Real Estate's Bubble Burst

How much more will this market correction affect communities in the valley and the outer skirts of the metro area, and when can we expect this correction to be over and prices stabilized?

It seems that the main difference between today's real estate collapse and the previous ones, is that changes in regulations allowed mortagages to be packaged and sold as mortgage-based securities. This took the risk, we're told, away from the mortgage companies that issue home loans, so they stopped caring about possible losses.
Does the recently-passed bill do anything to prevent the repeat of this fiasco? I have not heard of it.
Thanks.

I recently (March 2008) bought a home in south Temp for 290k. That was down from an original asking price of 350k.

Is my house value going down or is it flat flat for now.

Tim

As a real estate broker in the Valley, one thing I found invalid in the assessment of Arizona's situation that you reported at the beginning of the show was the idea that Americans need to migrate from the idea of home ownership as an investment into home ownership as part of the American Dream.

As a broker whose agents about equally represented the near 50/50 ratio of Hispanics to non-Hispanics we have here in the Valley, I would VEHEMENTLY argue that the majority of Hispanic homebuyers we represented in the "housing boom" prior to mid 2006 were ABSOLUTELY focused on homeownership as their claim toward the "American Dream" and not as an investment per se.

As home prices climbed higher and higher, these buyers became more and more committed to buying even though the likelihood of making "a killing" on their purchase not only became less probable, but frankly precipitous. By 2005, we had made it a company procedure that no one could purchase a home without signing disclosure forms that made it clear home values were volatile and could change in either a positive or NEGATIVE direction.

For the vast majority of our Hispanic buyers (and I want to emphasize we were careful to insure that all buyers we worked with were legal residents of Arizona), the concept of reinforcing their status as Americans with a right to be here given the anti-Hispanic political climate meant it was critical to be homeowners at the first opportunity possible. I think for many of these people it could be said that within their ability to qualify, price or loan rate was no object.

Unfortunately, a disproportionately high number of those Hispanic buyers were never properly qualified to purchase a home in the first place. In many, but not all, cases they were easily duped by Spanish-speaking loan officers who knew how to manipulate the weaknesses in the lending process and get them approved for high-rate loans based on fraudulent loan applications that the buyers themselves were unaware of. I think this reflects one of the major reasons the proportion of homes now in foreclosure on the West side of town is higher than others.

I wanted to know how to take advantage of the law that was just passed today. We are still pre-foreclosure but next month we will be put into foreclosure status. I have just recieved a letter from a collector informing me that one of my loans is owned by Fannie Mae, but what do I do now??? I am not quite sure where to turn for help.

When the market was booming, my manager had some employees ask him to falsify their income so they could qualify for home loans. Of course, he refused because he knew it was fraud but also because he didn't want his employees to get into homes that they were unable to afford and would eventually lose. The employees were told by the lenders that it was okay to falsify their income and their real income didn't matter - One of these lender employees was later arrested for fraud.

I rent a home in Phoenix and came home from work yesterday to find a notice on the door that the house is going to be auctioned due to foreclosure in mid September. My landlord tells me there is nothing for me to be worried about. As a renter, should I be worried? What happens if the house is auctioned in September?

Thanks,

Kate

How is this gonna affect the leasing market, for the two years I'm living in tempe, the price kept shooting up, before or after this real estate problem. I thought home owner with flexible interest rate would be more interested in leasing their property to pay for the morgage thus the overall leasing price would somehow drop. But that just didn't come.

is it a good time to buy a home in queen creek where the prices are lot attractive or the prices are still going to go down?

Why are we not talking about the fact that the excessive housing market was a govt created problem to stimulate a sagging economy. Greenspan consistantly lowered fed rates that banks used to create these exotic mortgage deals. Combined with an unregulated real estate market created the mess we are in today. This was only compounded by unethical appraisers, real estate agents, financial institutions.

And to respond to the PV comment, wealthy people are not affected by this market. They don't live check to check like 75% of the phoenix.

The 25billon is a bail out because Fanny and Freddie do not have to keep a liquid reserve like investment banks, they both had to have a 3billion sell off just to keep the lights on.

For tenants who face foreclosure, I was told by a company that handles many bank owned homes that banks are usually willing to help a tenant by providing up to $2000 in cash if the tenant moves out and leaves the home in good shape. A real estate agent usually comes to the door to tell you that a home has been foreclosed and they are handling the transition. I'm told it's cheaper for banks to pay tenants to help them move than hire attorneys to evict them.

I'm a native Phoenician and I can't believe you all are looking at this in terms of CA. AZ ISN'T California, we don't have nearly the job base or the high paying jobs CA has.

The speculators priced many Arizonans out of the market. Most people here make $25-$50K a year, that ISN'T enough to finance a $300K house realistically. You can quote statistics all you like, I see the reality. Homes here were NOT undervalued, they were priced to what people who work here can afford.

I was really angry to hear you say that we were undervalued and then couch it in terms of California! That's a rediculous statement! Now we are very overvalued, THAT'S why you are seeing such a precipitous drop and unless incomes start to rise enough to close that gap, you will continue to see it. If you don't believe me, check the want ads and take a look at the wages.