Comments on: Foreclosures leading the way http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/ Tracking the Arcadia and San Gabriel Valley Housing Market Thu, 20 Nov 2008 09:38:50 +0000 http://wordpress.org/?v=2.5.1 By: TheArcadian http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2274 TheArcadian Sat, 10 May 2008 21:04:31 +0000 http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2274 I think you've pointed out the biggest problem with this housing bubble. Salaries did not increase significantly during the last 4-5 years so there was no fundamental reason for housing prices to increase. It was all speculation. Be it Irvine, Los Angeles, Orange County and yes, even Arcadia, there was no "income bubble" to support the housing bubble. Interest rates will have to go up eventually and as you said, there is no where for home prices to go than down. I think you’ve pointed out the biggest problem with this housing bubble. Salaries did not increase significantly during the last 4-5 years so there was no fundamental reason for housing prices to increase. It was all speculation. Be it Irvine, Los Angeles, Orange County and yes, even Arcadia, there was no “income bubble” to support the housing bubble.

Interest rates will have to go up eventually and as you said, there is no where for home prices to go than down.

]]> By: TheArcadian http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2273 TheArcadian Sat, 10 May 2008 20:58:58 +0000 http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2273 My SO and I are working professionals and still find it next to impossible to <em>comfortably</em> afford a mortgage. This is after accounting for a 20% down payment on a modest SFR. Fortunately, prices have come down in Arcadia and another 25-30% drop does not seem unreasonable since homes doubled and nearly tripled in value during the peak of the bubble. My SO and I are working professionals and still find it next to impossible to comfortably afford a mortgage. This is after accounting for a 20% down payment on a modest SFR.

Fortunately, prices have come down in Arcadia and another 25-30% drop does not seem unreasonable since homes doubled and nearly tripled in value during the peak of the bubble.

]]> By: Matt http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2270 Matt Sat, 10 May 2008 17:06:20 +0000 http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2270 With the Fed cutting interest rates since August 2007 the side effect is the devaluation of the dollar. Crude oil is traded with dollars and it hit about $126 a barrel yesterday. Most other countries have not cut their interest rates and their currencies are proportionately becoming stronger. The point here is that the Federal Reserve will have to dramatically raise interest rates later this year or we will suffer 3rd world inflation. The 10 year treasury rate will increase in tandem and 30 year fixed rate loan rates will be several percentage points higher than now. This in turn will cause house prices to continue to fall further. This happened in 1980 and interest rates were at 18% for a 30 year fixed loan. For example a $100K loan at 18% interest is $1500!! Unless employers raise salaries to compensate for the higher cost of living, food and gas, (which I don't see happening) house prices will continue to collapse. I believe the Fed is temporarily lowering interest rates to give people a chance to refinance and then the window will close later this year. With the Fed cutting interest rates since August 2007 the side effect is the devaluation of the dollar. Crude oil is traded with dollars and it hit about $126 a barrel yesterday. Most other countries have not cut their interest rates and their currencies are proportionately becoming stronger.

The point here is that the Federal Reserve will have to dramatically raise interest rates later this year or we will suffer 3rd world inflation. The 10 year treasury rate will increase in tandem and 30 year fixed rate loan rates will be several percentage points higher than now. This in turn will cause house prices to continue to fall further. This happened in 1980 and interest rates were at 18% for a 30 year fixed loan. For example a $100K loan at 18% interest is $1500!!

Unless employers raise salaries to compensate for the higher cost of living, food and gas, (which I don’t see happening) house prices will continue to collapse. I believe the Fed is temporarily lowering interest rates to give people a chance to refinance and then the window will close later this year.

]]> By: Came http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2269 Came Sat, 10 May 2008 16:58:31 +0000 http://www.arcadiahousingblog.com/2008/05/10/foreclosures-leading-the-way/#comment-2269 God I hope so, then i could actually buy a house withough working two jobs. God I hope so, then i could actually buy a house withough working two jobs.

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