(AP) --
"Construction of new homes posted the biggest increase in more than two years in April, a rare spot of good news amid the worst downturn in housing in more than two decades.This is good! Now some of those who were forced out of old apartments for condo conversions will have a nice shiny new apartment to live in.
The Commerce Department reported Friday that housing construction rose by 8.2 percent in April to a seasonally adjusted annual rate of 1.03 million units. Building of single-family homes continued to weaken, however. The growth came from a big jump in apartment construction".
"By region of the country, construction posted the largest gain in the Midwest, an increase of 24.4 percent when compared to March. Construction rose 18.5 percent in the West and was up 3.6 percent in the South. However, construction fell by 12.7 percent in the Northeast.Also in Friday's news:
Even with the improvement, housing construction nationwide was 30.6 percent below the level of activity a year ago".
Reuters -
"Fannie Mae, the nation's largest source of home financing, said on Friday it is lowering the amount of down payments required on mortgages it purchases, even in areas where home prices are falling.
Starting on June 1, the new requirements of 3 percent or 5 percent, which replace rules set in December, will apply nationally to loans on single-family primary residences, it said".
37 comments:
Starting on June 1, the new requirements of 3 percent or 5 percent, which replace rules set in December, will apply nationally to loans on single-family primary residences, it said".
Let's see, it takes 6-9% to sell a home, so anyone with just 5% down is for all pratical purposes is immediately underwater. So with values dropping another 5-20% in high risk markets this seems like a recipe for disaster for Fannie Mae.
wtf is Fannie Mae doing?
I guess they are banking on a taxpayer bailout for when they fail
"Fannie Mae is expected to announce Friday that it is scrapping a policy requiring higher down payments on home mortgages in areas where house prices are falling.
The change comes in response to protests from vital political allies of the government-sponsored provider of funding for mortgages, including the National Association of Realtors, the National Association of Home Builders and organizations that promote affordable housing for low-income people.
Those various groups have said the policy is hurting an already feeble housing market by shutting out too many potential buyers."
http://tinyurl.com/6kd9cc
Mixing government and business is almost always a bad idea... based on this it sounds like this is a favor by FNMA for its political supporters. It wouldn't be a big deal if the taxpayer was free of any liability here... but we all know what will happen if FNMA gets in over its head.
No good news here...
http://tinyurl.com/6k3oro
Shamrock said:
"Let's see, it takes 6-9% to sell a home, so anyone with just 5% down is for all pratical purposes is immediately underwater."
The purpose of Fannie Mae is to get people into homes to live in ... not to re-sell. Anyone looking to stay less than 5 years in one place shouldn't be looking to buy. Hence why your "is immediately underwater" comment makes no sense whatsoever. Fannie Mae shouldn't be out there ensuring that flippers can re-sell immediately. Not with my tax dollars!
The "purpose" of Fannie Mae is nothing that clear cut...
It is a for profit enterprise that is looking out for the best interest of its shareholders...
They want as little regulation as they can get so they can make as much money as possible. (While counting on the taxpayer to bail them out if they ever need it.)
Will everybody on this list who has 25% for a down payment on $250,000 home, plus closing, plus moving and everything else, please raise their hands.
kob said...
"Will everybody on this list who has 25% for a down payment on $250,000 home, plus closing, plus moving and everything else, please raise their hands."
uhhhmmm ... "traditional" down payments for a purchase are one of the fundamental beliefs of the Bubble theory. i.e., prices will go down when only those able to come up with these down payments are allowed to finance. Less people competing for a house = a lower price. Didn't you get the memo?
Ask Neil. He's got far more than that socked away.
As usual lance you are either trolling or completely lost.
A return to normal lending standards does not mean that everyone will require a large down payment all the time.
Generally speaking it will mean higher down payments... but in your typical way you misunderstood that or twisted it in your rush to speak for "bubbleheads."
