The Fauquier Times-Democrat has some news on the situation there and in Prince William County:
"People are closing loans, but then the mortgage company may not be able to sell it. They have three days to back out, and some of them are," according to Valerie Frank, president of Preservation Mortgage in Old Town Warrenton.
"You could close today, and the money might not be there, even though the borrowers have the loan rate locked. That's the state of the market today."
. . .
"I talked with a lender today, and she said that she had seven loan applications that her company was working on. Normally they would have 50 to 75. A senior underwriter can process three to four a day, so you can see that the business is really slowing up."
. . .
Fauquier has weathered the storm better than many other places, but has not escaped it entirely.
There were just seven foreclosures here in the last half of 2006. In the first half of 2007, 48 other properties were sold on the courthouse steps.
"I understand that there were 900 foreclosures in Prince William County last month," Frank said. "For Fauquier County, it's harder to get hard statistics, but we are seeing them, as well."
. . .
At current rates of consumption, there is an 18-month supply of housing inventory on the market, and that doesn't account for any new listings.
There were 45 houses sold in Fauquier County last month, and 123 more were put on the market.
"This is the worst for me in the 12 years that I've been in the mortgage business," Frank said. "A lot of people are getting out of the business."
29 comments:
"This is the worst for me in the 12 years that I've been in the mortgage business," Frank said. "A lot of people are getting out of the business."
Well, I guess it's back to being Bank Tellers again....that's gotta suck!
Countrywide announced today that 90% of their loans will now be prime conforming loans. This is going to hit areas that rely on jumbo loans very hard I think.
Check out this URL for a chart:
http://tinyurl.com/2zwoec
Lower prices don't amount to much if you can't obtain financing.
"Lower prices don't amount to much if you can't obtain financing."
And if a lot of people can't obtain financing, then that amounts to lower prices for others.
Keith said:
"And if a lot of people can't obtain financing, then that amounts to lower prices for others."
That's right ... cash rich investors, kids with wealthy parents, those with enough savings in the bank to buy a house without needing a mortgage ... i.e., NOT the average person.
Houses will not be sold to people who do not qualify. Prices will drop (though not to the levels some want) to unload existing inventory & current sellers will be pressured into reality about the market value of their property.
It will be back to basic real estate economics: if you save money for a down payment, you can acquire a mortgage for a house. Period. Not everyone has or will have the income to have a mortgage much less ever "own" a house outright. Not everyone can own a luxury car, flat screen TVs or other things Americans have come to believe they are entitled to. If you want it, then save. If you can't then you don't make enough money to own.
America's banking/lenders do not owe citizens a house at the risk of jeopardizing long-term economic stability. Today we are paying for the excesses of others in the last 5 years thus creating an unstable business climate. The ripple-effect of these excesses will be felt for years.
The reality for many decades prior to the "invention" of creative financing was that people rented and saved to eventually buy a home. There are far worse things to happen to someone. Example: A family could overbuy a house that is beyond their means, find themselves upside down in a mortgage and unable to sell when they want or have to. They could take out loans on "artificial" home equity in an inflated market and find themselves headed for bankruptcy as the home depreciates in value. These are true tragedies. Renting is not a tragedy.
(It is true some inherited money. That was/is their good fortune. You shouldn't and I don't begrudge that.)
FYI: Investors won't touch this market. Today's properties in most markets will not appreciate to the levels "investors" want in the time frame desired. Investment for the RE yahoos of the last 5 years meant a quick flip; not sitting on property for years and watching it appreciate.
BTW: My parents are lower middle class, I have never been nor ever will be an investor in RE, but I do save and work. My ex and I went without vacations and dinners out for many years to get to the point we could actually think about owning a house. We were not then and I am not now entitled to own a house.
When housing prices stabilize and incomes increase to where there is a earnings/price ratio that is "normal" then life can return to where people can save for a downpayment and actually buy a house within their means.
