ARM Rates Continue To Rise

Sound like a broken record

New Housing Development near Frederick, MD

North of Frederick, Maryland is a new housing development that is called Sun Meadow. It is being developed by K Hovnanian Homes. Frederick is considered part of the Washington, DC - Baltimore metro area.

Notice the upper 400's located on the big green sign. The green board with the 'upper 400's' was added later. At the beginning of last year it was upper 300's. However, of the 8 models available at the homebuilding site only one ( yes one ) is priced at less then 500K. That one model 'The Newbury I' is priced at 495,990.



Image of home in Sun Meadow on the left. Notice the lack of mature trees. My friend and I were taking pictures of the sales trailer. One of the sales people came out and asked us what we were doing. My friend quickly said that we were doing research on land development. I asked him what the MBHR 3149 meant on the green sign. He did not know. Shows how much he knows.

MBA Wants to Lure Low to Moderate Income Earners to HomeOwnership

The Mortgage Bankers Association has benefited tremendously from the housing bubble. Home ownership is at an incredible 69%. The well of new homeowners is running dry. The following appeared in the Associated Press on October 30, 2005:

Many low-to-moderate income earners have talked themselves out of owning a home.

At least that's what bank officials said when they met in Orlando last week for the Mortgage Bankers Association convention. The officials say too many worthy candidates dismiss their chances of owning a home. How to lure Americans in this income bracket into the home market was a major issue for lender

"A foothold in real estate is a foothold," says Bank of America's Jackson. "Ownership has to start somewhere, and we need to let people know that it's OK to look around at the possibilities of owning rather than renting."

A foothold is not inherently a positive thing. Without a safety rope a foothold here ( on the left ) would be a very scary thing. For many, having an ARM and Interest Only loans are like climbing a mountain with an avalanche coming downhill. A foothold here is highly problematic.

The members of the Mortgage Bankers Association have done enough damage peddling their toxic loans to ill-informed or greedy homedebtors. They should stop trying to find new groups to lure with toxic mortgages and instead focus on raising lending standards.

Housing Signs In Frederick, Maryland

Bubbly!

Does it say "New Price"?

McMonster

Fall Images From Maryland ( Nothing to do with the Bubble)

Pretty mountain river near Camp David. Fall is so gorgeous up here in the mountain areas just west of Frederick, Maryland. ( Note, my digital camera was on the wrong setting so the image was blurred)


Lovely mountain valley near Camp David. The color of the leaves are terrific. The weather was sunny and in the upper 60's. Just perfect. We also checked out a corn maze that was designed by company called MazePlay. Neat stuff. :-)

Realtor Magazine: More High-End Sellers Cut Asking Prices

More High-End Sellers Cut Asking Prices

(October 21, 2005) -- Most of the homes on the market in Los Angeles and Orange counties in California for $500,000 or less fetched their asking price or more during the second quarter, according to statistics compiled by Real Data Strategies.

However, sellers in the most affluent neighborhoods—with homes priced above $750,000—have been forced to shave 5 percent to 10 percent off their asking prices and wait weeks to find a buyer.

Real Data Strategies President Patrick Veling attributes the price reductions to a 40 percent jump in inventory in the two counties over the past year. Analysts are closely watching to determine whether the cuts are seasonal or indicative of the start to a long-term decline in the housing market.

Source: Los Angeles Times (10/20/05); Haddad, Annette

Wow. It is surprising that this was actually published in Realtor Magazine.

Housing Balloon

It's Bubblicious

Remax Balloon

When Real Estate Goes Pop.
It's bubblicious

NAR: 'Change to Mortgage Interest Deduction Could Drop Home Prices by 15%, NAR President Warns'

The National Association of Realtors warned in a news release that a change to the Mortgage Interest Deduction could reduce home prices by 15%.

Home prices, particularly in high cost areas, could decline 15 percent if President Bush'’s tax reform panel's’s expected recommendation to convert the mortgage interest deduction (MID) to a tax credit gets implemented, said Al Mansell, president of the National Association of Realtors^®.

Speaking at the opening session of the 2005 REALTORS^® Conference & Expo here, Mansell said that if the MID were changed, the typical homeowner could lose $20,000 to $30,000 in housing equity.

Housing is the engine that drives this economy and to even mention reducing the tax benefits of homeownership could endanger property values. The tax deductibility of interest paid on mortgages is both a powerful incentive for homeownership and one of the simplest provisions in the tax code. It should not be targeted for change, Al Mansell said. "“NAR will continue to tell Congress that Realtors^® strongly oppose any attempts to alter the current tax treatment of mortgage interest."

Eliminating the mortgage interest deduction would hurt middle-income families the most, he said. According to IRS tax return data from 2003, 52 percent of the families who claim the mortgage interest deduction have household incomes between $60,000 and $200,000.

The president'’s tax reform panel will issue its proposals next week. It is expected to recommend converting the MID from a deduction to a tax credit; reducing the $1 million cap on mortgages to the local FHA loan limit (which can be as little as $170,000 and no more than $312,000 in high cost areas such as Alaska, Hawaii, Guam or the Virgin Islands; the current cap has been in place since 1987); eliminating any deduction or credit for second homes; repealing the deduction for property taxes, as well as other state and local taxes; and raising the amount of gain to be excluded on sale of a principal residence, but reducing the frequency in which the exclusion can be taken.

NAR sounded desperate. Al Mansell, president of the National Association of Realtors®, stated "These proposals are startling. We communicated immediately with the chairs of the Tax Reform Panel and expressed our shock at their proposals."

I totally support "eliminating any deduction or credit for second homes," as well "reducing the $1 million cap on mortgages." Too much federal tax revenue is lost on deductions for second homes and expensive homes.