My question is whether anyone has a problem with 5% down. Is that "normal" enough in the era of $5 a gallon gas?
Considering that the average American has no defined pension, not enough in their 401K for retirement, the idea of what's normal anymore is going through a serious recalibration.
That the buying power of Americans is on decline is no fiction.
"Normal" lending standards were in effect in the 1970s. But you could probably fill up your gas tank with what you earned in one two hours. Not today.
And so what is someone is underwater with 5% down? Big whoop. I bought in 1987 at 15% down and was underwater until the mid-1990s.
Kob:
Will everybody on this list who has 25% for a down payment on $250,000 home, plus closing, plus moving and everything else, please raise their hands.
My question is whether anyone has a problem with 5% down. Is that "normal" enough in the era of $5 a gallon gas?
Some people have large sums readily accessible, others are not so fortunate.
No way to tell what the distribution is. There are folks of modest income who have millions in investments, just because things worked out well for them.
kh said:
"There are folks of modest income who have millions in investments, just because things worked out well for them."
For once I must disagree with you my friend ... I've found that it's more complicated than "just because things worked out well for them". I think it has more to do with how they frame they events occuring around them. If they believe in and hope for "gloom and doom" that is what they will attract to themselves. If on the contrary they believe in good things happening for everyone, they tend to attract good things to themselves in the process. It's really all a matter of what you chose to focus on ... gloom and doom ... or good things for all ...
Right right...the best course of action is to speculate on real estate, or at the very least ignore impending price declines so you can waste tens of not hundreds of thousands of dollars.
Makes perfect sense...
Lance: If on the contrary they believe in good things happening for everyone, they tend to attract good things to themselves in the process. It's really all a matter of what you chose to focus on ... gloom and doom ... or good things for all ...
I see your point.
I know people who are millionaires. The common thread is that they expected the economy to turn up, had faith in themselves, saw investment opportunities in the work of others.
There is a common thread of optimism and an expectation of a positive result.
They saved and invested, took some risks but with the attitude that they would have a fair return, and everyone would win.
Is that why you decided to speculate on real estate KH?
When did you start buying into the market btw?
I find it odd that you spent so long lying about your motivations for posting here and claiming that you were just an interested homeowner before finally admitting that your real interest here is your real estate investments...
Leroy,
What is YOUR interest in posting here?
I am obviously following the RE market... eventually I will buy. For the time being I am just watching things unfold.
Leroy said:
"eventually I will buy. "
ha ... so you don't come to the table minus a motivation. you want/need for prices to drop so that you can buy ...
KH and I have many times said we aren't out looking to buy or sell in the short term ... i.e., current happening mean nothing for us from a personal viewpoint. That is not the case for you since you are relying on prices dropping to buy. I wonder which of us of the 3 of us has the least biased view point ... considering you are the only one of us 3 with a stake in what happens over the relatively brief timespan of the next several years ...
I guess I understand now why you can't see things as they are ... It isn't possible for you given the large stake you have in the magnitude of price swings of the next year, two, or three ... Okay, I promise to quit making fun of your bad analysis and judgement. You can't help it. You're blinded by your immediate stake in what happens over this short time period.
Lance: we aren't out looking to buy or sell in the short term ... i.e., current happening mean nothing for us from a personal viewpoint.
Decades. Think in terms of decades and you get a sense of what real estate is.
Consider how cities evolve and grow.
"ha ... so you don't come to the table minus a motivation. you want/need for prices to drop so that you can buy ..."
Lance, I could buy today if I felt like it... but as I have already explained I am moving overseas for a few years. I will buy sometime after I return.
"KH and I have many times said we aren't out looking to buy or sell in the short term ... i.e., current happening mean nothing for us from a personal viewpoint."
That is of course not true. KH is a speculator, and to a lesser extent you are as well because you aren't actually building in equity in your house that isn't due to appreciation.
"That is not the case for you since you are relying on prices dropping to buy. "
I believe I already addressed this above...
