tag:blogger.com,1999:blog-13164186.post115075057998770230..comments2024-01-27T19:26:32.604-05:00Comments on Bubble Meter: AP: Foreclosures may jump as ARMs resetDavidhttp://www.blogger.com/profile/11169148764438565562noreply@blogger.comBlogger87125tag:blogger.com,1999:blog-13164186.post-1151011258462021902006-06-22T17:20:00.000-04:002006-06-22T17:20:00.000-04:00anon 9:10pm,Brilliant analysis!anon 9:10pm,<BR/><BR/>Brilliant analysis!Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150949420372055332006-06-22T00:10:00.000-04:002006-06-22T00:10:00.000-04:00"I am quite familiar with all types of Notes. Most..."I am quite familiar with all types of Notes. Most ARMS have lifetime caps of 5 or 6 percent over the initial rate.<BR/><BR/>An ARM obtained 3 yrs ago would probably have carried an initial rate in the 4's and thus a cap in the 10's at the most."<BR/><BR/><BR/>VAinvestor = real estate cheerleader, aka paid pusher on housing bubble blogs.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150928857946114572006-06-21T18:27:00.000-04:002006-06-21T18:27:00.000-04:00I am quite familiar with all types of Notes. Most...I am quite familiar with all types of Notes. Most ARMS have lifetime caps of 5 or 6 percent over the initial rate.<BR/><BR/>An ARM obtained 3 yrs ago would probably have carried an initial rate in the 4's and thus a cap in the 10's at the most.<BR/><BR/>This is why I think you are blowing smoke.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150913549650952852006-06-21T14:12:00.000-04:002006-06-21T14:12:00.000-04:00VA_Investor...Have you read the fine print in ARM ...VA_Investor...Have you read the fine print in ARM notes??? The ARMs I have worked with can legally go up 12%; it's probably unlikely that they will go up by that much, but the fine print in the note allows it. <BR/><BR/>Do you work in financing aspect of RE? If so, you can contest my "story," though not very well, as you are not me, and thus you have not seen what I have. If not, then your counter "argument" adds little to the coversation.<BR/><BR/>BTW, 11K is not unheard of. That's high, but I have seen it before (I'm NOT an L.O. or a L.B., btw, so I have no say as to how much closing costs are). Still, in maryland loan brokers can legally charge up to 8 points, though from 1.5 to 2 points is the norm at THIS time. Going above that can raise eyebrows.<BR/><BR/>Funny how NONE of the anti-bubbleheads have said anything about my observation that RE agents are in a hurry to sell their own investment properties. And that's not just the agents I know personally. If I take a drive from my home to the closest metro station, I will pass by TWO houses for sale which are listed as "agent owned."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150901115419825462006-06-21T10:45:00.000-04:002006-06-21T10:45:00.000-04:00Reduce or subtract the commissions and the price w...Reduce or subtract the commissions and the price will come down. This does have some bearing on how the seller (and agent) will price the house. 6% of anything will influence how participants in a transaction will behave.<BR/><BR/>Again, go brush up on your economics a bit, Lance.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150844564060793282006-06-20T19:02:00.000-04:002006-06-20T19:02:00.000-04:00consumers vs. NRA said... ""Prices should be left ...consumers vs. NRA said... <BR/><BR/>""Prices should be left up to the marketplace," says Brobeck, "but the cartel still sets the prices.""<BR/><BR/>You did realize the "prices" they're talking about in this article are the commissions and not the selling prices of homes, didn't you? I.e., the cartel is stifling competition and keeping the sales commission prices at monopolistic levels. While this may increase transaction costs for the sale of real estate ... resulting in slightly higher costs to the buyer (and the seller), it has NO BEARING on real estate prices.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150844030152775262006-06-20T18:53:00.000-04:002006-06-20T18:53:00.000-04:0011k in closing costs is also highly suspect - even...11k in closing costs is also highly suspect - even for Maryland.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150843870321612462006-06-20T18:51:00.000-04:002006-06-20T18:51:00.000-04:00If she got an ARM 3 yrs ago, I seriously doubt it ...If she got an ARM 3 yrs ago, I seriously doubt it could cap at 12%. More like 10% at the most. Makes me doubt your whole story.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150843135399109002006-06-20T18:38:00.000-04:002006-06-20T18:38:00.000-04:00Anon 3:25You should get together with your buddy L...Anon 3:25<BR/>You should get together with your buddy Liukang and buy the Clarksville House.