The battle is escalating. It’s one side against the other… “It’s a great time to buy because…” & “It’s a terrible time to buy because…” What does one do to decipher through all the facts and hype? The answer is, the days of buying a home to get huge appreciation are over. So, if you are thinking of buying a home to ride a wave of appreciation and cash out, think again. It took the combination of super low interest rates, zero down loans, zero income, zero asset loans with interest only payments and even less than interest only payments around 1% to create that market. It was the perfect storm and it’s not coming back again until people get amnesia about this whole mess.
Its pretty easy to know if you should buy or not. The easiest way is to just calculate the cost of rent vs. own. There are many financial calculators out there that can help with that. Here is one You also may want to factor in the value of not having to move ever again if you don’t want to.
Deception During Times Of War
War causes people to deceive and mislead. For instance during WWII in north Africa
In January 1941, General Wavell, commander of British forces in north Africa, created a unit called A-Force, which was dedicated to counter-intelligence and deception.
A-Force created an elaborate operation which diverted German bombers from the port of Alexandria by setting up a fake harbour in a nearby bay; this involved constructing dummy buildings, a dummy lighthouse and even dummy anti-aircraft batteries which fired thunderflashes. He also made it hard for German bombers to locate the Suez Canal by fitting searchlights with a revolving cone of mirrors, producing a dazzling wheel of spinning light beams nine miles across.
The same type of thing is going on now with real estate in America. The banks and lenders are producing a dazzling wheel of spinning light and deception by creating the illusion that the housing inventory is getting bought up and that there isn’t a massive overstock of homes for sale. In actuality, they are strategically holding back the inventory from the public to create this illusion…and it’s working. They are doing this because they cannot possibly afford to lose the great battle of real estate values any longer. It’s not an lie when your local realtor says “There are multiple offers on this home, you gotta make a good offer”. The lenders and banks are successfully attempting to fool the American public into believing that somehow values are bottoming out, and they are. How are they doing it? It is “price fixing” at its finest. See Below from Wikipedia:
Price fixing requires a conspiracy between two or more sellers; the purpose is to coordinate pricing for mutual benefit at the expense of buyers. Sellers might agree to sell at a common target price; set a common “minimum” price; buy the product from a supplier at a specified “maximum” price; adhere to a price book or list price; …. purposefully reduce the output or sales in order to charge higher prices; or purposefully share or “pool” markets, territories, or customers.
Generally, price fixing is illegal, but it may nevertheless be tolerated or even sanctioned by some governments at various times, particularly among those whose countries are developing economies.
IstockAnalyst reported that The Shadow Housing Inventory Will Halt A Housing Recovery:
Any optimist talking up a housing recovery might want to pause and look deeper into the housing crisis. Amherst Securities Group analysts believe the market faces about 7 million properties that are likely to be seized by lenders have yet to hit the open market. There are two sources that contribute to a huge shadow housing inventory; ARM mortgages which are due to reset now through 2012 and current home owners who are struggling to make payments.
Assuming no other properties are on the market, it would take 1.35 years to sell this inventory based on the current pace of existing-home sales, analyst Laurie Goodman.
The favorable seasonality will be over come the October housing numbers and the reality of a 7-million-unit housing shadow inventory is likely to set in.
Massive Mortgage Delinquencies
With just our clients at YouWalkAway.com, we see over and over again, lenders postponing auction dates and refusal to take back property. The combination of the massive glut of homes in default, estimated between 6 and 7 million and the slow drip of REO properties onto the market, you can expect a relatively flat real estate market for at least a decade. This is actually a very thought out and decisively planned strategy to help the banks avoid further collapse. I am definitely not condoning or think it is the right thing to do, I just believe the lenders and banks are doing what they always have done…. what’s in their best interest.
The lenders / banks got a HUGE break when the mark to market rules changed. It enables them to hide the potential losses on their toxic securities. This will make the accurate valuations of their assets very difficult and it creates a great deception to the public. Just think if you had the ability to go to Las Vegas and play with these rules. If you win, you win big. If you lose, well you don’t really have to lose, because you got insurance against losing and also the owner of the casino is your friend and he just gave you a bunch of chips to play with. It’s been said that “All is fair in love and war”. I guess the lenders and banks shouldn’t complain then if a homeowner decides to do the same…. what’s in their best interest.
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