Bloomberg confirmed that today.
This was the year thousands of U.S. homeowners with option adjustable-rate mortgages were supposed to default as their payments spiked. Low interest rates and a surge of early delinquencies mean the numbers probably won’t be as bad as forecast, softening the blow to a housing market where prices have resumed falling.What it boils down to is these people walked years ago.
The big story now is jobs and financing for the sea of empty affordable houses. I am not sure anything can be done in places like Las Vegas and Florida, but in much of the rest of the country it is approaching the point of buying being less than renting.
5 comments:
One thing that has saved a bunch of ARMs is the low interest rates. Those people who did nothing about locking in their rates, letting the rates float, are often enjoying some quite reasonable house payments right now.
An example: My first ARM with ING Direct floated after the initial fixed period to 1-yr Constant Maturity Treasury Yield plus a 2.5% margin. Right now that's a 2.77% mortgage rate. Not bad! Very affordable.
This will change once interest rates actually start climbing, though. Then we might see more people having problems with these.
Yes, it's rapidly getting to where it's significantly cheaper to buy rather than rent but so many people don't bother to save up the down payments sales will still be in the dumps. Smart money will buy up those homes and rent them out.
Las Vegas (much like Phoenix) already has one saving grace when it comes to those numerous homes: Baby Boomer retirees. When LV is already cheaper to retire than such small towns as Grand Junction (CO) and Rapid City (SD), you're going to see lots of those smaller-town folk buy those homes.
The downside is that you're not going to see nearly as many younger folk flock to Vegas (or Ft. Myers, for that matter) to make a quick buck.
It's rarely cheaper to buy for the same square footage.
People tend to ignore property taxes (1.5% here, 3%+ there), significantly higher utility bills, and maintenance when they're shopping for a single-family residence.
Or when they're calculating the return (after they sell).
Anonymous -
Correct me if I'm wrong, but seems that you are thinking of a house as an "investment." If this latest bubble taught us nothing else, we should have learned that a house should be a home, not a scheme to make money.
There are an awful lot of intangibles that can really matter when it comes to buying or renting.
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