"I guess I understand now why you can't see things as they are ... It isn't possible for you given the large stake you have in the magnitude of price swings of the next year, two, or three ... Okay, I promise to quit making fun of your bad analysis and judgement. You can't help it. You're blinded by your immediate stake in what happens over this short time period."
This is just funny... you present nothing that could be mistaken for analysis on a dark rainy night. Your various theories consist of little more than buzzwords strung together to explain how your house will inevitably make you rich...
As for "making fun" of people that have a stake in what happens over the next few years... that is just pathetic.
We have already seen huge swings in prices and we aren't nearly done. Sorry, but if I can save a couple hundred thousand dollars by waiting a year or two it is worth it and most people would agree with me I think. What does it matter to you whether someone takes advantage of an opportunity to save money? Thus far your advice has proven to be nothing but wrong.
As it is I don't have to worry about buying or not as I won't even be here for the next couple years. When I return the large price drops will likely be over.
"Decades. Think in terms of decades and you get a sense of what real estate is.
Consider how cities evolve and grow."
How far into your multi-decade plan are you KH? Have you reached the half decade milestone yet or are you still looking forward to that one?
You never have answered why you lied about your motivations for posting here for so long. Why pretend to be nothing but an interested homeowner when you are really an investor?
Leroy said:
"When I return the large price drops will likely be over."
Correct ... And you'll have missed your chance to buy at "a lower" price.
Leroy said:
"Thus far your advice has proven to be nothing but wrong."
Thus far I have been EXACTLY on the mark. Your inability to understand that makes you more pathetic than someone to sympathize for.
"Correct ... And you'll have missed your chance to buy at "a lower" price."
Ah, another of your brilliant predictions.
Why am I unconcerned?
You think we are going to see the end of the bust, and THEN a recovery all within the next few couple years?
lol
We have a long period of stagnation ahead of us lance. Likely in the neighborhood of a decade if history is any guide.
"Thus far I have been EXACTLY on the mark. Your inability to understand that makes you more pathetic than someone to sympathize for."
Ah yes, exactly on the mark when you made your famous "subprime lemonaid" comment right? New computer models have eliminated risk... lol
Or your statement that everyone that is qualified for an ARM is always qualified at the maximum possible rate... lol
Or the numerous times you called the bottom...(going back years!) lol
Oh wait, lets not forget the "new paradigm"...
You are a running joke at this point. You were trying to talk people into buying at the top of the bubble using everything from faulty math, to lame "buy now or be priced out forever" threats, to you name it...
Really now, isn't it time you cut your losses and disappeared?
Or are you going to tell us all how 90% of the area is still heading up again?
On second thought...hang around lance, you add humor to what would otherwise be somewhat dry.
Leroy asked:
"You think we are going to see the end of the bust, and THEN a recovery all within the next few couple years?"
As I've explained to you over and over again, we haven't had a bust. How can we even predict a recovery from a bust that hasn't yet occured and never will occur. What we've seen is what kh and I have now been telling you for years: the end of the boom. The fact that overpriced places in new developments/transitional areas have now gone back to the prices they would have been had there not been a boom, does NOT indicate a bust. By and far, the vast majority of homes in the area are either holding their value or increasing in value. And that by definition would not be possible if there had been a bust.
But I understand ... for YOU who are motivated by the promise of price cuts that will allow you to buy more than you could otherwise, you are (perhaps unwittingly) extending the re-adjustment of pricing on these new developement/transisitional neighbors to all other places and types of housing ... The type you'd like to someday be able to buy for cheap. The problem is that hasn't occured. The fact that you and most other BHs on here are still looking proves that.
"As I've explained to you over and over again, we haven't had a bust."
lol... sure sure lance. You better call the NY Times with that little story. You have some major awards on the way once word gets out...
...and to think that the Fed, major banks, hedge funds, commentators, economists, congress, the executive... etc have ALL been under the false impression that there is a bust in housing!
