patrick.net

Realtor bullshit. Nothing can be proved by Zillow or the like. With unemployment as high as it is no one risks. That is very tried and true I have been in Real Estate for over 18 years. Don't fall for it.

CNN might as just as well be in lending. Cause those people the Debt Merchants own it. Only someone with really deep pockets could keep something like that going. I'd pick another line of work. I'm just trying to be nice here. Not trying to be a prick at all. Rates mean refi. Never ever do they mean sales. Realtors always try to push rates in an economic blowout. Once again the possiblity of job loss keeps the buyer out of the market.

It's really mean to push something on people when its this bad. Very selfish and they have the real potential of loss.

PockyClipsNow says

With the FHA providing loans for million dollar homes no wonder there are buyers.

All you need is a measly 250k and you can get a 729k FHA loan and live in the fortress with a non recourse mortgage. I'm pretty sure this is most of the buying activity. Sure more cash offers than ever but also more 729k loans than ever. Very odd but this situation is here to stay.

Afaik, the conforming limit was lowered from $729,750 to $625,500 in "high cost" areas effective October 2011. I admit that I haven't been out loan shopping so maybe I missed something....

Here's the quote from the FHA release dated Nov 22, 2011:

"The maximum conforming loan limits for one-unit properties, which generally have applied to loans originated since Oct. 1, 2011, are $417,000 in most locations, but are as high as $625,500 in certain high-cost areas in the contiguous United States. For loans originated prior to October 2011, the maximum loan limit was as high as $729,750 in the contiguous U.S. However, that higher “ceiling” was permitted under legislation that no longer applies to newly-originated loans."

fizbin,

Our fearless leaders quickly put the higher limits back in place to appease NAr/CAr lobbyists and the host of other RE leeches in high-cost areas. These higher limits are set to run through 12/31/2012. I have little to no doubt that they will be "extended" again & again for Bay Area zip codes. What better way to help people than to sell them things that they cannot afford? (!!!)

"For areas designated as high-cost in 2008 under the ESA, the FHA national loan limit “ceiling” is $729,750 for a one-unit property. The ESA maximum FHA loan limits (the ceiling) by property size for period stated in this mortgagee letter are as follows:

A list of counties at the ceiling for case numbers assigned from January 1, 2012 through December 31, 2012 is provided in Attachment I of this Mortgagee Letter."

Source:
http://portal.hud.gov/hudportal/documents/huddoc?id=11-39ml.pdf

Ahhh! Thanks, I stand corrected... That makes ever so much more sense. I couldn't really believe that "they" would ever let the limit roll back in an election year.

fizbin says

Ahhh! Thanks, I stand corrected... /p>

Interesting. A little checking reveals that the fannie-mae, freddie-mac conforming high-cost limits DO seem to have rolled back. It's only the FHA loans (ginnie-mae) that have the higher allowance.

It would be interesting to see how many more FHA backed loans are showing up in the SV area. How do they compare in cost to conventional loans when the mandatory MIP is factored in?

Whats really crazy to ponder is that in 2001 the Phonie/Fraudie conforming limit was 220k in high cost areas.

Ten years later its 729k and prices are crashed back to 2002 prices except for prime coastal which might be at what 2003/4 prices?

I would like the limits rolled back to 220k but way more likely they ramp it up to 1m soon. It was proposed by NAR to do this they lost (so far.....)

I don't think it's a bubble, I think banks are trying to create an artificial shortage with the government's help (cash infusion into the banks so they don't have to sell their distressed property to survive)... it's a ploy and it may be working.

Here in Orange County, California inventory has suddenly gone to virtually zero, the slim pickings of properties available are going into bidding wars and most are already in Pending status, prices are creeping upwards.

Remember that prices are sticky on the downside but not on the upside, prices can rise 10% in a month but for the same 10% fall it may take 6 months.

In the long run I think home prices will come down a lot in real terms (discounting for inflation), however I think we're in this soup for at least a decade... possibly 2 decades just like Japan since the government will try it's best to put the brakes on the whole correction.

REpro says

REpro says

At some point banks can refuse giving new mortgages for regular buyers. That may create situation: “NO Cash - NO House Amigo.”
50% loans turn away ???
http://realestate.msn.com/potential-homebuyers-hit-mortgage-brick-wall

In the link you sent we read about a couple with credit score 590, and they want to get a house with about 3.5% down. They are told by the bank that they need to get up to 620, and the article says rates will be high unless they reach 700.

Are we supposed to feel sorry for these people? Is the bank being unreasonable to "regular buyers"? I don't think so. I think the bank is being perfectly reasonable. This is what lending standards are supposed to be like. It is a return towards normal. The problem is just that after a decade people have started to think that no income documentation, no credit, no down payment is normal and that they are entitled to mortgages anyway. This is why 50% fall thru.

drtor says

In the link you sent we read about a couple with credit score 590, and they want to get a house with about 3.5% down. They are told by the bank that they need to get up to 620, and the article says rates will be high unless they reach 700.

I've sort of been reading up on this myself and from what I gather, supposedly the "new" threshold for getting a good rate these days is at least 700+ with some sources saying 750 or more. If you're below that then yes, you can get an FHA loan, but you'll also likely be paying a higher interest rate. So yeah, credit is king these days.

It's a totally artificial bubble. There are at least 1.6 million homes in the shadow inventory. That figure hasn't changed much since 2009. Interest rates are being held artificially low to enable buyers to buy homes at higher prices than what they are really worth. If interest rates were higher home prices would drop and more underwater homeowners would walk away. Banks are artificially holding back homes from the market because they want their assets to maintain an artificially high value. Again, they are wanting to maintain these prices because they are afraid more underwater homeowners will walk away in droves if their homes lose more value.

At some point many of the homes which are being held off the market will be sold in large batches to investor groups which will rent them out. Since they won't have been sold on the open market they won't bring down home prices. They will have simply been purged from the shadow inventory all at once. By controlling the number of homes for sale at any one time, and selling large batches to huge investors, the banks will eventually emerge from this bigger & stronger than ever.

In the meantime, those of us who are waiting for prices to drop naturally will be left wondering who were those masked men who designed such a plot.

More cash/credit than brains is what we have happening. Good luck to all the players. I hope you have a defensive play as well.

In many recent sales observations, offers with loans are out of consideration. Houses are going to the highest all cash offer. In transactions looks like investment, ROI becomes a secondary issue.
From some perspective it appears like we are witnessing a gigantic money laundering machine.

REpro says

In many recent sales observations, offers with loans are out of consideration. Houses are going to the highest all cash offer. In transactions looks like investment, ROI becomes a secondary issue.
From some perspective it appears like we are witnessing a gigantic money laundering machine.

You might be onto something. Who are these cash rich guys?