GREEN SHOOTS MORE LIKE CRABGRASS
21 August 2009 by Cullen Roche
1 Comment
Deutsche Bank analyst Karen Weaver says we are in the eye of the housing storm:
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Comments
The universe of credit worthy borrowers is losing ground quickly. The lending standards from the banks (lenders) are becoming higher because of the risk that is around us in the housing market. The time it takes to get ones credit back in shape is not being discussed when all of those who lost their homes, or are underwater in the mortgage. The two years for BK and 3 years for foreclosure is still out there and the homeowners that have lost everything, will still need to wait this out while getting their credit back in order. It is not being discussed in the media.
Do you think the lenders will lower their standards for all of the prime borrowers whose mortgages are classified as jumbo mortgages? You just can’t ignore once a class of homeowners because they defaulted on their mortgage or lost their job, and say oh well, we can get a new homeowner to step in to buy those homes. That is the next problem area in the housing market. In the trade up to the next level of home cycle is broken, which has taken decades to develop, and has been reversed in two years, I know which level of home I am going after- the one that was built for $800,000 and being sold for under$450,000. You think there is alot of homes above the $700,000 are on the market now, watch the next two years and also the phantom inventory the banks are holding and trying not to flood the market (trying to buy time for the market to improve). Kinda risky for them since they did not have a handle on housing in the last 5 years.
Cash will be king in 2011 because credit will be hard to get!!!