Originally Posted by
Andy
Like I hinted in my last post, the housing market is gettting bubbly. There are a lot of marginal buyers trying to get their first house ... I suspect many of them are counting on not paying back their student loans. These are not the people that you want to buy a house next to you because they'll default in a heartbeat.
Now, unfortunately, the current housing market is very tight across most of the US and this is reflected in home builders' stocks which keep rising as they sell every spec home they build. I moved this spring and we lost out on four homes before we finally got an offer that was accepted.
You express concern about first time buyers who can't afford to buy. I express concern about the possibility of them buying a home near me because they are in large part marginal buyers who are high risk for default. It's great that you're compassionate about these people, but you're betting on a lot of people who lack the financial skills to manage a home mortgage/budget. If they were able to manage their budget, they'd be able to save up enough money for a 20%+ down payment on a home.
Little talked about aspect is the fact that Mortgage and car loan delinquencies are at 2007 levels. The problem the banks have is they don’t have the capacity to process repos and foreclosures they had then. They’re also sitting on those delinquencies hoping to recoup rather than write-off. When they give up on that plan and figure out how to process them there will be a flood of foreclosures and repos.