Negative equity raising home prices

It is scary how many of you have a lack of understanding of what has happened, what is happening and overall basic econ.

First, to the guy going on about how much new home builders earn. First that is 27% gross net, not net and that is an aiming point. The fact is, when they earn 27% gross net, that only is 27% on that one house, less the cost of operating the business. I am sure you were not the CEO of a large home builder thus you have no idea what the true net proffits were. My estimation would be closer to 14% if it were an extremely well run company.

Second, to those who claim there are so many more foreclosures in the pipeline. That depends on region. This has always been my biggest issue with National real estate news. What happens in Phoenix is far, far different than what happens in say NYC. You are correct, in some regions there are many, many more foreclosures in the "pipeline", mostly in what you call judicial foreclosure states. In non-recourse states like Arizona for example, foreclosrues take place much faster and thus it is less likely to have many sitting in your pipeline.

The fact is, the only way to save the housing market was to stop the bleeding. The bleeding in this case was foreclosures. Are banks holding foreclosed homes to raise prices, yes indeed they are. No different than most other companies hold back some inventory to prevent flooding the market. Apple could build enough I pads to satisfy the market before selling them but they do not to create buzz about not being able to get one, why should banks do anything different. Housing inventories being low will help stabilize markets and raise prices. Rising prices will cause home owners to stop participating in what is known as strategic foreclosure.

The fact with the housing market is simple. Housing prices are now much lower than what they should be. The mark for housing can be set back at 2003, which is far before the frenzy buying of 05, 06. The fact is, in many markets housing historically increases 5% per year, in some markets even more and in a few markets far less (some will remain in decline as the cities are becoming ghost towns). Thus if you take prices from 2003 and increase them by 9 years that is where home prices should be and they are not. Simply put we are do for another market correction in the other direction, hopefully it does not jump off the cliff like in 06.

So, what needs to happen? Banks need to continue to regulate the amount of inventory they put to market and ease homes back to market. This will allow home building to start back up (which has begun) and allow prices to increase. It needs to be done carefully as you cannot flood the market but you also do not want to create artificial inflation. I believe this will be acomplished by the powers that be, although it will take some time. Look to 2014 before we are 100% out of this.

The entire U.S. banking system is a sham. I tried at 5 different banks to get a home loan with a 780 credit score, 25% down and 10 years on the same job and was denied every time. I decided it was time for me to take a stand and do something for myself instead of for the millionaires making money off of me through the banks. So two months ago I took out a series of "personal loans" for 10K each within days of eachother (two of them from banks who had recently denied my home loans) and was able to negotiate a 72K 3b/3b house down to 55K because I could pay cash on the spot. Now I have no mortgage and the payments on the three loans combined are less than I was paying for a 2b/1b upstairs apartment. These loans will be paid off long before my kids are ready to start college, I own my home outright, and the bank doesnt get a dime from me. Their greed just cost them thousands upon thousands of dollars in interest and fees.

They dont own us even though they like to think they do. I got angry, did something about it and came out way ahead. Dont buy into their "we make all of the rules".