Housing Abyss: Price drop feeding on itself

[Liberal_in_LA]

Comment on website:

stacy
Jun 27, 2008 2:09 AM GMT
I live in Las Vegas my house is worth 225,000. I owe 511,000. looks like ill be calling Steve Hawks to buy the one across the street for $225,000!!! Any body wanna buy mine for $511,000???


http://www.businessweek.com/magazine/content/08_27/b4091032364818.htm?chan=top+news_top+news+index_top+story

The Housing Abyss

Why the worst may be yet to come as forces battering the market gain strength. And the remedy coming from Congress? It's likely to fall short of the mark

**snip**

The risk for the financial system and the economy is that the price drop, already horrifying, will start feeding on itself. When home values fall low enough, hard-pressed homeowners become less able or less willing to keep paying their mortgages. That forces lenders to repossess homes and then dump them back on the market at fire-sale prices, which depresses prices further and leads to even more foreclosures.

That process has already started in parts of Arizona, California, Florida, and Nevada. The drop in those markets "is being fueled with jet fuel," says James L. Smith, executive vice-president for portfolio services at Fiserv (FISY), a Brookfield (Wis.) company. His unit works with borrowers to restructure delinquent mortgage loans. Smith worries that instead of settling at a reasonable price level, "we're going to blow past without even looking back."

[Mind_your_head]

1. THAT is EXACTLY what some people (the wealthy - the 1-2%ers) have been hoping for

They're gonna snatch up a lot real estate and then become landlords. This was predicted (by the tin-foil hatters) 5-6 years ago....and now "here it is".

Maybe the tin-foil hatters were smarter than they looked (in their tin-foil hats) ;-)

[Eurobabe]

2. Great time to buy

when the bottom drops out, not only for the wealthy, but for people who have been waiting for a chance to get a toehold. I'm sure there are still some financially solvent people who will qualify for a mortgage.

[Mind_your_head]

3. true.....but there is SUCH A BIG inventory of homes out there......

It's gonna be awhile before this mess gets sorted out, AND, I still contend that the ultra-wealthy are gonna make out like bandits.

Some people with stable jobs/inheritences will pick up some 'crumbs' and get great "deals" ~ sadly at the expense of a lot of other people, frankly.

The uber-riche will "make out like BANDITS!"