Don't believe the National Realtors Association that Housing has turned a corner. Don't believe what you continually hear about housing from all of the talking heads on TV and in the media.
Housing has very temporarily turned slightly up because of the governments incessant need to just spend their way out of a bubble. Its classic bubble economics. First time home buyers tax credits and general propaganda has led many people to believe that housing has bottomed.
For all those cool aid drinkers: Here is to you:
www.nytimes.com/2009/09/09/business/09loans.html?
Just the FACTS MAN! For arguments sake say $1 Trillion problem.
An analysis for The New York Times by the real estate information company First American CoreLogic shows there are 2.8 million active interest-only home loans worth a combined total of $908 billion.
In the next 12 months, $71 billion of interest-only loans will reset. The year after, another $100 billion will reset. After mid-2011, another $400 billion will reset.
"Nationally about 18 percent of prime interest-only loans are at least 60 days delinquent. In California, the level is even higher: 21 percent, a rate exceeded only in the other bubble states of Florida and Nevada."
The government knows these figures. The banks know these figures. But investors have been hood winked to believe that housing has bottomed and that all of this is baked into the system.
The government and banks are just kicking the can down the line a few years, because they really have no idea or clue how to fix this problem. They know the risks and end game, but are not ready for it and have no plan other then lying to the general public about a pending housing recovery.
Interest only, negative amortization, Pick-A-Pay mortgages, & ARM mortgages were the biggest origination's in Florida, California, and Nevada, which today are still the worst markets. As of today many of those mortgages are either in total default or going to be in total default. Even homeowners who are current with their payments will see their payments jump 75% when the rates reset. Going back to yesterdays chart of flat wages, you get the idea. Who cares even if you have a job, can one even afford a home with where wages are at currently?
This sums up the whole article for me. This is what the country has become about:
“I’m praying for another boom,” said Mr. Moller, 34. “Otherwise, we’ll have to walk.”
Yes, folks we need another bubble so that ridiculous behavior can be subsidized by government so that Banks can kick the can down the road until the next crisis hits us in the grill. By that time, Mr. Moller would have refinanced, re leveraged, and bought another home that was in foreclosure, because that is what people do when they are not punished for ludicrous behavior.
The only thing I have for Mr. Moller is empathy, other then that good luck my way ward son.
Another mind numbing part of this article is:
Mark Goldman, a San Diego mortgage broker, who himself was put into a interest only loan, is a lecturer in real estate finance at San Diego State University. God Bless the American Educational System!
Another wonderful quote:
“I understand I took a risk,” Mr. Janis said. “But I did not anticipate that the real estate market would go down 30 percent."
"The bailout is not trickling through to help many of us who have worked hard, under very difficult circumstances, to keep paying our bills,” Mr. Janis said. “I am stuck with nowhere to go — absent trashing my credit and defaulting.”
Cry me a river!
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