Upside Down Mortgage

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Housing Bubble Chart

Question: When will the real estate market crash and cause the next great depression from all the dangerous loans made.?

If the stock market crashed in 1929 because people were buying stocks on 10 to 1 margin, then according to what I saw in the last 3 years, 40% of the people had no 'right' to buy any houses with putting basically NO MONEY DOWN. When real estate down ticks and people cant come up with the difference but have to move, the will forclose. There should be a TREMENDOUS amount of people that will do this in the next 3 years or sooner, which should blow up some banks. The rest should domino and spill over to all areas of business. My question is why are we such a fan of bubbles, and why do we allow things to get so out of hand such as this bubble. See a 10 year chart of any real estate stock such as BZH,KBH, LEN, etc. Will we have any money left for food ? I dont.

Answer: I doubt that it will be that serious. First of all, most people will not be impacted. The majority of loans made in the past few years were still 30 year fixed rate loans and most buyers made down payments. The small portion of buyers who were speculating and cannot carry the payments long-term will become foreclosures. Yes, those foreclosures will drive prices down in the areas where they happen, but not everyone has to sell. Only those sellers who are in a position where they have to sell will be impacted. Long term holders of real estate will continue to make payments and will not be impacted. If a property's value drops down below loan value there is no requirement that people will have to "come up with the difference" as you put it, unless they are forced to sell. The most likely bunch of investors that will be negatively impacted are the ones that actually follow the advice of "real estate gurus" that preach the no money down, flipping, and similar deals. I don't think they are a significant part of the market and will be glad to be rid of them for awhile.

The lenders are not stupid. They do expect some impact in places like California and Florida and are taking steps to spread their risk. Many markets are counter-cyclical and have not experienced any part of the bubble you are afraid of, so lenders are spreading their portfolio risk by lending in various markets. Texas is a good example, where appreciation has been low in single digits.

Real estate markets are micromarkets, and do not behave like stocks. As any agent will tell you, location, location, and location are the keys to real estate. Good locations will mostly continue to be good locations in most cities. People will still like living in California and Florida (although the hurricane risk there makes me question their sanity). Much of the money driving the boom in these areas is foreign money. Few people realize that since the dollar has dropped almost 30% that non-US investors have been buying what they see as bargain property. After all, it is 30% cheaper than it was before for them. Many of these investors pay all cash. They will not be impacted by falling values. Unless the dollar recovers value, that money will continue to flow in.

I've been through two real estate reversals, once in the early 1980's when mortgage rates actually went to 19%, and another in the early 1990's when real estate values dropped about ten to twenty percent in some markets. There was a crash in commercial real estate in the late eighties created by the Reagan administration changing the lending regulations at the same time they increased the reserve requirements for banks that led to the savings and loan bailout. That was coupled with a change in real estate depreciation laws, but this mostly impacted commercial properties (and taxpayers who paid for the bailout). Most people's lives are barely impacted by falling real estate values. Like I said the only ones that will notice are the ones that are forced to sell for some reason other than falling real estate values.

By the way, I own KBH and have made more money off of it in the form of dividends and stock payouts than I initially invested back in the 1970's. The stock has split so many times I have lost count. The stock can go to $1 and I will still show a profit.

Glenn Beck's heart-stopping housing chart

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Outstanding Subprime Mortgages

Securing a mortgage is an initial step for modern-day home purchase amidst the economic dilemma that the world is experiencing. Home buyers find it difficult to acquire their own house in cash basis and more difficult to sustain the payment they need for the completion of their ventures. Therefore, qualifying for a great mortgage rate is a blessing that ensures you of a profitable and productive investment.

However, in the previous events that result to the massive subprime crisis, lenders and mortgage providers are now more careful and cautious in approval applications for home loan. It is therefore imperative that applicants must do their own part in making sure that they become eligible for the loan that could grant them the most privileges and financial assistance. Researching for the best lending company must first and foremost be the priority. You can do this by making a thorough background check on the reputation of the company. Find online sources such as web sites of the company you prefer to apply loan to and check for reliable testimonials and referrals from people who have actually benefited from their services.

Another important thing that comes from researching and carefully assessing the lender of your choice is to compare them to other lending companies who are offering the same services. Lenders vary in their terms and conditions as well as costs they require from their borrowers. You can check your available resources to determine if you can comply with the conditions of the company.

You then need to gather all the requirements you need for your loan application and you need to do this prior to that very day of filing. This is advisable in order to save you time, effort and money, going to and fro for the necessity documents. Lenders are going to request you to supply needed requirements on which they are going to base the approval of your application and what kind of mortgage program to grant. Make sure that you supply only accurate and complete details and information to avoid any discrepancies in the future.

Banks and lenders judge you with your stability of employment such as your salary rate and tenure or length of time you have actually spent with the company you work with. If you have pending promotions, you need to include that information because it definitely gives you the chance to have a better loan. Your employment is your main source of income which determines your ability to pay for the home loan. Hence, the more secure and stable your work is, the better program you are eligible for.

The next thing to do is to take care of your credit score because it mainly influences the decision of the lender whether to approve your application or not.  Take care of your credit standing by paying all your bills and other outstanding credits or personal debts. You must also make sure that your credit report is free from any errors that will affect your credit score.

Home loans are your basic weapons to combat the economic and financial crisis you are experiencing. Get the right one and you will find how great your investments will eventually become.

About the Author:

The Real estate market can be an enjoyable, satisfying and lucrative experience for you.
Whether you are a homeowner, a buyer, a landlord or simply a real estate enthusiast, get to know more about the latest in the real estate market now. Read more about it here: See Real Estate Property in Phoenix Metro Area and Phoenix Metro Area Realty blog.

Source - Qualifying for a Great Mortgage Rate

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Housing Bubble Cartoon

Question: I need help with finding a TV movie title - early 90's?

My son and me are trying to figure out what was the name of a TV show that told diffrent stories, one in question was one about an airplane pilot who was traped in a gunners bubble during world war two and the planes landing gear was stucked and he was about to die, so while he was waiting he took out a sketch pad and began to draw a cartoon plane like the one he was on. Then all of a suddend the real plane had the same cartoon wheels appear on them. The rest of the airmen saw this from the inside and landed the plane safely to the ground. as soon as they got the stuck person out, the cartoon wheel disappeared. Also it had a story about a train That was going to go through a little boys house. and he was trying to warn his parents about it but they thought he was making things up, the train did run right through the house, If any one knows what TV show was this please let me know.

Answer: Sounds like "Amazing Stories."

I loved that show!!

See here:

http://www.tv.com/amazing-stories/show/360/episode.html?om_act=convert&om_clk=tabssh&tag=tabs;episodes

Hope this helps!

Housing Bubble