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Strategies & Market Trends : Mish's Global Economic Trend Analysis -- Ignore unavailable to you. Want to Upgrade?

To: valueminded who wrote (80457)	6/22/2008 9:56:51 PM
From: koan	Respond to of 116555

One can get loans if they have good credit and cash. But it is very hard to get home equity loans and downpayments for everything have risen. Certain parts of the country with energy, like reworking Texas oil fields; coal, oil shale and Ng are doing well; and many agricultrual areas are doing very well. But for the middle class and below many are running into financial problems. Like if one needs to sell a house or take out a second deed of trust. For the poor high gas prices and rising food is causing problems. It is our huge debt I worry about. That could really devastate the dollar if we have to print money to pay the interest.

To: valueminded who wrote (80457)	6/23/2008 7:11:53 AM
From: Metacomet	Respond to of 116555

Once, in a previous life, I owned a real estate brokerage. One of the rules of thumb that we used in pre-qualifying buyers was estimating the monthly cost of a mortgage. At that time, and I doubt that it is much different today, each $100,000 of mortgage debt required a debt service payment of about $1000 per month, PITI. This is totally linear. Now that the era of nonsense mortgage loans is over, I expect that reality will return. It doen't take rocket science to relate the cost of housing/mortgages to income. Until houses become affordable, the market will continue to stagger under the weight of properties that are simply out of the range of what John Q can pay. This is the factor that will drive down housing prices. I am surprised that Tennessee has a lot of folks in a position to take on payments of $4 to $5 thousand dollars a month. Arizona sure as hell doesn't, and the downward trajectory in housing prices will continue until an affordable range is encountered. Only then will there begin to be market clearing.