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Non-Tech : The Woodshed
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To: nspolar who started this subject3/8/2004 6:51:14 PM
From: morokko65  Read Replies (1) of 60908
 
Steve Roach of Morgan Stanley calling for an immediate 2%

increase in the Fed Funds rate to stop the housing bubble before it gets out of control. Maybe 1998 or 1996 would have been a better year for that in northern California, where 700 sq.ft 1 bedroom condos with no views go for $275K, up from $120K in 1998. Model match condos are selling $20K higher now than they were selling for in December 2003 (4-5% increase, about 1.5% per month)

I am a Real Estate appraiser with a focus on foreclosure/REO properties and I have never seen a market this overheated, excepting perhaps, the summer of 1989.

Prices subsequently declined 10% in SF area after that; 20% in Sacramento; and 30% in parts of So Cal. During that boom the typical mortgage was 80% loan to value. I routinely see 100% financing, especially among first timers and lower credit scores. 65% of all loans are now ARMs with 1 year periods. Approximately 35% of all purchases have a second mortgage at time of purchase. Huge one way bets made by folks with borderline credit that prices will never go down and rates will never go up. This at a time when foreign outsourcing of silicon valley jobs is expected to further undermine regional job and wage growth.

morganstanley.com

click on archive for the 3/05/04 article
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