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93% of Mortgages are Being Paid on Time
Posted Thursday, March 6, 2008, at 9:53 AM<< Previous | Read comments | Respond | Email link | Next >>
I recently received this in a newsletter that I receive and thought it was news worthy. I certainly have not heard this stat on the evening news. It came from Jim Gibbs who runs the Career Institute in Murfreesboro. I know some areas are being affected more than others, and I do focus on our area, but if we look at the big picture then maybe it is not as bad as it seems.
93% of All Mortgages are Being Paid on Time Treasury Secretary Henry Paulson said Thursday that many proposals being put forward to deal with the housing slump would do more harm than good. While he still believes that the housing problem remains the biggest downside risk to the economy, Paulson said the issue needed to be put in perspective. He said 93 percent of all mortgages are being paid on time and that less than 2 percent are in foreclosure. "So while some in Washington are proposing big interventions, most of the proposals I've seen would do more harm than good," the secretary said in remarks prepared for delivery Thursday night before the Economic Club of Chicago. "I'm not interested in bailing out investors, lenders and speculators," he said. "I'm focused on solutions targeted at struggling homeowners who want to keep their homes." Paulson's comments represented the strongest administration objection lodged so far to a variety of proposals being pushed by Democrats in Congress to do more to help. Paulson said that dealing with the mortgage problems needs to be a shared responsibility. "If borrowers aren't willing to ask for help or respond to efforts to reach them," he said, "there is only so much that others can or should do on their behalf." Both Senate Banking Committee Chairman Christopher Dodd, D-Conn., and House Financial Services Committee Chairman Barney Frank, D-Mass., are leading congressional efforts to bolster the government's response to the unfolding mortgage crisis, which by some estimates could result in 2 million foreclosures this year alone. Among the items being considered are proposals to have the government buy $15 billion in troubled mortgages, change bankruptcy laws to allow judges to modify home mortgage loans to more favorable terms and provide assistance to state and local governments to help buy foreclosed properties. At the request of both congressional banking committees, Charlotte-based Bank of America Corp. has provided information about how a greater role for the government could be implemented, bank spokesman Larry Di Rita told the Observer. "We are not lobbying for a specific approach," he said. "We were asked to provide assistance."
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Kenneth Parker is a local real estate agent.
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But why should we be left with no choices in Shelbyville? Why should we spend our tax dollars elsewhere?
The traffic is pathetic in Shelbyville because too much is delegated to ONE side of Shelbyville... How about we stop vacating other sides of town and soley focusing on just one?
Well, Nows yalls chance, there are some great commercial properties available. You guys buy them up and start a franchise. That was a joke, of course. We are getting a few things. A little at a time. I personally like living in a small town myself. Of course, I live in Bell Buckle and it's just as easy for me to go to Murfreesboro if I want to go shopping for something, so maybe I am being selfish. But my kids play ball in Shelbyville and the traffic is bad enough,lol. But the stuff is coming in, slowly but surely.
How about Faxoli's?
Hey real estate people... When is Shelbyville going to progress a bit? How about a Starbucks? Zaxby's? Target? 6-8 screen movie theater? Entertainment venues {other than a horse stable}?
I want some information here. Got any?
Darrick_04,
Enron??? That is a bit harsh... I have been selling for ten years and have built my business on honesty and being ethical. In those ten years I know of only one client that lost her home to foreclosure. She bought it with her Mom and a couple months later the mother was killed in an accident. I made an effort to not push the sub prime loans because I did not feel it was good for the consumer. Ultimately, we are all responsible for our own decisions. I do think people were taken advantage of, and I do feel bad for their situation.
I was simply stating that 93% of mortgages were still being paid on time. It does not matter where the info comes from if it is true. You have stated in past blogs that you did not like the negative media. I am trying to put out some positive information to help people make their own choice.
Real Estate is cyclical. It will be up and it will be down. It will not stay on a steady climb forever. We just have to ride the wave and see where it goes.
Dianatn,
The stats that I pulled are for all homes that sold in Bedford Co. and middle Tennessee. These include new construction, mobile homes, existing homes, foreclosures, etc. ALL residential sales were included. As for the home and situation that you speak about, there may be alot of factors that have kept the other house from selling. What is the condition of the house? Is the realtor marketing it correctly? Is there a Realtor? Will it pass all financing? Did the other guy have a market appraisal on his home when he purchased it? There are many types of appraisals. If someone refinances that appraisal will tend to be more than and true market appraisal.