I did buy a house (though not here in this area) 2 weeks ago with a nice downpayment from having invested equity money from my prior house and realizing good returns through no extraordinary or speculative means.
It isn't rocket science. I have some great econ books I could recommend.
KC,
I'm not sure I agree with you that prices will fall as a direct result of less people being in a positon to buy. If the economy were static, yes, then I'd agree with you. But it isn't. Less people being in a position to buy will probably instead translate to less "for sale" housing being built in favor of more "for rent" types of housing. I.e., more apartment houses vs. single family homes. It will also, at least in the short term, translate to less of all types of new housing being constructed ... which means less supply for a naturally growing population ... and hence higher rents, and stable --- if not even higher --- purchase prices on "for sale" properties.
Put another way, more new construction translates to lower prices --- all other things being equal ... And the faltering of the financing markets for new construction will mean less new construction ... and thus higher prices for new buyers and higher rents for all renters.
Additonally, while your economic observations regarding "saving for a house" appear on the mark at first reading, they are far from correct when viewed from our national experience. We currently enjoy the highest home ownership ratios on earth not because of our propensity to save for downpayments but precisely because we enjoy the most lenient and most accessible financing in the world. Bottom line is that it is much easier to "incentivize" people to pay for nice homes when they have a mortgage hanging over their heads then it is when that dream of homeownership is still but a dream.
Just my two cents ... feel free to disagree ... I'm sure you will.
Lance,
An interesting theory. It seems to benefit current homeowners.
I personally can't reconcile it with the last 47 years of census data on vacancy rates, though. There doesn't seem to be a crisis in inventory.
There appears to be a historic high level of empty houses to go around, both for homeowners and for renters. The U.S. also has rural places begging for people to move there. So I can't see that building for profit will be out of the question, depending on the builder's land costs (which are headed down at present).
I do agree that current incentives for building more apartments are greater than for converting them to condos at present. And I think this is an area that was neglected in our area for the last several years. Our family, for example, can't rent an apartment in a traditional apartment building anywhere in Fauquier or Culpeper counties. Our income is too high. I would think that in spite of having a high income, some people who are here in the short-term would appreciate the convenience of living in a managed apartment building.
OT - Another Arlington County property for you (the neighbor of #961 Randolph that you previously listed):
977 RANDOLPH ST
ARLINGTON, VA 22204
List Price: $549,900
Prior Sale: $660,908 12/20/2006
Listing Date: 07/11/07
-16.8%
John,
Thanks. That's a nice-looking property, too.
"That's right ... cash rich investors, kids with wealthy parents, those with enough savings in the bank to buy a house without needing a mortgage ... i.e., NOT the average person."
Actually, those of us wise enough to stay out of the bubble and have enough for at least a modest down payment.
Keith said:
"Actually, those of us wise enough to stay out of the bubble and have enough for at least a modest down payment."
I guess you haven't read about the mortgage companies having problems coming up with the money to lend out?
Last Updated: 17/08/2007 09:31
US mortgage lender draws on $11.5bn
US mortgage lender Countrywide Financial said last night it drew down an entire $11.5 billion bank credit line as a global credit crisis limits its access to short-term cash.
The drawdown should help Countrywide, the largest US mortgage lender, conduct daily operations. It shows how liquidity strains have spread beyond subprime lenders to companies that mainly offer higher-quality loans, driving several into bankruptcy.
www.ireland.com/newspaper/breaking/2007/0817/breaking26.htm
Yep, Lance. And that won't hurt MY ability to get a loan, when and if I want one.
I know you had the movie in your head of all the poor non-buyers crying because now they're frozen out, but the real story is how smart we were to stay out in 2005 and how our wisdom is now benefiting us. The joke's on you. Your fear-mongering and wishful thinking lost and our wisdom and intelligence and analysis won.
