IHB: Home Price Drop Sudden and Dramatic

[blitzjs]

Prices are either stable or rising slightly each phase for the tracts I've looked at (Santa Barbara, Montecito, Sonoma, Santa Cruz, Casero) and they are still moving a lot of units.  I don't see how prices will drop over the next year or two. 

 

[irvinehomeowner]

As for the 2010 Collection - Santa Barbara is just about sold out and that was post tax credit;

And many of the SFRs were priced above the limits for the old tax credits.

(although you can posit that because people bought your house in within the limit due to tax credits, that allowed you to move up to a Sonoma/Carmel house)

 

[Irvine2Irvine]

As for the 2010 Collection - Santa Barbara is just about sold out and that was post tax credit;

And many of the SFRs were priced above the limits for the old tax credits.

(although you can posit that because people bought your house in within the limit due to tax credits, that allowed you to move up to a Sonoma/Carmel house)

That's me.  I believe that the credits definitely helped me sell the old house.  I also know co-workers who jumped in to housing market because of the credits, which is not a smart thing to do, IMO.

Only sure way to know if the price will go down further in next 2-3 years is to look back in 3 years.

 

[freedomcm]

IHO-

when the OA notes reach their 120% limit, or when they reach the 5(?) year reset date, don't they convert to amortizing?

So someone with a 4% IO/OA loan suddenly has to pay both the 4% (at current rates), plus the principal portion?

 

[irvinehomeowner]

IHO-

when the OA notes reach their 120% limit, or when they reach the 5(?) year reset date, don't they convert to amortizing?

So someone with a 4% IO/OA loan suddenly has to pay both the 4% (at current rates), plus the principal portion?

It depends on your terms.

If you put enough down and managed your payments (going bi-weekly instead of monthly) and didn't have an insane starter rate, your accumulation of deferred interest was manageable. And as rates went down, you should have actually been paying off that deferred interest during the last few years. There are probably some people who have OARMs with a current interest rate lower than what the current fixed rate is depending on what index you used and your margin.

And on the 120% or 5 year, I don't think they convert to amortizing... they put the deferred interest into the principle and re-amortize. I'm not really sure as I'm not a loan broker.