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Archive for October 8th, 2008

My Thoughts On When The Housing Market Will Hit Bottom

Posted by mikenopolis on October 8, 2008

I just read an article in the Orange County Register: “Trader Bet LA/OC Home Price Fall 18.5% More“. It wasn’t the article itself that made me think, it was the comments that I’ve seen regarding this subject. There are the group of people who thinks it is a good time to buy home, other think that the housing market will continue to crash. Here are my thoughts and opinions having worked in the back end of the mortgage business.

Housing prices WILL continue to fall, I cannot give an accurate percentage without spending some time with my old files, but I would say if you find a home you like at over 40% cheaper than what the current (or foreclosed) owner paid for and it is in good condition, try your best to get it because when it gets even lower, more people will want the house you are interested in and it will created a complicated bidding war. Your possibility of getting the house you really want will be very slim. It will create a lot more work for you because of all the paperwork you need to fill out JUST to submit one offer.

Majority of the sub-prime lenders were still funding loans with a 2 years fix rate (2/28) in June of 2007, It didn’t come to a complete halt until around August 2007, which means there are still plenty of people currently living within that 2 years period. Around September of 2009 is when the remainder of those homes will start defaulting and be foreclosed on as their rates and payments rise, that should be the last of the mass sub-prime home inventory. Of course there are other loan products that were 3, 5 or 10 year fixes, but they were rare and not as “plentiful” as the 2/28.

We have two homes with both a 30 year fix loan. One in LA purchased in 2002 another just purchased in OC at the end of 2008. I personally believe they were purchased at a good time. Might be taking a lost on the OC property for a while, but it will be a gain when we’re ready to sell. Time wisely or you’ll be renting for another 10 years before you MIGHT see “affordable” homes. Think about what age you will be when you get this house, what age will you be when you finally pay it off and will you be able to have a stable income at that age. Anything can happen in 30 years, but personally, I don’t want to pay 25 years of mortgage just to have it foreclosed on because I was forced into retirement!

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