" ... the traditional cutoff point between prime and subprime loans -- previously a FICO score of 620 -- has migrated upward in recent weeks. Some mortgage companies are posting 680 FICOs as the new demarcation line; others have set the break point slightly below."
www.washingtonpost.com/wp-dyn/content/article/2007/08/17/AR2007081700991.html
Credit Score 680+: Excellent
Situation:
You have several long-established tradelines which have been in good standing for 6 months or more. You have very few negatives on your report ...
“the median score in the USA is 680” or something similar
www.crusaderservices.com/article_08.php
Ah, the irony of it all! Could it be that when you finally get the price you want, you'll be financing it with a "subprime" loan?
Lance, actually I have a FICO way beyond 680 and I bet most everybody here does, too. So the joke is still very much on you.
Again, Lance, that's what happens when you engage in wishful thinking and weird confirmation bias instead of real analysis. It also happens when you keep holding on to sad stereotypes instead of learning and listening. The obvious keeps surprising you, Lance, over and over and over again. It's too bad you'll never figure it out.
Wow, Harriet and KcWood and Leroy are so smart and Lance is so dumb. It's pretty cool Lance keeps showing everybody how smart other people are compared to him.
Keith said:
"Wow, Harriet and KcWood and Leroy are so smart and Lance is so dumb."
Harriet ... Didn't you say something about deleting posts with personal attacks ... Now that I think about it, there've been quite a few of these from Keith ...
"The difficult market conditions could work to the advantage of prospective home buyers who can negotiate the current lending gauntlet and qualify for a mortgage. As home sellers find it more difficult to find qualified buyers, people with financing should be able to negotiate better deals, brokers said.
"There are good bargains for people with reasonably good credit and a little money in the bank," said Ilene Cohen, a broker with First Call Mortgage Inc. in Andover, Mass.
To qualify for a loan, borrowers generally need a credit score of 700 to 720 (on a scale of 850) and enough money saved for a 10 percent down payment. They also need to be able to verify their incomes."
It's good to see we're all on the same page. Let's remember though that a FICO score of 680 is the median score out there. I.e., half the population has a lower score ... and is going to have to rely on the almost dead sub-prime mortgages.
"It's good to see we're all on the same page. Let's remember though that a FICO score of 680 is the median score out there. I.e., half the population has a lower score ... and is going to have to rely on the almost dead sub-prime mortgages."
Sounds like an argument for price drops to me...
Interesting ... so, everyone on here has a fico score way above the median! ... doubly interesting since most of you are renters and not being a homeowner works against you when your credit score is calculated. You know the box when you fill out a credit application that says "Own your own home? How many years?"
You must all have spectacularly good other credit enhancements such as hundreds of thousands of dollars in the bank ... to bring you past that median 680.
A sincere suggestion that I hope you do is spend the $30 they charge to find out what your credit score really is ... rather than making an assumption. I suspect you are all assuming that if you've never missed a then you must have a very high credit score. Did you know that even one late payment to a credit card company will most likely put you well below that median score? Did you know that things such as your owner/renter status affect it? Go buy your score and then you'll know whether you're cheering against your own best interests or not in cheering for the fact that a lot of people are being shut out of the mortgage market ... just so that you can have your dream house for something like 5% or 10% less ...
Nice new scare tactic lance...
Beating the median isn't hard in the slightest. I wouldn't be surprised to find out that a group of aggressive savers would have good credit. You aren't going to find a lot of people here that get by paying the minimum balance on their credit cards.
Of course I can't speak for everyone else here... but you don't have to worry at all about me.
Good grief, Lance.
Yes, on average, renters score about 40 points lower on FICO scores, according to Experian (658 verses 700). I truly don't think people who read housing bubble blogs are your "average renters" (whatever that is), though. And it's not a cause-and-effect relationship, either.
The average FICO score in Virginia is 700, and the average in DC is 682. The national score index is currently 692. So if you're talking to us Virginians here, realize we already have you beat by 18 points. (Obviously, I'm using a straw man argument here, because it's silly to paint anyone with a broad brush).
