As "they' say it not over till it's over,and this first week of 2010 we have heard more than a few perspectives of what to come in 2010. A few things that I heard that made me think is that is not over yet.
1) Arm Rates have reached the 3 -5 reset date, According to one business journalist:."The big wave of Option ARM resets has yet to come, and given the drop in home prices, refinancing won't be realistic.".
2) Municipal Defaults: yep, local towns and counties are feeling the pinch with foreclosures and tax defaults draining their coffers. And when a town goes broke, it will put their resident's property even further underwater.
3) Loan modifications aren't working. Unless and until there is meaningful principal reduction, most people getting a loan modification will stop making their payments if they are $100,000+ upside down on their home. And there are A LOT of people upside down. There will be lots of "jingle mail," where the homeowner just sends back the keys to the bank, this year.
4). Commercial Real-Estate Collapse: The second largest chain of malls has already declared bankruptcy. Obligations needing refinancing in the commercial market are in the trillions. And most of them, even with positive cash flows, are as underwater as residential mortgages. As these businesses crash, they will cause even more unemployment.
So when will it be over -- we an economist said we really will not know until long after we should have known
Just rememebr all Real Estate is local and now more than ever Hype Local so work with a Realtor that New the details of your market .
Thanks for article. We learn a lot from Active Rain Blogs. Best of luck in 2010
The page has been turned over on the calendar, but I don't think that changes any market conditions.
Dude...great points...especially #3. What is it going to take to get banks to realize this?
I think it's called government intervention. Now, that said, I'm not for that, but it's like having little kids. You tell them how to play in the sandbox, and when they continually throw sand in the kids's face, you then have to step in with your hand and enforce, or change the rules.
I don't consider a "loan modification" a reduction in my payments short term, when I still owe $300K on a now valued $200K home. A loan modification is the lender writing off the 100k, reseting my loan and we all move on. I'm now making a loan payment on a piece of real estate that is what it's worth. That is where the bank bailout money should be spent.
That all said, if I lose my job, no loan modification is going to keep me from foreclosure unless the bank is willing to forego my payments till I get a job. Not a bad thing here either. Think about it, the local real estate market does not go bonkers with foreclosures, people and families get to stay in their homes, and they make up those payments in the future. You sell your home 2 years from now, and you still owe 4 payments from the "we let you stay and NOT pay" time period, you NOW pay them out of your proceeds, or come up with that money. This is not a short sale...you own these payments as we agreed.
There, now my blood pressure is up.....
We have a long way to go. Thankfully there are many opportunities for us as Realtors and Mortgage Originators to shine during these times.
Eric - I don't even think principal reductions will do much. Not if someone doesn't have a job. Excellent summary of what is coming.
Thanks Wendy - Randy - Thom -Linda - Edward
The last 6 months have been clearing away the "low hanging " fruit now its time to really roll up our shirt selves and get to work