Another Useless Yahoo Survey
Chuck Ponzi March 26th, 2007
Periodically, I like to post these, since they appear on the front page of Yahoo finance… presumably polling some of the “faceless herd” that helps you in deciding where things might be going. Remember, large numbers of amatuers are almost always better predictors than experts!
What do you think?
The question itself is skewed, perhaps inferring that the subprime meltdown is some isolated event that we might “get over” like a bad cold, then everything will be peachy once again.
Kurtz101. The current sub prime meltdown is a single event and things will be peachy again. The mortgage industry will get over it, it will just take time. Eventually sub prime lending will come back and people with sub prime qualifications will once again be able to get financed. The issue now is that investors are shaken and not wanting to purchase sub prime loans right now. Because of that, banks aren’t able to loan like they used to because there is no buyer for that loan anymore. Once investors feel comfortable and things stabalize, investors will once again slowly allow their dollars to go towards risky investments like sub prime borrowers. It will just take time for that to happen again.
According to The Kiplinger Letter, sub prime ARMS represents 7% of the market, perhaps more in southern california but then again southern california have some nice equity gains that will help them refi out of them.
I really don’t think we’ll see the huge price drops that a lot of people on this site are anticipating. Potentially 10 to 15%, and in most cases the homes weren’t even worth what they were put on the market for anyway, some newbie realtor just said OK to whatever the home owner wanted to list it for so he would be able to put his cool new sign up and maybe get a phone call or two.
After months of not selling, the price will have to be reduced to what it should have been in the first place.
Yeah, I’m still seeing people list homes that should be in the 700K range or less for $1M or more. And there they sit, empty in Rancho Cucamonga. Brilliant marketing I must say, particularly the ones a stones throw away from the 15 freeway. One new developer seems to have their prices set about right, but most of the new homes still are way overpriced for this market.
um…this looks a smidge “trolly” to me. Those “nice equity gains” are long gone, consumed entirely by the last wave of refis.
There’s a reason subprime was such a small % of the market (no more than 5-7%) for so long: these people CANNOT BE TRUSTED WITH LOANS! I doubt that Wall Street’s appetite for such loans will ever grow even close to what it was the last few years.
Subprime is the tip of the iceberg…basic rules of economics have a funny way of throwing cold water on the bubble brigade.
RT…I enjoy checking this blog because I like to read the news and see the posts. It’s an interesting read.
The reason why the equity gains are still there is because sub prime loans carry hefty pre payment penalties for the first 2 to 3 years. Because of that, a lot of sub prime borrowers don’t tap into their equity until after that penalty is up. Although that isn’t what everyone does, but a good majority of people don’t enjoy throwing 10k or so out the window in addition to the 5k it will take to refi just to get another 10k out.
Wall Street will once again return and lend to the sub prime borrower. Actually, because of the higher interest rates for a long time sub prime lending was extremely profitable. That is why Wall Street was willing to loan to them. Believe me, it’s a credit cycle just like a real estate cycle and sub prime will some day be hot again.
With appropriate risk premia like Countrywide’s current rate sheet (9-10.5% interest).
Fair enough, there may be an equity “well” out there that isn’t completely dry, but it only takes a refi crunch at the margins to crush the comps and send the housing market reeling. I think that some of the pseudo-equity built up over the last few years won’t be nearly enough to save this market.
That “some day” when subprime becomes “hot again” is a LONG, LOOOONG way off. The higher rates made these securities extremely profitable, but now we’ve seen the downside. These securities looked fantastic when housing appreciation was keeping default rates on the floor. It will be many decades before we’ll see the frenzy for these securities that the housing permabulls spurred over the last few years.
Subprime predictably led the way on this downturn, but it really is the tip of the iceberg. Alt-A and even prime were also infected by wildly overinflated prices. A lot of people with average or even good credit have also gotten in over their heads in the last five years.
The subprime mess is the symptom, not the disease. The disease - rampant speculation and a lemming-like devotion to the “real estate always goes up” hyperbole - will take many years to cure…
Oh, this thing hasn’t even begun to pick up real steam. Loans need to re-set, people need to be stuck with what they have and then try to minimize their losses.
It isn’t going to be long but it’s going slower than I would like. I want houses to be affordable for many more people than they are now, including my family. The prices are still at stupid levels in teh Inland Empire of So. Cal.
Social workers say that most people are between 1 and 6 paychecks away from homelessness, so, for better and for worse, mark your calendars…
If you look at the recently published Bear-Sterns-Credit-Suisse chart of upcoming ARM resets, there are two major waves coming in the next 2 years or so. We are only on the very earliest uptick in the first swell of resets. I forget the URL but I will be posting the graph tonight (Pacific time) on my blog.
Who the hell would pay half that to live in the IE? Sit tight hold on to your jobs and save like mad. This thing will take several years to unwind it’s just starting to hit the Main stream Media. Bubble watchers have known for at least three years. Barring a geo political event it will be a sticky ride down.
Patience is the operative word now. Just go on with your life and those who participated in the HB will get eliminated. They had their chance most bit off more than they could chew. Too Bad… As far as they rediculous pricing that will take care of itself as soon as defaults hit high levels. Just pray the economy doesn’t get swept in too. Or even those who were financially responsible and didn’t buy will be affected as well. Remember the credit crunch is coming so make sure your stuff is in order and you have a decent down payment. No more funny lending practices that’s over..