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dodgeboy11

Michigan Housing Market

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Quite a heart-breaking article.

When we bought our 1300 square-foot home, spring of 2000, we put 20% down, mainly because we thought that was how it was done. I mean, that's how an adult buys a house, right? And if they are able to make a larger down payment, they certainly do, because it makes the total debt smaller. That's how we assumed it was done in the reasonable adult world.

Just a year or two later came the gimmick of low-percent down or no-percent down mortgages. Just whom did these loans benefit, other than the originating lenders?

The mantra of "getting people into homes who otherwise couldn't afford it" is bogus. It is not a "must" to own a house. I wish that bit of brainwashing could be erased from the populace.

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Quite a heart-breaking article.

When we bought our 1300 square-foot home, spring of 2000, we put 20% down, mainly because we thought that was how it was done. I mean, that's how an adult buys a house, right? And if they are able to make a larger down payment, they certainly do, because it makes the total debt smaller. That's how we assumed it was done in the reasonable adult world.

Just a year or two later came the gimmick of low-percent down or no-percent down mortgages. Just whom did these loans benefit, other than the originating lenders?

The mantra of "getting people into homes who otherwise couldn't afford it" is bogus. It is not a "must" to own a house. I wish that bit of brainwashing could be erased from the populace.

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FYI: Although Michigan is certainly hard hit with foreclosures, it's not just happening here:

U.S. Foreclosure rates continues upward trend

In September 2006 alone, Florida (1st) recorded 28,000 foreclosures, California (2nd) at 17,000, Texas (3rd) at 9000, Michigan (4th) around 7800, and Colorado (5th) at 7000, The national average was 51% higher in September 06 over September 05. Other states in the top 10 highest were Georgia, Ohio, Illinois, Indiana and Utah.

The media was just latching on to the giant foreclosure auction in Detroit.

I think banking experts should be analyzing what percentage of mortgages in each metro area are made up of ARM's, $0 down, interest-only loans and high home equity line balances. Those markets, no matter what the job market, are at the greatest risk, IMO.

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1. Maybe these 0 down loans should be outlawed.

2. This may sound down right cold and heartless. But given the global economy, should lenders be able to factor in the buyer's employer in qualification? For example if the buyer's employer is doing well and has a history of prosperity and is very likely to retain existing jobs and add new ones, the buyer's chances improve. But if the buyer's employer is not doing well and is outsourcing jobs or cutting them and is unlikely to reverse this trend for the forseeable future, the lender would think twice of approving the loan. Of course other factors like credit rating, income, etc. would still apply.

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Besides looking at paystubs to verify a borrower has a job, I'd say checking out the employer itself crosses a line. What if you work for a startup company? What if you're self-employed? Self-employed people already have a hard enough time documenting income to make a bank feel comfortable.

-nb

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I think it would be step in the right direction if mortgage companies actually required any kind of employment or income verification. A lot of them go on "stated income" if your credit score is high enough. No consideration given to whether you can afford the payments or not. They'll just take your word for it.

I don't think mortgage companies should be ascertaining the viability of employers or not. It takes long enough to do standard underwriting half the time, not less have them researching companies' stock portfolios, business plans, annual reports, yada yada yada.

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A lot of them go on "stated income" if your credit score is high enough. No consideration given to whether you can afford the payments or not.

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I think it would be step in the right direction if mortgage companies actually required any kind of employment or income verification. A lot of them go on "stated income" if your credit score is high enough. No consideration given to whether you can afford the payments or not. They'll just take your word for it.

I don't think mortgage companies should be ascertaining the viability of employers or not. It takes long enough to do standard underwriting half the time, not less have them researching companies' stock portfolios, business plans, annual reports, yada yada yada.

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My mortgage company actually called my employer to verify my alleged existence and rumored salary.

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Now that you mention it, the bank I got my loan through wanted to see pay stubs, but once they saw my credit score and what I told them I make they didn't actually bother to verify anything. Very convienient for me. I can afford my house, but I wonder how often they get burned by this practice? I also put a full 20% down.

-nb

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Check out this article today about the DC market:

House sales in region increasingly called off

People are walking away from big (five figure) deposits on new homes because they can't sell their existing homes. In the article, a 33 year old marketing manager for a non-profit has a $725,000 home (now dropped to a price of $670,000). :blink: I'm not usually one to quibble about what people do with their money, but something's not right with that situation.

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Does anyone here think that the cooling housing market will have any negative effects on all the condos being proposed and built in and around downtown? The last thing we'd need is to have a bunch of empty buildings.

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I'm sure some people have a better idea than me. It's hard to say exacly though, because moving downtown has been sort of a trend lately. If downtown is where people want to be then the market there will be fine. That said, all this new construction is increasing the downtown housing supply so much that we'll probably have to wait and see how well the market absorbs these new units before we see new projects.

I'd also expect our slow-growth economy here to keep prices from falling too much. Prices didn't skyrocket in the last 5 years here, there's no reason we'll fall off a cliff now. I have heard home builders in the area have seen a huge drop in new sales, but I'm sure they've cut new construction accordingly.

The ridiculously low interest rates of even a year ago may have pulled many sales forward as well, which means we're sort of in a vacuum right now. The housing market will pick up again eventually.

I wonder how much of a drop we might see in the really hot real estate markets though. Once property values are unattainable for first-time buyers then who will buy all those houses as people keep buying new houses farther out in the suburbs? Nobody will, and either developers will have to stop building houses or prices will have to drop as supply has finally caught up with demand.

-nb

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Downtown housing markets are largely immune from this drop. They are a self-contained community. The market's just different.

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Downtown housing markets are largely immune from this drop. They are a self-contained community. The market's just different.

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Downtown housing markets are largely immune from this drop. They are a self-contained community. The market's just different.

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I'm talking about isolated from the suburban market, which is the largest part of the market. Downtown urban living is a largely a niche market in most cities (at least in Michigan, right now) that's largely uneffected by what's going on in the suburbs. The people that can afford to live in a lot of these new downtown spaces obviously have enough money that they can choose wherever they want to move, right? Maybe I'm missing something, here?

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I'm talking about isolated from the suburban market, which is the largest part of the market. Downtown urban living is a largely a niche market in most cities (at least in Michigan, right now) that's largely uneffected by what's going on in the suburbs. The people that can afford to live in a lot of these new downtown spaces obviously have enough money that they can choose wherever they want to move, right? Maybe I'm missing something, here?

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You'd be surprised how much money mortgage companies are willing to give people these days. You don't have to be wealthy to buy a $300,000 condo, just a decent household income and a good credit score.

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Many of the people moving into these downtown developments have homes to sell in the suburbs. If they can't sell their home, they're not going to move. And not all of them are rich. Many are plain middle class people, or young people making their first purchase. You'd be surprised how much money mortgage companies are willing to give people these days. You don't have to be wealthy to buy a $300,000 condo, just a decent household income and a good credit score.

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Ouch! :w00t: At my household income level I would much prefere to live in a grass hut in Nome Alaska than to pay the monthly payment on a 300,000 loan for the next thirty years. If lenders are willing to loan that kind of money to buyers who really can't afford it, no wonder the Housing Market is crapping out.

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As far as downtown GR condo projects go, I don't think we'll be hearing any new large-scale condo projects announced for a couple of years now as things shake out one way or the other. We might see some cool small projects.

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There are seventy-six homes listed on GRAR.com for over $1,000,000 right now. That has gotta be higher than the long-term average.

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