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150842734014819552006-06-20T18:32:00.000-04:002006-06-20T18:32:00.000-04:00Well, seems the party...er, conversation...totally...Well, seems the party...er, conversation...totally deviated from the original subject on foreclosure forecasts... But I'd like to offer some anecdotal "evidence" to support David's post: I worked with a borrower last week who 3 years ago had taken an ARM with a 3-yr fixed rate to buy a very modest townhouse in Silver Spring (original price was under $250k, if my memory is correct). She was forced to refinance this year because her ARM would have been adjusted next month and her mortgage would have increased from $1300 to $1800+ (closer to $1900, actually). Now her new mortgage (a 30-yr fixed rate) is $2000 including property taxes (she took a modest cash back with the refi, and paid $11K in closing costs). She was not happy about it, but knew that if she did not lock in at a fixed, not-so-horrible rate now (7%), she might not be able to afford her adjustable rate mortgage in the future (which could legally increase to 12%). Before the closing, I asked her if she can really afford this new mortgage, and she replied in the positive, though her face and body language told me she might have her doubts...I hope for her sake that she can keep up with her payments... This woman is probably luckier than most others who will have to face harder financial decisions in the future because they bought homes at a time when they should have waited...And will probably need to consider a refi at HIGHER interest rates than 7% for fixed rate, or somewhat lower for yet another ARM.<BR/><BR/>BTW, I know RE agents who have been busy trying to sell their own "investment properties" before the bubble bursts...And have thus spent less time marketing their clients' houses, which have been sitting in the market for months now...How does the saying go? When the rats jump ship....???Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150842382958422142006-06-20T18:26:00.000-04:002006-06-20T18:26:00.000-04:00Help, I need some advice... Hi all,I need some ad...Help, I need some advice...<BR/><BR/> Hi all,<BR/>I need some advice here - I'm renting now (paying $1800 for 4 BR/ 3 BA on 6 acres 45 min from DC) and I am thinking about buying this house in Clarksville, MD. This SFH is priced at $669900 (2568 sf on 1/2 acre) and needs at least 40k of repair. This is the lowest priced SFH compared with other similiar ones in the same area. I am pre-approved for the loan but I am agonizing whether I should get it now. I am an investor and plan to live here maybe for 3 to 5 years. Most asians told me it'd be hard to sell a house in a slowing market. My income to debt ratio would be around 45% if I get it with a 6.65% fixed 30 yrs mortgage. Also I work for a small company and I'm worried what if I get laid more than once I'll only have enough savings to maintain the mortgage for 6 months whereas I can always move to a cheaper SFH with more land. Or I should just wait until I get smarter and see if there're better deals?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150842333592480812006-06-20T18:25:00.000-04:002006-06-20T18:25:00.000-04:00Help, I need some advice... Hi all,I need some ad...Help, I need some advice...<BR/><BR/> Hi all,<BR/>I need some advice here - I'm renting now (paying $1800 for 4 BR/ 3 BA on 6 acres 45 min from DC) and I am thinking about buying this house in Clarksville, MD. This SFH is priced at $669900 (2568 sf on 1/2 acre) and needs at least 40k of repair. This is the lowest priced SFH compared with other similiar ones in the same area. I am pre-approved for the loan but I am agonizing whether I should get it now. I am an investor and plan to live here maybe for 3 to 5 years. Most asians told me it'd be hard to sell a house in a slowing market. My income to debt ratio would be around 45% if I get it with a 6.65% fixed 30 yrs mortgage. Also I work for a small company and I'm worried what if I get laid more than once I'll only have enough savings to maintain the mortgage for 6 months whereas I can always move to a cheaper SFH with more land. Or I should just wait until I get smarter and see if there're better deals?Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150842233647163102006-06-20T18:23:00.000-04:002006-06-20T18:23:00.000-04:00Consumer group goes after real estate industryCons...Consumer group goes after real estate industry<BR/><BR/>Consumer Federation of America says home buyers pay higher prices because 'cartel' stifles competition.<BR/><BR/>By Les Christie, CNNMoney.com staff writer<BR/><BR/>June 19, 2006<BR/><BR/>NEW YORK (CNNMoney.com) - A leading consumer rights group, the Consumer Federation of America (CFA), on Monday issued a report charging that real estate industry members act as a cartel to stifle competition, resulting in higher prices and poorer service for homebuyers.<BR/><BR/>It's the latest episode in the long-running soap opera that pits consumer groups and the government against the real estate industry. The dispute has become increasingly heated in recent years as soaring home prices have resulted in huge commissions for the industry. At the same time, the technology advances that have dramatically lowered costs in investment, travel and other industries have not had a great impact on real estate.<BR/><BR/>"Many traditional real estate brokerage firms, and their organizations, function as a cartel that tries to set prices and restrict service options," said Stephen Brobeck, CFA's executive director at a press conference in Washington D.C.<BR/><BR/>The CFA charges that consumers are harmed in three main ways:<BR/><BR/> * Traditional brokers charge high, uniform prices regardless of the quality of the broker involved. Even a newly licensed, inexperienced agent receives the same commission no matter what the level of service offered.