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    • Thu Apr 3rd 04:11 AM | Rating: 0 0
      Commented on:
      How Far Will House Prices Fall? Implications From the Latest WSJ Survey
      typo - meant to say ...payment is 30% or less of median income...
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    • Thu Apr 3rd 04:09 AM | Rating: 0 0
      Commented on:
      How Far Will House Prices Fall? Implications From the Latest WSJ Survey
      Housing prices will fall until they reach the price where most homebuyers can comfortably afford the down payment (remember those? they're baaack) and the monthly payments and can readily obtain the mortgage on those terms. Basically, the point where the average mortgage payment is 30% or less than median income in each area. By my calculations, that means at least another 15 to 50% drop in prices depending on the region of the country (southern Cal is in the 50% drop range, for example). Of course, you will also have to factor in the massive drying up of available funding for mortgages as no sane investor will ever again buy mortgages they way they did. And when lenders have to use their money (deposits or other internal capital, they certainly won't lend it out at 4, 5 6 or even 7%. Once risk premiums return to mortgages and other investments, you will see significant interest rates, Fed and other market manipulations be damned.

      No chance of a bottom in the RE market for at least another two years, as stupid political posturing and grandstanding - such as Fannie and Freddie buying billions of bad mortgages, government sponsored guarantees on $720k mortgages, etc. prolongs the agonizing slide into the abyss.

      If you are sitting on piles of cash and oil income, be patient. When we buy good assets to pennies to 40 cents on the dollar, wealth grows...
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