As for the Unionville area I have sold 4 homes there in the past 6 months or so and they all sold in the first month or two. So again there may be more factors involved. Some may be too high?
Again, guys I have never come on here and painted a rosy picture of the market. It is a little slower and maybe we are all in big trouble soon. I am just giving the most recent facts and stats on Bedford Co. and Middle Tennessee. This blog was simply about 93 % of people paying their mortgage on time. That may change soon as well. If it does, I will certainly eat my crow.
As for North Main, of course the businesses are buying those homes. That is where the town is growing right now. Businesses want to be where the people are.
Yup... However, unfortunate that many buyers are guaranteed lower prices, meanwhile their incomes haven't caught up to the rampid inflation.
I said it was a buyers market.
I should have no different than Enron "who stated their profits were reasonable".... As, obviously they are no longer in existence.
Diana, his statements are no different than Enron, stating their profits are reasonable... While I am not accusing him of "tweaking the numbers" I am curious as to why the only news in this situation he sees, are those reported from the associations he belongs to? If you truly want objective answers about the situation, you need to look those 900,000 people who lost their homes and tell them just how perfect things are. Then, when Bedford County finally feels the trickle-down effect, you'll be sitting there scratching your head, saying "how did this happen?"
I see alot of businesses buying up real estate right now. The reason Bedford Counties numbers don't reflect the downturn, is because nearly all those houses on North Main are up for sale and will be bought for "prime commerical lots".
I don't want the devestating picture, but ignoring it while it's happening, is flat out absurd.
One more small example then I am going to leave this subject alone because actually it makes little difference to me one way or the other because I am not in foreclosure nor even close to it nor do I plan on selling or buying.
Outside the city limits of Shelbyville in a nice but somewhat older subdivision there is a house that went on the market listing price for this house is 89,000. The fellow that lives beside him bought his house 2 years ago the house listed for 97,500 appraised at $112,000 the homes are very similar if not exactly the same. So this fellow didn't need to put a big down payment on his home because the house already had beginning equity. Now should he decide to sell his house do you honestly think he will get the price he paid for his house at 97,500 when one is sitting right beside him for 89,000 and it's not even selling at that price?
Or if he decided he wanted to refinance into a lower payment his house would not appraise at his mortgage value because the homes around him are now selling/listing for much less than he purchased his home for and anybody who has ever had an appraisal done knows that the homes that sell/list around you are a big factor in appraisals.
BTW true story...
Gee with all this good news Mr Parker is giving us I wonder why there's such a housing market crash
FRom 2006
http://www.moneyweek.com/file/18903/coul...
From 2008
http://articles.moneycentral.msn.com/Inv...
http://bloomberg.com/apps/news?pid=20601...
http://latimesblogs.latimes.com/laland/2...
From 2007
http://nymag.com/news/businessfinance/bo...
If you think Tennessee or even Shelbyville is immune to the housing crisis Please search for something besides new home prices.
Or better yet drive around Shelbyville Look at the homes for sale or on your way home. How long have they been on the market? Why?
I know of at least 25 just going out the Unionville area that are not new homes but have been for sale since last summer.
Kenny, I wasn't arguing with you, at all, I was just asking a question. I knew some people that would buy a home, file bankruptcy, live in the home for the 7 or 10 years or however long that was, then sale the home and buy another. It just always confused me how they did that. I notice they don't do that anymore. And Diana, YES, this is definatly a buyers market. Not just for first time home buyers, but for investors or anyone else. Two years ago, sellers could name their price because there weren't that many properties available. Now, with all the new construction as well as the foreclosures and shortsales, buyers have more of an option as to where they want to live and how they want their house built. I am not a pushy sales person, but, we really don't know how long this market will last. The bottom line is as Kenny stated, buying a home is never a bad investment, as long as you have the means to do it.
OK, I did some checking on the local MLS statistics as well as all of middle Tennessee as for the values. First, however, let me say that real estate is still a great investment. Especially in a softer market. Real Estate is a LONG term investment just like mutual funds or stocks. When you want to make money in the stock market you should get in when things are selling low. When it rebounds you can make alot of money. Real Estate is no different. Why would you wait until prices go back up to buy or invest in real estate?
As for the article that is in today's paper...no argument. New consruction has slowed. The prices went too high because of building material increases. The builder has to pass the increase down or take a loss. Existing homes are selling fine right now. You can buy alot more home for the money at this time. We also saw a huge blow up in homes and yes the inventory did swell quite a bit. As the article states more subdivisions are in the works right now. The developers are expecting things to improve.
