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a good man on the housing question . . .
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a good man on the housing question . . .
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Re: Aaron Krowne
Thanks, Don.Originally posted by don View Post
I've been thinking that housing prices would go up as more people expect the value of the dollar to go down.
If you're sitting on a pile of savings, why not invest it in something real, like real estate?
I can also see downward pressure as the economy continues to fall. In that case, people will be forced to sell RE to meet expenses, which would drive housing prices down.
Opposing forces at work . . . .
So the question arises, when is the best time to buy RE?
Any thoughts?raja
Boycott Big Banks • Vote Out Incumbents -
Re: Aaron Krowne
It was easy for me, Raja. I was moving and after due diligence on pricing, location, etc. I simply went cash in this Era of Eternal ZIRP. I'd have to think long and hard about investing more in "income" property.
(Aaron points out after massive efforts FIRE has stabilized RE to the tune of a 2% appreciation. As miserable as that result for effort is, 2% in the land of ZIRP leaves some less further behind.)Comment
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Re: Aaron Krowne
Nice to see Aaron back. Hi There! RE in Ireland is having a somewhat 'Lazarus-style' resurrection - in the more desirable locations - you understand!. The housing 'pump machine' is in overdrive or something approaching this. Desperate measures.
Meanwhile back at the political coalface we have a national budget next week which will 'subtract' euro 3.5 bill from the economy - and hand it to the IMF and ECB. And our tame (read: gov controlled) economists, media and other sychophantic followers say that we will emerge the better for all this 'suffering'. Anyone on this site ever been a resident in a Gulag? It is alleged that such suffering makes one more Manly! Well, welcome to Gulag-IRL!Comment
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Re: Aaron Krowne
in related news . . .
In an F.H.A. Checkup, a Startling Number
By GRETCHEN MORGENSON
DO we have another Fannie or Freddie on our hands — another mortgage giant headed for a rescue?
Like Fannie Mae and Freddie Mac before it, the Federal Housing Administration is suffering in a mortgage hell of its own making. F.H.A. officials say they won’t need taxpayers’ help, but we’ve heard that kind of line before.
The F.H.A. backs $1.1 trillion of American mortgages and, by the look of things, it’s in deep trouble. Last year, its mortgage insurance fund was valued at $1.2 billion. Today that fund is valued at negative $13.48 billion.
Granted, that figure, reported by F.H.A.’s auditor, doesn’t represent actual losses. It’s an estimate of the difference between future mortgage insurance premiums that the F.H.A. will collect and the expected losses on the mortgages that the agency is obligated to cover over time, combined with the agency’s existing capital resources.
But the upshot is this: If the F.H.A. were to stop insuring new home loans today, it wouldn’t have the money it needs to cover its expected losses in the coming years.
The F.H.A., a unit of the Department of Housing and Urban Development, is not about to stop insuring mortgages. Its officials say that without the F.H.A., people would have a tougher time getting home loans, and the housing market would suffer. (The F.H.A. insures loans of up to $729,750 in certain areas and requires down payments as low as 3.5 percent.)
But the sharp decline in the fund’s value is a stark reminder that the mortgage mess is still very much with us, even as the real estate market seems to be recovering. In November 2011, for example, the F.H.A.’s auditor projected that the fund’s value would climb to $9.5 billion this year.
The agency acknowledged that its financial position is a hostage to insured loans that still have “significant foreclosure and claim activity yet to occur.”
Whether the F.H.A. will have to turn to the Treasury for help, of course, remains to be seen. That step would be determined by assumptions used in the Obama administration’s 2014 budget proposal, due early next year, and not the auditor’s report.
But neither the F.H.A. nor its auditor has a great record when it comes to forecasting. Its current woes, F.H.A. officials say, stem largely from toxic loans that it insured between 2007 and 2009.
In addition, the F.H.A.’s limited experience with high-balance loans means that it has little data with which it can project losses accurately. Ms. Galante conceded this point, but added that recent increases in premiums levied on borrowers would help offset future losses at her agency. Initial fees rose this year to 1.75 percent of a loan balance, from 1 percent, while ongoing premiums are also going up.
but not to worry . . .
A big question is whether the F.H.A.’s prehistoric technology undermines the accuracy of its data. In 2009, an independent auditor’s report found significant deficiencies in the agency’s aging information systems. Three years later, the agency is still trying to migrate from its creaky Computerized Home Underwriting Management System to a more modern one.
For example, the agency’s system cannot spit out an accurate history of modifications on the loans it insures. As a result, these histories have to be recorded manually.
“The systems are old and antiquated and are in the process of being updated,” Ms. Galante said. “But in terms of the underlying analytics of the performance of the portfolio, that’s not an element of concern.”
just the way somebody likes it . . . .
http://www.nytimes.com/2012/12/02/bu...gewanted=printComment
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Re: Aaron Krowne
Originally posted by don View Post
ahhh... bernie would be proud - not that perhaps if the FHA didnt subsidize/insure loans for such huge amounts that perhaps RE values might not've ever got that high??? (or that its a give-away to those who would or SHOULD o/w being able to afford paying that much for a house? - same as allowing the mortage int deduction for upto a million??)
and in response to the latest .gov ponzi scheme revelation we get more soothing words from the same bunch of beltway bozos that assured us that giving loans to anybody with a pulse - esp if they were 'deserving' - wasnt causing housing/finance to bubble/boil over?
so all we need to do is 'update' the system/numbers and VOILA! EGBAR - and just in time fer xmas - right?“The systems are old and antiquated and are in the process of being updated,” Ms. Galante said. “But in terms of the underlying analytics of the performance of the portfolio, that’s not an element of concern.”
the only question seems to be at the moment, is - how does one go about shorting the FHA?Comment
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