I think that is totally normal. When you are talking loans below 165K and above 417K you are getting in to non-conforming loans. There will generally be a higher foreclosure rate in those non-conforming ranges. The banks got greedy and sold bad loans to people buying too much overpriced house. Now they are getting burned. The foreclosure rate for the folks who bought houses the right way, 20% down, no second mortgage, no debt consolidation heloc, with a payment about 25-33% of their take home pay have seen no change in the foreclosure rate. We just had a lot of dummies buying houses and paying for points instead of putting money down and lumping $20,000 credit card debt into the adjustable rate mortgage for an overpriced house. The banks were dumb enough to make loans to people who already couldnt live within there means.
arent most of the foreclosures still on investment properties? i know earlier about 90% were. the only people i feel sorry for (besides the kids with stupid parents) are some of the people in the really expensive markets. i have a friend in S.F. that has lived there his whole life and didnt want to leave. had a good job. didnt want to move to another city. the only house he could get that wasnt a fixer upper was for just over $500k. so he did an interest only so he could afford the payments----he got lucky and refinanced before the credit crunch. im sure many werent so lucky.
I've told my husband many times that I would not CONSIDER a move to one of those types of housing markets. They are ridiculous--I watch "House Hunters" all of the time, and I'm simply amazed by the crap people will buy for $700K. A person could live in an absolute mansion in Dallas for that price. His co-workers in New Jersey keep asking him if he'd consider moving up there. Aside from the fact that I'm simply NOT a New Yorker--and would probably stick out like a sore thumb, I told him to show them pictures of our current house and say, "We'll move to New Jersey or New York when we can buy THIS house in a good school district for $250k. Case closed.
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2008/03/15/ccom115.xml Probably the kind of article you will not see written in the US press. Overly negative? I don't really know, I'm not a banker and don't know the structure well enough. But I sure won't hold and large financial institutions in the next 12 months, or until their stocks turn up sustainably. If this is a standard recession, we would hit bottom soon on the stock market. If this is something worse than a standard recession, and it well could be, we could be in uncharted waters. I don't know, but there are enough warning signs I am treating it as if it could be something worse than your standard recession, until proven otherwise. The gentleman at the end talks about "ridiculously loose monetary policy". In the US, you can thank Bush, the republican house and senate, and Greenspan. Fighting an expensive war without raising taxes increases the budget deficit and weakens the dollar. Then everything imported goes up in price, and we have inflation. Gold at $1,000 an ounce, oil at $110 a barrel. If the inflation continues, kiss the value of your hard earned money in your 401Ks goodbye. The standard of living you can buy with interest from your savings will be much less in the future with a cheaper dollar, than it could have if their value was not destroyed by inflation. There is a real risk to all of us, even if you are not in the stock market.
....the catylyst to most evils in the world. (People worried about what other people have, don't have, getting, not getting...)If everyone would just worry about themselves & family, the world would be a much better place.
The economy is cyclical in nature. There are good years followed by a year or two of an economic downturn. Generally the president and Congress are not to blame. That is just the nature of the economy. There is no such thing as uninterrupted prosperity. If the current downturn becomes a full-blown recession (a recession is defined a a decline in a country's GNP for two or more successive quarters of a year) then we will survive just as we have all other recession. No need to panic. It will not be the first recession nor will it be the last. Recessions are a fact of economic life. One way to restrict the depth of a recession is by putting more money into the pockets of consumers through tax cuts tax rebates. If the consumer spends that money instead of saving it or paying bills with it, that will help to keep the recession from getting too deep. The tax cuts Bush implemented affected most Americans, as will the current tax rebates. Not just the wealthy. In fact, the current rebates will not include the wealthy and are too shallow in my opinion. They will cover only single individuals who earn no more than $75,000 a year and married couples who earn no more than $150,000 a year. That will leave out a lot of middle income Americans. The last recession we had was not very deep. If the current enconomic trend continues we will see another recession. Hopefully this one will not be deep either, but it is too early to say. Admittedly things are not looking good. But when Bush and the Fed Chairman gave upbeat reports they were not lying (why do we always assume that when someone makes a statement that turns out to be wrong, he was lying)? Most presidents try to be upbeat about the economy because they know how negativism can adversly impact the economy. But they are not lying; they are saying what they genuinely hope to be the case.