Look at North Point, it is almost sold out. Those are some of the highest priced homes in the county, but they are still selling.
There are still new homes, "starter homes" being sold. (I am looking at 1200 sf and below) These are being sold in the 90's right now. The same home was selling in the 70's or 80's just a year or two ago. That is a great increase in equity for those first buyers.
Now there are some subdivisions in Bedford Co. that were developed where people paid $30000 more than what the home was worth a couple years ago. I think we all know these subdivisions. These homes are now selling at or just below the true market value. The value did not drop, the people were taken advantage of and some how bought homes that should have never appraised for the purchase price. These areas should not be considered in our values.
As for the stats, I pulled the stats on Bedford Co average homes price from this year back to 2004.
2004 1581 sf $99232 100 DOM
2005 1632 sf $112570 85 DOM
2006 1646 sf $122240 79 DOM
2007 1694 sf $124165 80 DOM
2008 1502 sf $122246 80 DOM
As for the entire middle Tennessee area:
2004 1940 sf $166934 78 DOM
2005 1996 sf $188337 69 DOM
2006 2015 sf $206758 65 DOM
2007 2000 sf $212655 72 DOM
2008 1945 sf $196818 87 DOM
DOM- Days on Market
Now these stats are all residential sales. As for 2008 it is for just two months so it is too soon to tell for sure. It looks like the prices are holding pretty well overall. No homes in our area that sold for $120000 a couple years ago have dropped in to the $90000 range unless it was a foreclosure with some damage or the people bought in a previously mentioned subdivision.
I don't know much about bankruptcy law but I do know you can still file bankruptcy. The biggest change in the law was forcing people to go chapter 7 instead of chapter 13. The biggest plus to the new bankruptcy law that I saw was lawyers would be charging 75% to 100% more for taking the case. (plus for the lawyer that is )
Am I wrong or did all these foreclosures start when they changed the bankruptcy law? I mean, wasn't this really a problem started started by a mixture of that law and the sub-prime mortgage companies? Perhaps the government was stepping in to make the people act more responsible and the sub-prime mortgage companies were sent as a temptation from the devil... ok, that was a little much, but, do you see what I am saying?
Diana,
I agree with what you wrote. I highly agree with the statement about first homebuyers. I hope we are heading into a buyers market for those first time homeowners.
Hmm, very true statements Diana :) Very well said!
Ok so maybe some people are paying their mortgages. Do we agree home prices are dropping more and more very month. We should agree anyway, not only across America but here in Tennessee also. People who started out with little to no equity to begin with now have the problem of being upside down with their mortgage. In other words if you bought your home 2 years ago when the market was still booming you may have paid 120,000 for your home but now that the market is sliding the same home would possibly sell for 90,000 making your mortgage upside down.(you owe more than your home is worth)
Even if you bought your home several years ago and you have refinanced for any number of reasons that Americans have done (ie credit card debt, boats, cars, school etc) then you are more than likely upside down with your mortgage also.
It hasn't been so long ago Real Estate was the best financial investment a person could make, that's not the case right now.
With the widening foreclosures in almost every zip code, more houses on the market equals higher supply versus less demand equals lower prices. When your boat sinks, one side only goes down at a time but eventually though everybody gets wet.
Is that the negative side? well I guess you could see it as negative but I see it as taking off those rose colored glasses.
But then I also see it as a plus for those who wish to buy their first home right now. It is Not the time to sell your home.
If you are buying your first home you will more than likely get a much better deal than you could have 2 or 3 years ago..even if you go into your mortgage with little down when the market begins to climb or catch up again your home will be worth more than it was when you purchased it..which is the way it should be and has been for many years..until recently.
The people hurting are the ones wanting or needing to sell now with their upside down mortgages. And this is a fact that forces many into foreclosure.
I would guess the banks and mortgage companies appreciate the fact that 93% of their customers are paying their bills. I don't think anyone would disagree with the fact forclosures are up. The disagreement appears to be over about a 1% difference. From my understanding most of the folks in trouble are those caught in the subprime market and with an adjustable rate mortgage. I feel for those that have been caught by the subprime market and I not sure what the answer to that is, but we can still make the numbers look however we want them.
Here is a link to Channel 4 and a story about our local real estate market.
http://www.wsmv.com/news/15519729/detail...
We seem to be holding steady, while most of the real estate problems are in CA, FL, AZ, and NV. We may hit a low spot, but I can remember in the 80's when the interest rates were in the teens and home could stay on the market for around 2 years.