<BR/><BR/> * Traditional brokers who work with both seller and buyer in a home sale almost always function as facilitators. Brokers try to make sure a sale is completed (and they get paid), rather than as fiduciary agents acting in the best interests of their clients, as the brokers claim to do.<BR/><BR/> * Brokers "double-dip," promoting their own listings or the listings of their firm over properties better suited for their clients.<BR/><BR/>For those who have not followed the controversy closely, the CFA explained how traditional real estate brokers are able to control the sales process:<BR/>By having sellers pay all commissions<BR/><BR/>Home sellers' 6-percent commissions are split between their broker (the listing agent) and the buyer's agent. That creates reluctance among sellers and their brokers to lower commissions: They depend on their homes being seen by potential buyers, and buyers agents will be more likely to show homes with full commissions than discounted ones.<BR/><BR/>According to the CFA, if sellers and buyers each negotiated compensation separately with brokers, brokerage services and prices would quickly become unbundled and clients would pay only for the services they need.<BR/>Discriminary practices targeting non-traditional brokers<BR/><BR/>Brokers will sometimes offer rebates to buyers or sellers - cash back at closing - to attract their patronage. But many state commissions have banned rebates, prohibitions that the Department of Justice has gotten overturned in some cases.<BR/><BR/>State legislatures have also enacted minimum service regulations, which prohibit brokers from unbundling services and charging a fee for each. "We're asking states to end minimum service laws because we think they harm consumers," James Cooper of the Federal Trade Commission, noting, however that Washington can't dicate remedies to the states.<BR/><BR/>There are also more subtle forms of discrimination by traditional brokers. In one, "boycotting," discount brokers say that traditional brokers refuse to show their listings to clients.<BR/>Restricted listing services<BR/><BR/>The CFA says traditional brokers dominate the unregulated multiple listing services and restrict full access to broker clients, hide commission splits from consumers, and restrict non-traditional brokers from access or full information.<BR/>Lack of consumer knowledge<BR/><BR/>The CFA says homebuyers and sellers, especially first-time ones, are at a great disadvantage in that they know little about industry practices. Those selling one home and buying another tend to be preoccupied with matching these sales. Many consumers do not shop and negotiate for brokerage services as carefully as they would purchase a car or other much less expensive transactions.<BR/>Lobbying efforts<BR/><BR/>Many real estate brokers also sit on state real estate commissions; they make up the majority of all state boards, according to the CFA. They regulate themselves and make rules that disadvantage competing business models.<BR/><BR/>The National Association of Realtors released a comment on the CFA report calling the industry, "One of the most competitive business environments in the world, characterized by low barriers to entry, intense personal client service and a results-based compensation structure. Real estate consumers can choose from nearly 80,000 real estate brokerages and more than 2 million real estate licensees, more than 1.3 million of whom are Realtors. Competition is fierce. In fact, discount brokerages and many innovative business models are doing very well today and the average real estate commission, as computed by Real Trends, has fallen from 5.5% in 1998 to 5.1% in 2003."<BR/><BR/>Tom Stevens, president of NAR, says the real estate brokerage is "an intensely client-driven business and every client's needs are different. You can't compare it to buying an airline ticket or stocks."<BR/><BR/>Brobeck agrees that, despite the best efforts of the industry, the commission structure is eroding in some markets.<BR/><BR/>"Sellers with a $600,000 home are saying, 'I'm not going to pay a commission of $36,000,'" he says. But in some slower markets, commission rates can still hover at around 7 percent. Overall, commission rates probably average well about 5 percent. They are much lower in other countries and would drop in the United States except for anti-competitive practices.<BR/><BR/>"Prices should be left up to the marketplace," says Brobeck, "but the cartel still sets the prices."Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150829115488386202006-06-20T14:45:00.000-04:002006-06-20T14:45:00.000-04:00Thanks for all your advices. A smiliar condo unit ...Thanks for all your advices. A smiliar condo unit is being rented out for $900 which would not cover the mortgage+taxes+condo fees so leasing it out is not a good option neither. I think I'll wait awhile then. In the mean time I think I'll take a nice vacation and not to worry about going through the home buying process :-)Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828923937110702006-06-20T14:42:00.000-04:002006-06-20T14:42:00.000-04:00LiukangDon't buy unless you are certain you can ge...Liukang<BR/>Don't buy unless you are certain you can get a replacement job within 6 months (in case of a layoff) and your mortgage with taxes and insurance is less than your rent (extra money to payoff debts). Also will this condo be sufficient for you in the long term. If you are going to have a family, definetly not! You would have to wait 5-10 years to be able to sell it at a minimal loss.