"How can we even predict a recovery from a bust that hasn't yet occured and never will occur. What we've seen is what kh and I have now been telling you for years: the end of the boom."
Out of curiosity, what color is the sky in your world? I am going to guess lemon yellow, but I would be interested in hearing your opinion.
"By and far, the vast majority of homes in the area are either holding their value or increasing in value. And that by definition would not be possible if there had been a bust."
By and far this has got to be one of the dumbest things you have ever said. Why bother lying? Here of all places people know better so why even bother?
Are you honestly so hopelessly in denial that you will make up outright lies to make yourself feel better?
Or are you just at troll? because that is the theory I am leaning towards at this point.
"But I understand ... for YOU who are motivated by the promise of price cuts that will allow you to buy more than you could otherwise, you are (perhaps unwittingly) extending the re-adjustment of pricing on these new developement/transisitional neighbors to all other places and types of housing ... The type you'd like to someday be able to buy for cheap."
You don't have a clue what it is I plan to buy. Don't let that slow you down though... it never has before.
"The problem is that hasn't occured. The fact that you and most other BHs on here are still looking proves that."
Well I guess this confirms that you are functionally illiterate.
The "fact" that I am "still looking" as you put it is due to the "fact" that I am moving out of this city in literally weeks. The "fact" that you tried to use this as the basis for some kind of argument knowing that... well it just shows you will make up whatever suits you regardless of what the truth is... but then we already knew that.
Oh please Leroy ... we went through this excercise a couple weeks ago and I showed how something close to 90% of all the Washington area's housing (weighed for population) is either holding its value or increasing in value. I know you don't want to accept it because it is more convenient for you to say "Ah, prices dropped 1% in the southern sector of Arlington and you can't cound that as 'holding its value!'". But the truth is that home buying is a decades long proposition as KH said just today ... and the longterm trend --- no matter how you slice it --- is that there's been no big, wide-spread bursting bubble that will allow would-be buyers to go out and purchase their dream homes for pennies on the dollar. The hard "where the rubber meets the road" fact is that people buying today aren't getting any "fantastic bargains" other than on places which we can't be sure will hold even the little value they have retained. BHs who have relied on your "stellar" advice are finding themselves between a rock and a hard spot. Do they hold out longer for those "real" bargains you've promised them? Or do they buy into a falling town/development/new-condo-building and risk seeing the values there plummet even further. If they are truthful with themselves they will be asking themselves whether they might not now be better off if they'd listened to KH and me instead ... faced up to reality, and did the best they could under current circumstances ... rather than wait forever for the elusive bargains you've promised them.
"Oh please Leroy ... we went through this excercise a couple weeks ago and I showed how something close to 90% of all the Washington area's housing (weighed for population) is either holding its value or increasing in value."
LOL, no you didn't. You just made a fool of yourself by trying to define anything less than a 15% decline as "stagnant" and EVEN THEN being proven wrong.
Seriously, if all you are going to do is lie then what point is there in even posting?
"I know you don't want to accept it because it is more convenient for you to say "Ah, prices dropped 1% in the southern sector of Arlington and you can't cound that as 'holding its value!'"."
PWC, Loudon and Fairfax are all down 15%+ at this point. Even using your brain dead 15% standard you can't come close to making your 90% claim come true.
Arlington is down almost 10% from its peak as well while Alexandria is also significantly down from its peak.
"But the truth is that home buying is a decades long proposition as KH said just today ... and the longterm trend --- no matter how you slice it --- is that there's been no big, wide-spread bursting bubble that will allow would-be buyers to go out and purchase their dream homes for pennies on the dollar."
Way to connect two completely unrelated thoughts... yes home buying is a long term proposition.
Why that makes you think there isn't a bubble when everyone with a clue has already concluded that there is is beyond me. Turn on a TV sometime lance. There is nobody left trying to argue that there isn't a bubble, and for that matter there is nobody around here arguing that they are going to be able to pick up "dream homes for pennies on the dollar." That is just another of your lame strawman arguments that you seem to think are a suitable substitute for knowledge.