That is essence, is stagnation[no growth] along with inflation[consumer prices]... The end result is stagflation, a HUGE factor in an inevitable recession.
Disregarding only foreclosures, two key elements in the equation are :New home sales, and inability to re-sell existing homes [not new]... When you add that into the equation "93% of mortgages paid on time" doesn't amount to much.
The answer to "on time" per money.cnn article "Payments are considered delinquent if they are 30 or more days past due."
Thank you Sharon22 for running the numbers. I still have not seen an article that disputes the 97% being paid.
Disturbia, it is true that I do sell homes for a living and will absolutely try to protect my industry, but the "research that I did not do" still supports the article I posted.
Yes, foreclosures are out of control but we have to be careful not to fall in to the belief that everyone is losing their home. That simply is not the case. The numbers are large because people that should not be buying homes were able to get loans to do so. No one disputes that. Alot of these people were taken advantage of, and it will probably get a little worse before it gets better. That still does not mean that everyone is losing their home. In our area most of these homes are being resold quickly to people that have a great equity position in a new house.
Again, it is difficult for me to go to a listing presentation and tell someone that he or she needs too much to sell and pay off the mortgage. Some mortgage companies are willing to "short sale" which means the house sells for less than the mortgage. This will still hurt the sellers credit, but it is better than foreclosure. In every one of these cases it was someone that had a variable mortgage and quite frankly should not have bought the house to begin with.
The numbers are also heavily effected by the markets in Florida and California. These markets went out of sight and the prices went off the charts. Now they are dropping and the homes are worth less so the people walk like Jaxspike pointed out. So in conclusion I am not saying that the foreclosures are not up and that things are not going to get worse in that regard, but it is all in what numbers you look at.
I may not be in foreclosure, but when we are looking at numbers and percentages they can be presented in a way that we want them to look. I am taking the same numbers from that article and coming up with the same numbers and looking at them from a different vantage point. I am not saying the numbers are not up, but we still have close to 98% paying mortages and that figure comes from the same article. Maybe the truth hurts in that direction also.
Good point, Dianatn...there is nothing positive about a foreclosure, especially when that number is sure to rise in the upcoming months!
Sometime the truth hurts Sharon22.
Maybe because there are Over 900,000 households in foreclosure. I would think that if you were one of those 900,000 households you probably would not be looking at the positives either.
That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.
Yes, numbers are up, but even according to the article it is still only 2.04% of all mortgages, meaning 98% are not in foreclosure. Why can we not look at the positive and not the negative all the time?
Over 900,000 households are in the foreclosure process, up 71% from a year ago, according to a survey by the Mortgage Bankers Association. That figure represents 2.04% of all mortgages, the highest rate in the report's quarterly, 36-year history.
Another 381,000 households, or 0.83% of borrowers, saw the foreclosure process started during the quarter, which was also a record.
Additionally, the number of mortgage borrowers who were over 30 days late on a payment in the last three months of 2007 is at its highest rate since 1985.
http://money.cnn.com/2008/03/06/real_est...
"More than 1 percent of all U.S. households were in some stage of foreclosure during 2007, up from 0.58 percent the year before." This is a quote directly from the money.cnn article. To obtain the 75% that would make the exact number 1.015%. Yes, forclosures are up, but it is still only slightly more than 1% of the market. Many more people are paying their mortages instead of defaulting on them.
of course he will post stuff like this...HE SELLS HOUSES FOR A LIVING..seems like he should do some research on the foreclosure problem.
Diana posted a great link and I will add my own that was just posted 10 minutes ago on Yahoo....
http://news.yahoo.com/s/ap/20080306/ap_o...
and reader_2, love the swamp land part LOL...
Hmmm that's strange if people are paying on time then why is foreclosures up 75%
http://money.cnn.com/2008/01/29/real_est...
If you honstly believe that figure, I've got some swamp land in Flordia that will grow a great garden I want to sell you.
Please define "On Time".
Also, some of the mortgage problems are due to people who don't think it's fair to pay a mortgage that doesn't equal the present value of the house so they think it is ok to simple go into default and just walk away. Anytime you sign a loan, you agree to the risks that are involved with the housing market and how the value of homes fluctuate so I have no sympathy for those that can pay the mortgage but don't think they should be held responsible for it and just walk away when they don't get the desired results they hope or things just aren't going their way. That is fiscal irresponsibility and those people make it hard for those honest individuals who do try and make their payments and honor their obligations.