Subprime Mortgage Crisis Spreading to High-End Housing Market

Remember MMAfia your rent rent is due the first of the month. Please pay on time your landlord needs to rent money to pay his mortgage down.This is just a friendly reminder.

This part of the article is quite astonishing:

"The banks that are still making jumbo loans are charging substantially higher rates to compensate for the lack of investor demand. Borrowers who could have gotten rates as low as 6.5 percent in June are now having to pay as much as 9 percent."

That's a 2-1/2% increase in range during a 2-3 month period!

Please have it postmarked prior to the 1st

I agree with you MMafia that the jumbo mortgage rate increase is going to hurt the Manhattan real estate market. Spunky, do you believe all buyers of Manhattan real estate pay cash?

Yawn. The mortgage rate increases are going to hurt renters as well.

Turmoil in mortgage market hits renters in the wallet
http://www.usatoday.com/money/economy/housing/2007-08-30-renters-crunch_N.htm?csp=34

Fading American dream of homeownership fuels rentals
http://www.usatoday.com/money/economy/housing/2007-08-30-renter-foreclose_N.htm?csp=34

Oh and by the way, jumbo rates have dropped recently. For how long I don't know, but they have... and its well below the 9% quoted a few post ago.

Gee, if you view the boards for the past year you will find alarmist postings on why the Manhattan RE market is going to crash. Take a look at just two months ago every pessimist (probably renters) were citing the trend and spike in interest rates as to the reason. Then just 4 months ago it was we were heading into the summer months. 6 months ago it was the overbuilding of condos. This month it's the sub prime dilemma. Next month it's going to the new highs of oil prices and the following month its going to be a rise in taxes for city dwellers. Rest assure that there are three things in life you can't escape and they are 1.Taxes 2.Death and 3. Renters on this board giving new reasons as to why Manhattan RE will collapse.

spunky, I agree.
Do you think the past 10-20 years were any different?
RE market good?? Not a good time.
RE market bad?? Not a good time.

Am looking for mtge, nobody has quoted over 6.75% for 30Y fixed. Will wait till the fed meeting and lock

spunky, you left out global warming. I think that's the next reason Manhattan RE will crash.

and spaceboy I agree with you - I think this is one of the BEST times to purchase RE in prime locations, especially in areas hit by foreclosures.

As for Manhattan, you can't predict but long term you can't go wrong.

"you can't predict but long term you can't go wrong." - that's just the most awsome statement I've ever seen. I will make the quants hang it in their lair.

Next headline discussion "SUBPRIME CAUSES GLOBAL WARMING"

"Investment banks are set to cut 10-15 per cent of their staff across the board as turmoil in the markets takes its toll on revenues.

The bulk of cuts are expected in structured credit and leveraged finance, though recruitment experts said other investment banking areas could be affected."

"World series will be delayed indefinitely as turmoil in subprime mortgage takes it tolls on attendance"

The bulk of the delays are structured leveraged credit and this in turn may also have an impact on whether or not the Super Bowl will be cancelled.

"you can't predict but long term you can't go wrong."

CLASSIC!! LMAO. except for pseudonym, the quality of posts by the nervous homedebtors in this forum are quite hilarious, emotional (either sarcasm or anger or a mix of both), and, as the above quote shows, quite contradictory.

MMAfia this is a friendly reminder that the rent is due tomorrow. I will charge a penalty if I receive payment after this date.Thanks you.

zizi your rent is also due tomorrow. Just a friendly reminder of course.

repetitiveness is only an element of comedy when used in moderation.

Gee, investment banks laid off a TON of workers between 2000 and 2002 in the wake of the tech market crash. I don't recall a significant decline in Manhattan RE prices at that time; in fact, I recall the opposite.

Hi MMAfia - regarding your comment about 9% interest, you are correct to a certain degree; however your comment does need clarification for others reading these message boards:
Those banks that are currently charging 9% (with 3 points and up to 30% downpayment requirements, by the way) have that rate in place for buyers who are seeking to purchase with NO INCOME VERIFICATION. If a buyer chooses to borrow showing income, the rate is much lower.