The economy is cyclical. There will be expansions and recessions. The president is generally not responsible for that. But, the fiscal footing of the nation has a bearing on the governments ability to DEAL with the recession. The government implements fiscal policy to stimulate the economy and pull it out of recession, such as tax cuts, and/or make work programs like road and bridge building (CCC and WPA by Roosevelt in the great depression). If the fiscal underpinning of the country is solid, such as 2001 when Clinton turned over a balanced budget and strong dollar to Bush, you have tools in your arsenal. Small deficits don't hurt much. After years squandering the financial strengths Clinton handed him, Bush now does NOT have the sound base he inherited, so he has a limited set of tools to deal with this situation. He has taken on huge deficits with tax rollbacks that primarily benefitted the rich and failed to stimulate the economy earlier this decade, and entered an ill advised war and passed prescription drug coverage with no new taxes. Now we have a huge deficit and a historically low dollar. The nation does not save enough, and foreigners are not wanting to take on lots of US debt. We face rising inflation and then rising interest rates that the fed can't control. The recession is not the governments creation, but that is not relevant to much. The government has put itself on a weak financial footing and therefore limited its range of options to DEAL with the recession effectively, and that is their doing and their problem. If they expand the money supply more, we will have unacceptably high inflation that will destroy the purchasing power of our IRA's and 401k's. The last recession was not deep because the underlying finances of the country were sound and we could deal with it, and you can thank Bill Clinton for that. The popping of the dot.com bubble was as big an event as the bursting of the housing bubble, we just didn't start with a $400 Billion a year deficit, we started with a balanced budget. No telling this time where we go. Edited: You say when Bush and the fed chairman gave upbeat reports on the economy they were not lying. Do you read anyone else and see what they are saying. I pay an old stock market letter writer $300 a year for his letter, and he's predicted since 2002 a crisis in the subprime mortgage sector and to stay out of it. How is it that a non-insider can see this 5 years in advance and call the shot, and the president and Greenspan and Bernanke can't? Goldman Sachs saw the problems in subprime mortgages and did not play in the market, and they have had no writedowns. This is a problem that was seen by some, and known. It is not possible that Greenspan, Bush, and Bernanke did not know the scope of the problem if my measly old letter writer and Goldman Sachs did know.
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2004/IO_02_04.htm This is a brief excerpt from the Feb. 2004 comments by Bill Gross, managing director of PIMCO, the US largest bond fund. There it is, on the internet four years ago. Too much debt out there, and when it falls over, "debt deflation". We see it in fallling housing prices now. Bill's writing is hard to read in some ways, he's verbose and technical. But this stuff has been floating around for several years. If Bill Gross knew in 2004, there is no way Greenspan didn't know in 2004, and Bush. Gosh, anyone could have read it. If you want a good free opinion on what's going on with the economy, I recommend reading Bill Gross's update each month. Sometimes he touches on the stock market although its not his specialty. You can find his stuff off the PIMCO home page, and then find his archives for older stuff. Bill Gross is the real deal. He's real smart, and he's a straight shooter. You may not like his message, but its hard to attack it. When I move to bonds, I like a PIMCO bond fund, because I trust Gross "to get his money back, inflation adjusted, and then some". I don't hold any of his stuff now, because when we get to the bottom of an interest rate cycle, I don't want to be holding a bond fund when rates turn up (the bond principal will fall). A bond fund has no maturity date, so you are not in control of your destiny. I prefer fully FDIC insured CDs at this particular juncture, so I can pick my maturity date and be sure I'll get all of my principal back.
I'm putting as much money as I can into the stock market this year. The market is overreacting to the housing market slump & credit crunch, creating some good value for long-term investing. However, I expect the stock market to remain very cautious and timid for the year and into '09. It won't get too bad though. All that's really happened to our economy is that it has become less liquid, but it will readjust itself. I do not foresee a great time ahead for investing (next 4-8 years) though because there does not appear to be enough of a political movement to stop ridiculous government spending & taxation.
Economies are cyclical in nature due to consumer over-confidence. Proper government control (such as on the subprime market, which is being done way to late) can help keep this in check. Our government has done a lot to keep our economy from being able to reach a deep slump, but they could do more. You appear to be repeating what you've been told, which is not completely true. Yes, giving people money is a good short-term way to increase spending. No, it is not helpful to the long-term health of our economy. If they are saying what they hope to be the case and not what actually is the case, then they are essentially lying. I don't blame them for doing it, but it is not an honest representation of the facts.
