Friday, October 29, 2010

Thinking Of Buying a House in ATL... Think Again

Since the beggining of 2008 everyone seems to be an expert on the housing market. "Prices will never be this low again" "Lock in that sub 5% rate they are at historical lows" While the latter of these two statement is most definately true, the fed cannot keep rates artificially this low forever. I do however believe that they will supress them as long as they think they have to which will be at least 12-18 months. This faux recovery is just to fragile to sharply raise rates. As for current home prices, have they come down 30-50% in some many markets including Atlanta? Yes, but the whole debacle is much deeper and is largely not covered by mainstream puppets on MSNBC, FOX ect. The shadow inventory, or properties banks have foreclosed on that have not hit the market is large and more inventory is on the way.

The graphic to the left shows the number of ppl who are 90 days late on their mortgage and the current defaults banks in the Atlanta area hold. Now is it possible that these ppl who are 90 days late could pay the the 3 months of payments they are late and become current on their mortgage? Sure but since Q209 the rate of homeowners doing so that are 90 days in the rears has plummeted to almost ZERO! The Cure rate has fallen so sharply due to ppl being upsidedown in their loan. Why keep paying on a note when the underlying asset is worth less and will probaly lose another 8-10% before we find a bottom.

So with just over 123,000 new homes/condos that will inevitably make their way to the Atlanta Market my suggestion would be to wait watch this mess unfold. Ultimate goal would be to find a shortsale/foreclosure and make the bank a lowball offer. I still dont think homeownership is all its cracked up to be, seems to me its just alot of bills/maintenance and leaves you no mobility if you ever want to move ect.

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