Hello mmm33, a pleasure to meet you. You are the smart one - please allow me to clarify your strategy for other potential buyers reading these threads: The next meeting of The Central Bank is going to be held on Tuesday September 18th. A rate cut of at least 1/2% point is widely anticipated. Wall Street closed out another errotic week as investors took comments from Federal Reserve Chairman Ben Bernake as a reassuring sign; Bernake said last week that the central bank "will act as needed" to prevent the credit crisis from hurting the national economy. Poster mmm33 is waiting for this Sept 18th meeting before locking in his rate - brilliant move, assuming his mortgage broker/banker allows him to "float" his rate another 3 weeks. Hang in their mmm33, I hope to toast to your success on this message board on Tuesday 9/18 evening.

Dear spunky: Although I don't like to see anyone insulted, I think you are hysterically funny. 'Nuff said.

Cheers everyone, have a great Labor Day Weekend and wish me good luck; looks like I am going into contract next week with a fabulous prequalified buyer and he is really cute, too (Helloooooooo handsome how 'bout we say 1/2 price and I'll just stay here with you?).
haha just kidding

Umm.... gee, you think that could be because the real estate bubble hadn't formed yet to its current monstrosity in 2000???

Let's see what happens this time around with layoffs in CONJUNCTION with a peaked-out real-estate bubble.

Hi MMAfia, the layoffs are (unfortunately for those who have lost their jobs in the lending sector) a necessary market correction by lending institutions who have decided to downsize or shut down their SUB-PRIME units. Hong Kong Shanghi Bank is one example, Lehman is another. There are, however, other lenders who see this as an opportunity in the lending sector - Bank of America, for example, who just pumped $2 billion into Countrywide Financial, the nation's largest mortgage lender. BofA's move was bold and opportunistic, and showed Wall Street that they were willing to put their money where there mouth is, betting there will be recovery in the sector. I'm betting with them.
Cheers and enjoy the holiday weekend

"Umm.... gee, you think that could be because the real estate bubble hadn't formed yet to its current monstrosity in 2000???"

Hmm funny... couldn't that be said about the stock market?... oh wait, even with the recent declines, its been soaring since 2000.

YAWN. The rich get richer. The poor get poorer trying to imitate the rich.

"Hmm funny... couldn't that be said about the stock market?... oh wait, even with the recent declines, its been soaring since 2000."

yes, but we don't live in stocks, we live in homes. see the difference?

also, soaring since 2000? you have been taken. sure, nominally we have "soared", but if you measure against the Euro or Gold or adjust for real inflation (not the Fed headfake that uses rent values for homes instead of sale values to mask inflation for example), anyone will clearly see real growth.

ShareShareThatsFair, that BoFa move came right after the night when the NY Fed met with Citi, Bofa, and a select few other banks to orchestrate help for Countrywide since it's banking division did not have access to the discount window the Fed opened up with the cut they made. watch the mozillo interview on bloomberg where he gets asked point blank and doesn't deny it.

I do hope this doesn't turn into a serious recession for that would mean job losses all around.

"Umm.... gee, you think that could be because the real estate bubble hadn't formed yet to its current monstrosity in 2000???"

Oh, but plenty of people like you were saying there ALREADY was a real estate bubble in Manhattan real estate in 2000-2002. Do keep praying, though.

"yes, but we don't live in stocks, we live in homes. see the difference?

also, soaring since 2000? you have been taken. sure, nominally we have "soared", but if you measure against the Euro or Gold or adjust for real inflation (not the Fed headfake that uses rent values for homes instead of sale values to mask inflation for example), anyone will clearly see real growth."

That's funny for a second there, I thought you were presenting arguments FOR buying not renting.
- If people live in homes and presumably buy homes for stability, why would they flip in and out of homes during every business cycle? Clearly you don't have a family (dependents).
- Yes, assets naturally go up in time. Inflation should technically thus provide a floor for minimum real estate appreciation over time.
- Hmm based on what you're saying we should buy higher what's been growing, but we should not spend money on what we live in day to day?

