Real Estate Guru

Have Housing Prices Bottomed? Not so fast!

As summer comes to a close, the headlines read " Housing Bottoming Out."

I disagree. First, seasonality will fade quickly into the darkness of winter. Two, the expensive coastal markets of both coast is about to get hit with a Katrina type of financial storm.

Remember the sub-prime was the start of this economic chaos nearly 3 years ago? Much of those foreclosures have worked their way through the banks. Half off and mortgage liquidity by FHA, FNMA and Freddie have grease the skids....

Now the big storm and major losses to the banks will be the "Jumbo option arms" coming due over the next 2 years. The difference? Sub-prime loans might have averaged a loss per property of $200,000 nationally. The Jumbo loans might top $1 million per home.  Do the math. Yes, a smaller percentage of all mortgages, but 5x the losses?  Very likely. The big banks do talk about this much. It will hit their bottom line over the next 24 months.

Homes values between $1-3million will be hit much harder because their is minimal, if any financing. Appraisals are already less than the loan balances and will be exacerbated. Buckle-up!



Real Estate Guru

Phil Immel