Is Real Estate real

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Oct 25, 2006 5:20 pm

Thus us a note on cnn.money. The bottom line is great. Maybe oil up 8% in a week is of some concern for those who never see inflation. Saving my pennies to buy, buy, buy when most will sell, sell, sell!







Short-term mortgage rates jumped after the Federal Reserve hiked interest rates 17 times by a quarter-point each time since June 2004. The rising rates and several years of double-digit price surges crimped home affordability and dashed incentive for the home refinancings that were driving loan production.



"Long-term interest rates have remained low in the face of rising short-term rates, equity prices have risen nearly 20 percent, capital expenditures remain strong, the trade sector has turned from a big drag on growth to a modest stimulus and energy prices have dropped sharply," Duncan said of his forecast for longer-term stability.



The Fed likely will keep interest rates unchanged with the federal funds rate at 5.25 percent rate through 2008, the trade group predicts.

Oct 25, 2006 8:33 pm
AirForce:


The Fed likely will keep interest rates unchanged with the federal funds rate at 5.25 percent rate through 2008, the trade group predicts.


Through 2008?  The talking heads were all atwitter today that the Fed seems poised to pull the trigger for a rate increase, and would have loved to have done it today but that the politics of the situation would not allow it.


Through 2008 is more than two more years.  Ain't no way the Fed Funds target is going to remain static for 26 months.  Just ain't gonna happen.

Oct 25, 2006 9:05 pm
Devil'sAdvocate:
AirForce:


The Fed likely will keep interest rates unchanged with the federal funds rate at 5.25 percent rate through 2008, the trade group predicts.


Through 2008?  The talking heads were all atwitter today that the Fed seems poised to pull the trigger for a rate increase, and would have loved to have done it today but that the politics of the situation would not allow it.



I don't know what talking heads you were watching. The ones I saw were discussing how only one Gov was in favor of hiking rates.

Oct 26, 2006 11:51 am

Dude, they can't say the truth. The new guy said he sees problems a few months ago and the entire world came crashing down. He was told be cautious on what he says.



Oct 26, 2006 12:11 pm
AirForce:

Dude, they can't say the truth. The new guy said he sees problems a few months ago and the entire world came crashing down. He was told be cautious on what he says.



Dude, that's not remotely accurate. The Fed Head took grief because he made apparently contradictory statements. What he said to Maria, and during trading hours contradicted the previous Fed statement. You might want to save the conspiracy stuff until you earn your wings in this business. For example, there was only one Fed Gov asking for higher rates at the last meeting. The balance seem to think the economy is slowing up enough on its own to warrant a hold on any more increase. My money says it 50/50 whether the next Fed move is up or down.<?:namespace prefix = o ns = "urn:schemas-microsoft-com:office:office" />


 


BTW, when crude moves from $58 to $61 it’s hard to scream inflation when it’s down from a recent high of $78.


Oct 26, 2006 8:21 pm

Yeah man, I do not know the exact details of what the FED chair stated, but I do know inflation is an "egg shell" word.



My concern is with the housing market. Did you know if the value of the home decreases below the mortgage amount one is not supposed to deduct the interest difference. Did you see the average price is now 210 from 255k.



Earning have been strong and I am glad I MCD and AMZN for a while.



As for oil I was talking 56 last week to 61 yesterday. I don't mind the steady drop, but thats an 8% rise.

Oct 26, 2006 9:34 pm
AirForce:

My concern is with the housing market. Did you know if

the value of the home decreases below the mortgage amount one is not

supposed to deduct the interest difference.




You mean the interest on the mortgage is no longer deductable for that

percentage of the loan above the home's value. You think the IRS is going

to demand new apprasials on every home in the nation to find the tiny

percentage that have mortgages larger than their value? Somehow I doubt

it.



I think there's little to worry about in housing. Some people who are

overextended will be hurt, otherwise people simply live in their homes.



AirForce:

Did you see the average price is now 210 from 255k.




I haven't seen that number, but it sounds dubious.

(Existing home sales drop for fifth straight month (msnbc.com))



"The median price of a home sold last month fell to $225,000."



That's not the median price of a home, btw, that's the median price for

what sold last month.



AirForce:

As for oil I was talking 56 last week to 61 yesterday. I

don't mind the steady drop, but thats an 8% rise.




And it's nothing, when it comes to inflation pressures, since oil was at

$74 recently. Nothing to worry about.

Oct 27, 2006 11:50 pm

New prices plunge (boston.com - Boston Globe)





As for the new prices.... If one was audited they potentially would have to

show the current homes value to justify 100% of their interest. If someone

has a million dollar mortgage, but current home value of 750k they may

have to eat the 25%.