"Oh, but plenty of people like you were saying there ALREADY was a real estate bubble in Manhattan real estate in 2000-2002. Do keep praying, though."

Woah, there are still people who think there is no Housing Bubble? LMAO!!! no need to comment further on this one...

spaceboy does bring up some good questions though:

"- If people live in homes and presumably buy homes for stability, why would they flip in and out of homes during every business cycle? Clearly you don't have a family (dependents). "

Exactly, this is the speculative behavior that all manias require for any asset class- ask all the greedy speculators who jumped on the get rich quick flipping scheme, and thank them among others, for participating in the house of cards ponzi scheme.

"- Yes, assets naturally go up in time. Inflation should technically thus provide a floor for minimum real estate appreciation over time."

spaceboy, that "technical" floor has disappeared as housing prices are actually declining while inflation is not. you are making the age old assumption that is drilled into our heads that housing can only go up, which we are finding out is not the case. actually, it's quite rare when housing, on a national level actually goes DOWN, and we are in that rare situation. as you've probably read, never since the Great Depression has national housing gone down YoY, except now. That should put into perspective the kind of situation we are facing.

"- Hmm based on what you're saying we should buy higher what's been growing, but we should not spend money on what we live in day to day?"

not at all, we should be always invest or allocate our assets to vehicles that show strong fundamentals. some may want to participate in manias as well based on speculation, and that's their choice as the gains can be great, but so can the risks.

That's right Jasper: I don't think there's a bubble in Manhattan real estate now. Historically low supply of a commodity and consistently high demand for that commodity -- and rising prices for the only real alternative to that commodity (renting) -- are not characteristics of a bubble. Or didn't you know that? Do keep renting and praying though!

Time to take your head out of the sand and stop playing ostrich. Hint: stop looking at lagging indicators and start looking at leading indicators to understand what's about to come.

We just had a major, as in crisis-level, disruption in the mortgage and credit markets. This has obviously spread across the financial sector. The ramifications of such an abrupt halt will be shown in statistics months from now. Stop referring to lagging stats that show the effects of the record-levels of Wall St. bonuses handed out early this year.

Watch for Q4 stats this year, where will should start to see the beginning of the effects of the crisis that just struck weeks ago.

I just hope you'll still be around as most housing bulls tend to disappear from the forums once the truth settles in.

Yeah, and that major disruption has pushed 30-year fixed rate conforming mortgages up to, what, 6.75% as of today? Even the current jumbo rate is low by historical standards, and may come down again if the Fed acts. And the low inventory? That's a CURRENT, not lagging, indicator. And where's your proof that demand is CURRENTLY slackening? In fact, there are plenty of renters out there who will jump at the slightest indication of a softening market, thereby promptly re-hardening it. And finally, where's your proof that rents are about to come down? They ain't.

I'll be around. In the meantime, you keep renting and praying, and I'll keep laughing.

MMAfia you need to link my points together and not address them separately.

1) Manhattan is VERY largely coop in which you need to have significant liquid assets.
2) If you buy in Manhattan, then generally speaking you have a lot of money and want to stay here for a while.
3) Thus if you stay for a while, your asset will very likely increase in value, especially if it is a desired asset.
4) I never said real estate always go up. I said the fact that generally people who buy want to stay there for a while. Imagine for a second if you had a family. Would you move your kids around from school to school every business cycle?
5) If you own a place that doesn't mean you can't make investments in other areas.
6) Even if your "home" investment has topped off, it is still possible you wish to stay for a while longer and thus do not care about attempting to time your sell, which could have been wrong anyway.
7) Even if you "needed to sell" and your property was "down", your equity could be used to purchase in another area that very likely also is "down", which makes your "loss" less of an impact. Hmm i need to leave manhattan. I'll just take my gain and buy a house in florida for cash now.

update on recent mortgage pricing in hot areas across the country

http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aBTJS7oiB92I