<BR/><BR/>Bottom line, keep on renting.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828834085621582006-06-20T14:40:00.000-04:002006-06-20T14:40:00.000-04:00mytoocents,As far as I know the limit is one milli...mytoocents,<BR/><BR/>As far as I know the limit is one million dollars for deductible mortgage including second home.<BR/><BR/>The limit on home equity deductibility is 100K over original mortgage amount (not purchase price).<BR/><BR/>Any CPA's out there, feel free to correct me.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828700623458782006-06-20T14:38:00.000-04:002006-06-20T14:38:00.000-04:00"because you rent an apartment so far from your jo..."because you rent an apartment so far from your job? Rent a place closer to your place of employment."<BR/><BR/>According to the Northern Virginia Association of Realtors, for the 1st quarter of 2006, the average rent for the 5 close-in jurisdictions (Alexandria City, Arlington County, Fairfax County, Fairfax City, Falls Church City) is $1889+.<BR/><BR/>Don't most landlords require your rent to be no more than 1/3 of your income? Sad to say, many of us, even with 2 jobs, don't make $68,000+ per year.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828571265759572006-06-20T14:36:00.000-04:002006-06-20T14:36:00.000-04:00liukang,Also, don't forget selling costs in 4 year...liukang,<BR/><BR/>Also, don't forget selling costs in 4 years and/or if you need to sell early. You're worst case scenario 10% loss needs to factor in another 6% for commissions. Though these fees are being attacked on several fronts now a days. Just don't bank on timely change.<BR/><BR/>My $0.02.MyTwoCentshttps://www.blogger.com/profile/10642606797401998999noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828445035049482006-06-20T14:34:00.000-04:002006-06-20T14:34:00.000-04:00liukank,The condo market got creamed in the last d...liukank,<BR/><BR/>The condo market got creamed in the last downturn. Some dropped as much as 40%. Will you be able to lease it if you have to?<BR/><BR/>If not, I wouldn't be looking to buy a studio or any condo right now. Again, FWIW. No one has a crystal ball.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150828384213246592006-06-20T14:33:00.000-04:002006-06-20T14:33:00.000-04:00VA Investor,What is the limit on deductible home m...VA Investor,<BR/><BR/>What is the limit on deductible home mortgage interest? I didn't think there was a limit per-se. <BR/><BR/>Rather, I know that if you get snared into the AMT then you lose the interest deduction and pay taxes based on an entirely different set of rules. Is this what you're referring to?<BR/><BR/>Either way, I would like to see the "wealthy definition" of the AMT linked to inflation and a cap on home mortgage interest deduction - something similar to the social security wages cap. Granted no one wants taxes to go up but we have to fund government somehow...<BR/><BR/>My $0.02.MyTwoCentshttps://www.blogger.com/profile/10642606797401998999noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150827781762892812006-06-20T14:23:00.000-04:002006-06-20T14:23:00.000-04:00"honorable mention in the W. Post."uh, the Express..."honorable mention in the W. Post."<BR/><BR/>uh, the Express isn't the Post, and it isn't honorable. It was meant to be a light read while commuting via Metro. Or while sitting on the can.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150827747251942692006-06-20T14:22:00.000-04:002006-06-20T14:22:00.000-04:00I am genuinely asking for advice here; don't too m...I am genuinely asking for advice here; don't too much care about all the sarcasms throwing around here. I've been looking in the Arlington,VA area for a long time and the condo I am thinking about has everything I need and in a relatively good neighborhood. It's hard to time the market plus the price is not so outrageous that even if it's down 10% in 4 years I'm only out 17000 which is 14 months of rent. The only thing holding me back is not comfortable with my income/debt ratio and the uncertainty of the job market.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150827556902962872006-06-20T14:19:00.000-04:002006-06-20T14:19:00.000-04:00mytwocents,I agree. The deduction is very regress...mytwocents,<BR/><BR/>I agree. The deduction is very regressive but I don't think it will be changed. We already have a limit on deductible mortgage balances and home equity lines. <BR/><BR/>These limits are not even inflation adjusted.Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150827240215576662006-06-20T14:14:00.000-04:002006-06-20T14:14:00.000-04:00VA Investor,What do you think about the regressive...VA Investor,<BR/><BR/>What do you think about the regressive nature of the home mortgage interest deduction? <BR/><BR/>My $0.02.MyTwoCentshttps://www.blogger.com/profile/10642606797401998999noreply@blogger.comtag:blogger.com,1999:blog-13164186.post-1150827192055072082006-06-20T14:13:00.000-04:002006-06-20T14:13:00.000-04:00For the guy looking for advice:Listen to va-invest...For the guy looking for advice:<BR/><BR/>Listen to va-investor; rule of thumb is don't buy unless you plan on being there for at least 5 years.<BR/><BR/>Ignore dc_too and his never-ending bitterness.Anonymousnoreply@blogger.com