When was the last time homes droped 10 or 20%? In DC friends

purchased homes at 750k and now they are worth less then 650k.



I do not understand the justification of these massive increases in home

prices. Where I live there are about 80% jobs paying less then 30k a year.

Incomes have went up 2% yearly over the past 5 years and housing went

up 100%. Something is wrong.

Oct 28, 2006 6:01 pm

Low interest rates

Oct 29, 2006 4:57 pm

Your link doesn't work.



AirForce:

As for the new prices.... If one was audited they

potentially would have to show the current homes value to justify 100% of

their interest. If someone has a million dollar mortgage, but current home

value of 750k they may have to eat the 25%.




I doubt the IRS would go after someone who wrote a mortgage for the

home's value or less (how many 100% mortgages might there be to begin

with) and then saw a decline in value that meant they were upside-down

in their mortgage.



AirForce:

When was the last time homes droped 10 or 20%? In

DC friends purchased homes at 750k and now they are worth less then

650k.




No doubt it could happen is some, select, markets. Nationwide, here's

something from the article I provided.



The median price of a home sold last month fell to $225,000. That was

down 2.2 percent from July and down 1.7 percent from August 2005.




That's 1.7%.



AirForce:

I do not understand the justification of these massive

increases in home prices. Where I live there are about 80% jobs paying

less then 30k a year. Incomes have went up 2% yearly over the past 5

years and housing went up 100%. Something is wrong.




As was noted below, it was the low interest rates (and historically high

demand) that made more expensive homes afforable.

Oct 30, 2006 10:47 am

Its my opinion that nationwide the real estate market is in the second inning of a difficult pullback in prices. The advent of interest onlys for the past 3 years will finally start to hurt homeowners when their fixed period ends and the higher adjustable rates start.


I read some research the other day that stated there was an 18% increase in default notices nationwide Y/Y and a 38% increase in CA alone. People used hybride mortgages as a last resort to affor their new homes and 'get in' on the boom, and they will lose their shirts in the process.


Some of you may know that I am living in SoCal, and renting right now. One indication (granted it is here in SoCal) is the dream condo I am waiting on. One block from the beach, 2BR, 2BA, balconies, just built, the WORKS). They were intitially listed at $650K last summer, and a recent unit went for $535K.


I will let Rightway, JoeDaMan, and the rest of you guys know when the blowout house warming party is....

Oct 30, 2006 11:00 am
blarmston:

Its my opinion that nationwide the real estate market is in the second inning of a difficult pullback in prices.



Just when you think you know something you get an awakening.


One of my daughters lives in the nothern DFW metroplex.  She and her husband are wanting to move closer to Fort Worth so they have been looking at houses.


Since it takes four to six months to get a contract in the metroplex these days they decided to list their house before they found another one.


On the FIRST day they got an offer for $10,000 more than their asking price--the buyer wants to close before Thanksgiving and the kids have nowhere to go.


Now I have to wonder if she'll volunteer to repay the $50,000 we "loaned" her to make the downpayment.

Oct 30, 2006 11:18 am

I love how Put lies...just to stir the pot.  But even if it was a truthful anecdote, it is no more than that.  Hardly an indicator of anything really.

Oct 30, 2006 11:38 am

Isn't reality made up of individaul anecdotes?

Oct 30, 2006 11:50 am

One rare isoalted situation. COre inflation up again near long term high. So is inflation a factor? After the election I say yes, but WTF do I know.

Oct 30, 2006 12:32 pm
AirForce:

COre inflation up again near long term high.


Huh?



AirForce:

So is inflation a factor? After the election I say yes, but WTF do I know.


Huh, no. But I do agree with your alst part  

Oct 30, 2006 12:34 pm

alst = last

Oct 30, 2006 1:11 pm
Devil'sAdvocate:

Isn't reality made up of individaul anecdotes?



Do you think that one individual anecdote is a proper basis for the reality of an economic condition in the U.S. such as housing?

Oct 30, 2006 1:37 pm
BankFC:
Devil'sAdvocate:

Isn't reality made up of individual anecdotes?



Do you think that one individual anecdote is a proper basis for the reality of an economic condition in the U.S. such as housing?



No, but it factors into the reality.  What I said was reality is a collection of anecdotes.  I stand by that statement.

Oct 30, 2006 1:45 pm

Right, it factors in...about as much as an albino chimpanze factors in to the overall look of chimpanzes.


One outlying variable does not constitute a trend.  Only liars and the media (which sometime are one and the same) try to prove otherwise.