It’s estimated that 75% of mortgage applications are from refinanced loans. Realtytrac reports that banks have another 500,000 homes and are paying for servicing to keep them off the market, thus falsely inflating prices. Unemployment has risen from 8.5 to 11%, which also has an effect on housing delinquencies. Plus, Zillow estimates that nearly a quarter of the mortgages in the entire U.S. are underwater.
Another way to look at declining housing starts is the closer to zero new starts go, the sooner the unsold inventory will go, and then price stabilization should occur. At that point, we’re at restart.
A huge factor is the mortgage and commercial real estate loan sector of the economy which has just begun to heat up as it pertains to defaults. House mortgage defaults are not slated to peak until late 2010 – early 2011, with a corresponding drop in asset value. The commercial real estate sector crises is going to make the sub-prime defaults look like a cake walk! Lots more red ink is on the way.
I apologize but I’m not buying a housing recovery this year at all.
The other side of the coin is the fact that in March, in the hard hit Las Vegas real estate market, sales jumped from 1,954 to 3,626 units in a year. Real estate sales have also picked up in California cities like Sacramento and Stockton. This seems to be the first signs of a real estate housing bottom.                     Little Italy San Diego real estate
Given the ratio to income to sales price in California the foreclosure crisis will be a California problem for many years. Until the recent bubble lending 3 times income was a good yardstick but now it ranges from 6 to 10 times income and this has become the norm. A good example would be the city of Santa Rosa BMR problem that has a cap of 50K income for houses costing 304K using the FHA 3% down program. Low income cannot afford a 300K home; only in California is this type of thinking keep alive by local and state government. In fact the State yesterday wants to give low income families 100% financing for foreclosure homes in the most impacted parts of the state. These homes require extensive rehab which low income citizens do not have and will again provide a new wave of foreclosures in the coming years.
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I looked for the recovery to start right after the election. Why? Hope. We needed hope as a nation. From there, I figured about a year to win back the confidence needed. The economy is all about confidence. But, I guess I was wrong…
San Diego California real estate