"The hard "where the rubber meets the road" fact is that people buying today aren't getting any "fantastic bargains" other than on places which we can't be sure will hold even the little value they have retained."
LOL, right right... you go straight from "nobody is going to buy a dream house for pennies on the dollar" to "we can't be sure will hold even the little value they have retained."
In case you skipped the title of this blog while you were skipping all the information it provides... this is a "Northern VA" blog. Naturally you have convinced yourself that everyone wants to live in DC, in your neighborhood... but believe it or not that isn't the case, and we have seen some huge price corrections in places many people are interested in.
Areas you said weren't going to be hit the way they have been incidentally...
"BHs who have relied on your "stellar" advice are finding themselves between a rock and a hard spot. Do they hold out longer for those "real" bargains you've promised them? Or do they buy into a falling town/development/new-condo-building and risk seeing the values there plummet even further."
Ah yes... prices aren't falling, except in areas where they are... in which case they might fall even farther... but but but
lol
Spin spin spin lance. You area like a little top out of a cracker jacks box.
Prices are falling, the bust is working its way inward. Areas you claimed would never be touched are already seeing their prices nosedive.
Naturally any place that sees falling prices just doesn't "count" for you. The only places that count are the places that haven't yet fallen 15%.
If you limit yourself to places that haven't yet fallen 15% virtually nowhere has seen a 15% decline! The market is in great shape!
lol
"If they are truthful with themselves they will be asking themselves whether they might not now be better off if they'd listened to KH and me instead ... faced up to reality, and did the best they could under current circumstances ... rather than wait forever for the elusive bargains you've promised them."
Yeah, they should have bought in summer 2006 like you said, because THAT has proven to be great advice...
...give it a rest lance. You can't dig yourself out of a hole.
Leroy said:
"Prices are falling, the bust is working its way inward."
Really ... That's funny ... that's NOT what I hear your fellow BHs (the ones with brains) saying. They're wondering why we're in the "middle innings" and the center has held ...
"Really ... That's funny ... that's NOT what I hear your fellow BHs (the ones with brains) saying. They're wondering why we're in the "middle innings" and the center has held ..."
heh, if that is what you read into this discussion... well that does nothing but further confirm that you must be functionally illiterate.
Leroy,
Why the denial about what is happening out there ... and what the smarter BHs are starting to figure out?
It'll be interesting to see what happens to you a few years from now ... after you're back in the States from your stint in Europe. For starters, I can't wait for you to see what places go for over there. And you think homes are unaffordable here ...
"Why the denial about what is happening out there ... and what the smarter BHs are starting to figure out?"
heh, right right lance... most people on this site, with your obvious exception, are trying to understand better what is taking place. I think it is safe to say that your "theory" is gaining no new followers.
"It'll be interesting to see what happens to you a few years from now ... after you're back in the States from your stint in Europe. For starters, I can't wait for you to see what places go for over there. And you think homes are unaffordable here ..."
I have already spent quite a bit of time in Europe lance...
They are having their own issues with housing bubbles in much of Europe, but if you can't see what it happening right before your eyes I can't expect you to see what is happening thousands of miles away.
Lance said...
“Thus far I have been EXACTLY on the mark.”
Lance, the only possible way you could be EXACTLY on the mark, is if somewhere you listed the ingredients of a can of tomato soup somewhere in one of your rants. And I’m not even going to hold my breath for that.
Lance said...
“As I've explained to you over and over again, we haven't had a bust.”
Lance, please explain the rise in foreclosures, falling prices, record inventory, a housing slump “not seen since the great depression”, and rounds of government bailouts.
Leroy said:
"I have already spent quite a bit of time in Europe lance... "
Okay ... I wonder what "quite a bit of time" means to someone 3 yrs out of college ...
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