I haven’t done a housing bubble post for a while, so here is a roundup.
Lenders have “tightened up” on their requirements to qualify for a loan, so fewer buyers are qualifying: As mortgage lending tightens, house hunters with weak credit get shut out,
Rising interest rates and dropping home prices have squeezed a market that had been propped up by risky loans and easy credit during the housing boom. As mortgage bills came due, foreclosures rose, and the easy credit dried up for families like the Shields.
[. . .] This year, the volume of subprime mortgages is expected to drop by about 30 percent, said…
So there are fewer buyers.
Meanwhile, foreclosures are up, which means more houses for sale with special deals. So just as there are fewer buyers, there are more sellers.
Stories like these, around the country: National: Brace for wave of foreclosures,
More than 1.1 million homeowners will lose their homes to foreclosure by 2014 because they can’t afford the rising payments on their adjustable-rate mortgages, according to a researcher.
Kansas: Foreclosures up as loan rates adjust,
“We’re just in the first wave of anniversaries now,” Hermes said. “There will be a second, third and maybe a fourth wave of foreclosures. Then, all the people who are getting subprime loans now — they’ll start to kick in.”
West Michigan: Foreclosures on a sharp rise
Florida: Foreclosures through the roof in Manatee
Minneapolis: Foreclosures take a toll on North Minneapolis
Here’s one that will make us all weep – maybe even send a donation. Second home sales plunge,
The National Association of Realtors said Monday that sales of second homes for investment fell by 28.9 percent in 2006 to 1.65 million. That was down from an all-time high of 2.32 million investment homes sold in 2005, at the peak of the five-year housing boom.
But don’t cry too hard, because Vacation home sales set record.
Where will this lead? There are too many houses for sale, at the highest prices ever, with fewer buyers. So prices will fall. Especially as the foreclosures come up for sale, because those sellers aren’t holding out, thinking there is still a huge inflated bubble – they are being sold by banks that just want enough cash to cover what they are owed…
The only question is how far will prices fall? And how any people will be wiped out?
Remember – check if you have funds in a :money market account” and whether it is government insured, because these “mortgage instruments” are all over the place now, and might no tbe worth the paper they are printed on.