I've known gobs of young professional renters through the years who have had great credit scores, including us when we were young 20-somethings and bought our first home. Buying an automobile helps greatly, too, as that's a fixed payment that gets paid off over time.
Lance,
At the risk of piling on, a few items.
1) Don't cry to mom: show you are not dumb by posting arguments that are not dumb. You can't blame people for assuming A=A.
2) Weren't you on a soap box back in March/April saying that subprime defaults wasn't going to be a problem because they were less than 1% of all home loans. Can't say you were dumb about that one, except for the fact that it was completely unsubstantiated by reality. But wholy crap were you off by a mile.
3) Now you are saying that everyone who was financially responsible not to buy into the bubble is going to have a problem getting financing because they obviously have low FICO scores evidence by the fact that they are renting. Well, I hope you are starting to see that this "Theory of the Week" will suffer a similar fate as the rest of the unsubstantiated crap you have been peddling.
You obviously have no idea how FICO scores work, so don't talk as though you do. FICO was a scheme dreamed up by the credit industry to encourage people to take on more debt.
The fact that you leap-frogged from a condo to a row house durring the greatest real estate bubble in history does not establish that you are a financial or real estate genius. All you did was take on more debt.
And in case you haven't figured this out yet, you have actually increased your long-term housing costs. You don't have any more ownership interest in where you live, yet you will pay more in interest over the long run. This does not make you a financial or real estate expert. Harriet is right that your arguments have a remarkable way of always seeming to support a homeowner that bought in 2005, particularly one who bought a row house in zip code 20009. You have to present supported arguments that are consistent. To do otherwise in a blog format would just be, well, dumb.
"The fact that you leap-frogged from a condo to a row house durring the greatest real estate bubble in history does not establish that you are a financial or real estate genius. All you did was take on more debt."
Impossible! You are just jealous that you haven't been able to accomplish what he has!
Do you realise he OWNS a house that cost $700k!! Do you have any idea how much money that is? He is RICH.
He has secured his future through an interest only loan. You just wish you had his keen insight into global economic nodes.
Harriet,
I thought you had a policy against allowing personal attacks on this blog. Why is it not being enforced against everyone equally?
Lance,
I think it's you that tends to stir up hornet's nests and goad people into angry remarks. Are you sure it's healthy for you? Maybe you could start a blog from a housing bull's perspective to get your ideas off your chest. I'm not sure why other people's decisions to wait a few years to buy a house bother you so much. The facts in hindsight are that in places like Prince William and Loudoun, it was economically beneficial for a middle-class homebuyer to sit out 2005 and 2006. And the jury's out on what will happen closer in to D.C. in the coming months.
Personally I feel quite neutral about other people's decisions, but appreciate the opportunity to examine statistics and hearsay about our local market. Personal decisions are somewhat distinct from the purpose of this blog. We all have our reasons for doing what we do with our money and time.
Harriet,
Interesting thought that this blog is for people of a certain mindset only.
"I think it's you that tends to stir up hornet's nests and goad people into angry remarks. Are you sure it's healthy for you? Maybe you could start a blog from a housing bull's perspective to get your ideas off your chest. I'm not sure why other people's decisions to wait a few years to buy a house bother you so much."
Word. Harriet so totally nailed Lance. Over at Bubblemeter, Lance used to whine to David J, too, whenever Lance tried to dish it out but then found he couldn't take it.
I'm guessing Harriet is or has been a parent, and so could easily see through Lance's "punish that other kid for hitting me back" routine.
Lance said...
“That's right ... cash rich investors, kids with wealthy parents, those with enough savings in the bank to buy a house without needing a mortgage ... i.e., NOT the average person.”
Yep, the average person will need a mortgage. But no worries right? You can just count on the top 5% income earners will buy up the entire inventory!! Yea,….. that’s the ticket, right now, these “above average folks” are buying up AHM as fast as they can!!
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