaining and waiting for everything to be handed to you. News Flash: that's NOT how things work in life.

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  55. Lance said...
    “And Robert your mantra is like….. “


    Nanny Nanny Boo Boo?

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  56. Lance - folks don't have to buy at rock bottom to get a better deal.

    Secondly, I am offended by your judgement of others who hope to get a good deal on a house when you yourself tout that you bought your place at 200K below market, simply by making an offer. Now that others want to do the same, you are acting like they are gold-diggers.

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  57. anon 9:17,

    Lance is not judging those who want to get a good deal - only those who make ridiculous statements about where prices will go (drop 50%) and their perceived ability to capitalize on those prices (I'll buy your McMansion for 300K).

    The blanket statements made by bubbleheads are getting old. "houses used as ATM's, ...when the rates reset etc. etc." As if ALL homeowners are stupid people. Quite the contrary.

    Homeowner's best renter's in every financial and educational category. These are the facts.

    Lance got a great deal. This requires a certain skill set that most renters don't have.

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  58. Guess what "it's different this time." :) While certainly not true for all, renters on this board are probably just as educated and financially secure as the homeowners. For once, in recent years, the smart money was renting.

    Secondly, the whole homeowners = more wealth/education is a class issue, not a direct cause and effect relationship. It is WAY more complex than just, 'people who buy homes end up smart and rich and people who choose not will be stupid and poor.'

    Third, Lance did not acheive his home with some special skill set. He bought interest only after scrimping, saving, and foregoing all else to do so, and trading up during a bubble market for years. A lot of housingheads see this as a virtue somehow. In truth, it is just unsophisticated money management. He could be a lot richer if he had diversified.

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  59. Anonymous said...
    "Lance - folks don't have to buy at rock bottom to get a better deal.

    Secondly, I am offended by your judgement of others who hope to get a good deal on a house when you yourself tout that you bought your place at 200K below market, simply by making an offer. Now that others want to do the same, you are acting like they are gold-diggers."

    First off, no, I didn't "just make an offer." Like I said before, I paid full asking price for the house. He just asked less for the house than he would have asked if he had to pay a realtor to sell if for him and if he wasn't getting a higher-than-bank-rate return on his sales proceeds by financing my purchase at what for me was a full percentage point under market for similar 30 year fixed loans offered by banks. It was win-win for both of us, and I could get the house for less because I had done my homework and could (1) recognise a good property/deal and (2) was able to propose a financing structure from which we both benefited by squeezing out the middleman ... as we did with the house sale itself since he paid no sales commission. (I contact him via the tax records ... simply writing a letter telling him I was looking for a house like his in his neighborhood.) And all THIS is what I mean by being a good buyer. I NEVER said you shouldn't make a lower offer than what is being offered. I just said it shouldn't be a rediculous offer because when a rediculous offer (such as 40% below asking) is made, everyone (offerer and offeree) knows that it is not being made in good faith (i.e., the offerer who is probably totally unqualified for the types of properties he wants is just tryin to somehow "get even" with a seller that he perceives as purposely and incorrectly denying him a reasonable possibility at buying the property. It's not an offer .. it's a fricking political statement!

    So, to recap, I am NOT opposed to someone who is seriously trying to get a better deal (vs. someone who is just making a statement at an other's expense). If I were looking now, I definitely would be making offers below asking. Now, I do have "judgement" against people who think they are going to do it simply by "timing" the market ... My judgement is that they are naive in thinking they can time the market ... and in thinking that even if they could, that their savings would be any lower than if they just did their homework and negotiated hard in today's market.

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  60. va_investor said:
    "Lance got a great deal. This requires a certain skill set that most renters don't have."

    Thanks Va_Investor! Now that I am set with "a roof over my head" which is being financed by my rentals on the property, and I am set with my ever growing 401K Plan (which incidentally is more than what some of these bubbleheads would pay for a 1 bedroom condo) and I have an ESOP (Employer Stock Ownership plan) that I am working at building up, I think my next step will be to go in and buy some investment properties in those up and coming "transitional" neighborhoods like H St NE ... and follow in your good example with longterm rental investments. Of course, I won't wait till prices have dropped 50% .. I'll have swooped up the bubbleheads' dream homes long before they can "time" the bottom of the market ... simply 'cause I'll know the market much better than they ever will as they have been wasting their time studying P/E ratios and other LAGGING indicators ... while I'll have been out there getting a feel for the area and the development and economic trends that are out there for all of us to pick up on. And you know, when I start buying those investment rentals I'll know I'll have come a longways from that first condo purchase 10 years ago where I had to scrap together the 2% downpayment ... and forgo eating out much or buying new clothes for a couple of years. But, oh wait, no ... I was just lucky that's all. I could have deprived myself of luxuries ... and what if the value of the condo had actually fallen the next year rather than risen? ... hmmm ... well , I still would have had that roof over my head ... and not been at the mercy of housing heads renting (or denying me) a place to live ...

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  61. I said:
    "that their savings would be any lower than if they just did their homework and negotiated hard in today's market."

    I meant "... any higher ..."

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