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Market (mis)timing

By Matt Carter, Tuesday, May 6, 2008.
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More than half of folks who bought into the housing market in 2006 are now upside down, and in places like Las Vegas it's about nine out of ten -- if you want to take Zillow.com's automated home valuations at face value (see story).

Whether the numbers are spot on or not, the potential implications -- more foreclosure inventory as borrowers lose their motivation to keep up their mortgage payments -- are ominous.

Reports like these may alarm would-be bargain hunters who would otherwise be ready to jump back into the housing market, but are afraid to end up in the same boat. But every market is different, and it's likely many have already bottomed out or never tanked. What does it take to convince fence sitters that the (discarded) mantra of the National Association of Realtors ("It's a great time to buy") may actually be true?

Homethinking.com has launched an interesting site that helps realtors show clients how lenders behaved back in 2006, when many of the wildest excesses of the housing boom were in full swing. Mortgage.homethinking.com taps the Federal Reserve's Home Mortgage Disclosure Act (HMDA) database, showing the percentage of subprime loans, average loan size, loan-to-income ratio, and other statistics at the county level.

The site's not perfect (see story), but it's the kind of innovation that makes you wonder if the folks at the Fed are sorry they didn't think of it first -- especially given that the Fed has created some pretty nifty dynamic maps that show the recent performance of subprime and alt-A loans in a database maintained by FirstAmerican CoreLogic LoanPerformance (see previous post).

Risk indexes that take into account past price volatility and economic factors like unemployment are perhaps the most sophisticated tool for peering into the future. PMI Mortgage Insurance Co.publishes one of the most comprehensive indexes (see story on the most recent numbers from PMI).

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Submitted by Shane Kane on May 7, 2008 - 3:49pm.

As long as lenders require 15-20% down, home values will continue to decline in most areas. Most people simply don't have the money for the downpayment.

 
Submitted by Karl Lingenfelder on May 8, 2008 - 5:10am.

Timing is everyting and right now it is very tricky for buyers. If you don't have to buy you should probably wait unless it is a unique, must have home in a traditionally strong area. It is tough being a buyer and a lender right now. As with most stocks, try to buy for the long term.

Karl Lingenfelder
President/CEO
www.viewr.com
karl@viewr.com

 
Submitted by Spencer Mason on December 10, 2008 - 8:21am.

Many buyers (and real estate agents and economists and lenders) are trying to “time” the market right now. Guessing when it’s going to bottom out and how low the interest rate is going to go. Unfortunately, there’s just no way to know what’s going to happen. So buyers need to look at the here and now to determine what’s best for their own situation. Do you have the credit score it takes to get a mortgage today? Sufficient savings to make a down payment of 10 - 20 percent? Do you have a current home to sell or are you renting a place right now? What about your job security? Do you qualify for federal tax credits or other home buyer incentives? The answers to these questions may not point to the bottom of the housing market, but they will point to whether this is your time to buy.

Chicago Real Estate | Chicago Condos

 
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