Mortgage & Loan: The Money Pit

One reason why the housing market is failing as badly as it is lies with the fact that homeowners simply don't have the means to hold on to the homes they have. Rising energy costs, stagnant wages, and astronomical home prices have pushed homebuyers to use toxic mortgage products just to get their feet in the door, and homeowners are so strapped that they're eating Ramen noodles and sleeping on mattresses just to make the mortgage payment.

This bleak analysis was further substantiated by today's release of data from the Census Bureau, confirming that in 2005, Americans spent more income on their homes than at any time since 2000:

Housing analysts blamed surging home prices, higher interest rates and lower incomes for hurting affordability.

The housing market has gone soft in many areas, but home prices are still much higher than they were at the start of the decade. Nationwide, median home values jumped 32 percent from 2000 to 2005, to $167,500.

Unsurprisingly, California rates as the country's most expensive market, with homes in San Diego doubling in price from 2000-2005. The report also claims an increase of 4 million owner-occupied units to 74 million since 2000, but you have to wonder how many people are looking at that deal and regretting it after seeing how their bank account got depleted.

In what I am sure is sheer coincidence, now, finally, regulators are paying attention to lending with toxic mortgage products:

In response to perilously lax lending standards and a proliferation of risky new mortgages, bank regulators issued new guidelines on Sept. 29 to protect American home buyers. The Office of the Comptroller of the Currency (OCC), along with the Federal Reserve Board, the Office of Thrift Supervision, and other bank agencies, now requires more stringent underwriting standards and more informational sales practices surrounding nontraditional mortgages, such as interest-only mortgages and "payment option" adjustable-rate mortgages (ARMs). These so-called exotic mortgages, regulators say, have raised serious consumer protection and safety and soundness issues for banks.

Day late and a few billion dollars short, eh, boys?

Posted at October 3, 2006 03:39 PM

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One reason why the housing market is failing as badly as it is lies with the fact that homeowners simply don't have the means to hold on to the homes they have. Rising energy costs, stagnant wages, and astronomical home prices have pushed homebuyers to use toxic mortgage products just to get their feet in the door, and homeowners are so strapped that they're eating Ramen noodles and sleeping on mattresses just to make the mortgage payment. This bleak analysis was further substantiated by today's release of data from the Census Bureau, confirming that in 2005, Americans spent more income on their homes than at any time since 2000: Housing analysts blamed surging home prices, higher interest rates and lower incomes for hurting affordability. "It is now much more difficult for first-time homebuyers to get into the market, and for existing homeowners to trade up," said Mark Zandi, chief economist at Moody's Economy.com. "This decline in affordability is the catalyst for the current sharp decline in housing activity." The housing market has gone soft in many areas, but home prices are still much higher than they were at the start of the decade. Nationwide, median home values jumped 32 percent from 2000 to 2005, to $167,500. Unsurprisingly, California rates as the country's most expensive market, with homes in San Diego doubling in price from 2000-2005. The report also claims an increase of 4 million owner-occupied units to 74 million since 2000, but you have to wonder how many people are looking at that deal and regretting it after seeing how their bank account got depleted. In what I am sure is sheer coincidence, now, finally, regulators are paying attention to lending with toxic mortgage products: In response to perilously lax lending standards and a proliferation of risky new mortgages, bank regulators issued new guidelines on Sept. 29 to protect American home buyers. The Office of the Comptroller of the Currency (OCC), along with the Federal Reserve Board, the Office of Thrift Supervision, and other bank agencies, now requires more stringent underwriting standards and more informational sales practices surrounding nontraditional mortgages, such as interest-only mortgages and "payment option" adjustable-rate mortgages (ARMs). These so-called exotic mortgages, regulators say, have raised serious consumer protection and safety and soundness issues for banks. Day late and a few billion dollars short, eh, boys?