As this feedback loop works itself out, a regionally dependent phenomenon has begun to emerge. Although home prices averagely dropped in the US the story doesn’t end there. Despite lowered economic growth forecasts and commodity-related inflationary pressures, (which are felt much more diffusely throughout the economy) several metropolitan areas have remained more robust, which explains dissenting votes on the past two rate cuts by the regional Fed chairs from Dallas and Philadelphia, respectively. Part of their reasoning is based on working against what they view as a misconception about the scope of the Fed’s powers among many investors; namely, that the central bank is the only agent responsible for assisting challenged markets. Political jockeying has and will continue to play a role in their decisions, especially in the charged climate of an election year, but their dissenting votes represent the resilience of many areas of the US that continue to experience growth. From Charlottesville, North Carolina to Austin, Texas, many metropolitan areas continue to develop quickly, seemingly insulated from much of the speculation and predatory lending that has defined tracts of the US. While some of the worst affected markets in the Southwest like Phoenix, Arizona and Las Vegas will take considerable time to rebound, some price correction was inevitable. This is partially due to property value spirals in recent years, without corresponding increases in infrastructure and demand. In markets where growth had already been steady, home prices have been relatively stable.
If the federal government steps in further to freeze or help re-negotiate more of the estimated two million sub-prime mortgages projected to default over the course of 2008, prices may stabilize more quickly. Politicians, closing ranks in a show of solidarity, will likely be reluctant to make bipartisan efforts a priority while the presidential race remains in the limelight, which makes investment in the near and medium term likely to be more profitable, both in markets where prices have overcorrected and in stable markets. This is because any government-based mortgage interest rates freeze may be less favorable than current rates, which are firmly negative. Moreover, refinancing remains available should climates change. In any case, the worst may not be over for a lot of America, but some places have weathered the past eight months relatively unscathed.
tanner_1122
January 23, 2010 at 1:51 am
He has nothing but dishonest friends. Keep posting the info but make it shorter so everyone can read it and get the message. Post more questions about this or just post it somewhere in your answers. Most have no clue about this.
Side note: Look up ACORN and their ties to Obama and voter fraud. It explains why Obama helped with community organization.
You are a great American.
ashtonk
January 23, 2010 at 2:40 am
I don't think so, they are a niche product that was created to fill a demand. The real estate market never was created for day traders. Rising or lowering market values once a loan is funded do not adjust to suit the spending habits of the borrowers. Guidelines were stretched but good financial advice rarely if ever was given to borrowers of hybrid type loans. Loan officers also swerved many into bad loan products for their borrowers to make extra rebate. The loans themselves aren't as bad as the ones selling them in most cases. Another issue is while it is easy to pick on sub-prime loans due in part to their typical poor credit scenario borrowers that would likely default on any type loan. A huge segment of the default market isn't sub-prime at all. It is the jumbo loan market and all the neg am loans that are starting to become delinquent. Another issue is that of Real estate agents overselling people into more house than they need, or can truly afford. In those cases a option arm is often their only hope of closing escrow. The shame is that many will lose their dream home once their loan starts to adjust up. In other cases it is just people that have no shame that know they wont make their payments but borrow anyway. I have seen more 1st payment defaults in the last year than in the last decade. I process over 200 notice of default filings per week and have analyzed pre foreclosures for over 20 years. The seasoning on loans going into default is at an all time low. Lastly I think our own federal government has a bit to do with this as well. They enticed rates to go low so people could take out their equity to keep this economy going. Most that have refinanced have done so to not really lower their mortgage payment as much as to just lower their total payments. Now they are broke and overextended again with no chance of digging out of their debt trap. I know theres a few more reasons but in the big picture I really think sub-prime loans are just an easy target due to the poor credit and spending habits of the niche they were created for.