There are now 20 brand new homes for sale in HPP.

[Punatang]

expect the crash to bottom out

You reminded me.  Those same people also let us know when the bottom has arrived because all of those irresponsible and predatory mechanisms enabling the most vulnerable and least sophisticated to acquire assets, will evaporate.  As if on cue, our "leaders" will proclaim, as they always do, that this most recent crash has occurred due to these predatory practices and "something must be done!".   

Action including knee jerk overreaction is taken against the practices (never the predators).  The end result is that, astonishingly, at the very moment that assets are most affordable, credit dries up.

Coincidentally, now only the unpunished predators, who still have access to or do not need credit, are left to cherry pick the nicest fleeces. 

At this point (the bottom) we begin the process again.

   

[Durian Fiend]

I've posted this before, so sorry if it sounds like a repeat, but the foreclosure concept is a different animal than it was after the GFC.  When the housing market tanked, the banks were "required" to initiate mass foreclosures because of the 10% reserve requirement.  They had to claw back as many non-performing assets as possible or risk running afoul of banking regulations.  Since that almost tanked the global (ponzi) economy, regulators learned that was probably a bad idea.

To prevent a similar occurrence during COVID, the federal reserve eliminated the reserve requirement.  Remember that scene in "It's a Wonderful Life" where George Bailey was explaining to the mob of depositors that the money wasn't back in a safe somewhere?  Well it isn't.  Most banks will do anything they can to keep existing loans going.  Nobody knows why the FED didn't re-initiate the reserve requirement when the emergency was over, but the most likely explanation is that some of the banks would be unable to comply.

There was a ban on foreclosures during the pandemic, so it doesn't seem that the reserve requirement was changed for the same purpose. After the ban expired, I believe banks returned to the business of foreclosing on bad loans.

[terracore]

For sure, there were other reasons why they eliminated the reserve requirement. It allows the banks to make more loans, and people were withdrawing more money than usual during the pandemic. And yes, the foreclosures resumed. Dead people and dead beats don't pay their loans and can't or won't renegotiate them.

[Chas]

One of the biggest U.S. lenders is offering 0%-down-payment mortgages for first-time home buyers. Here's the catch.

I dunno. 15k at no interest is 15k at no interest. As long as you understand the terms, it seems like a great deal. Personally, I would never pay it back until I had to. 

The "catch" is that you have to pay the money back eventually. Not that hard to understand.

[Punatang]

One of the biggest U.S. lenders is offering 0%-down-payment mortgages for first-time home buyers. Here's the catch.

I dunno. 15k at no interest is 15k at no interest. As long as you understand the terms, it seems like a great deal. Personally, I would never pay it back until I had to. 

The "catch" is that you have to pay the money back eventually. Not that hard to understand.

The "catch" is a bit deeper than that.  You get the 15k at the peak of the market and at peak interest rates on your primary loan. You are now very stuck for a long time. You can't refinance when rates drop because you don't have the 15k to pay back.  So even if rates drop tomorrow back down to 3%, you are stuck at 7%. Insidious but very convenient for the purchasers of your bundled loan who will have a greater chance of  reaping above market yields until you are no longer able to pay, at which time you get sheared.
and
You can't sell in the near future because you don't have the 15k to pay back until prices have risen substantially.
and
If by a miracle you make your 360th payment, you now have a $15,000 balloon payment due immediately.

You may be sophisticated enough to make this work for you. Many are. Many are not. They will suffer. These mortgages are explicitly for people who make 80% or less of an area’s median income.
 These borrowers, by definition have no down payment, no savings, and many are already likely on the margins and one economic ripple away from missing payments. The economy is already faltering.

No doubt more of these schemes will roll out as we sputter towards the balloons inevitable pop.

Other than the late stages of the 2008 housing bubble, at least from where I'm standing, there has been no worse time in my lifetime to offer zero down mortgages.  

[Chas]

My first mortgage was at 15%... It worked out.

[Punatang]

My first mortgage was at 15%... It worked out.

I hear you Chas. If we are talking about the time frame I think we are, my parents made it work too. That was a very different economy back then too though. A family could reasonably live on one income. It's very rare to see that anymore. In real estate, if you hold on long enough, it always works out. Inflation guarantees it.  When a person buys at the absolute worst time though and at the highest interest rates, and their circumstances are so precarious as to prevent them from saving up for a down payment, the chances of holding on, for them are unreasonably diminished. When there are an abundance of foreclosures, it hurts everyone except those vacuuming up the great deals at the bottom. That is my point.

[Chas]

I can't even imaging how hard it will be for kids just starting off in the workforce today. No pensions, no company match of savings, and probably no or very limited Social Security.

I get your point and don't really disagree with you. But I also think that as long as you are well informed as to what you are "buying" into, you will benefit in the long run. You have to have a plan B (and C) going into it. But yeah, I guess a lot of people don't.

[Durian Fiend]

According to Redfin, just 16% of listings last year nationwide were affordable for the typical American household. The median price tag was $433, 558. Renters are fairly glum about their prospects, imagining a better than 50-50 chance they'll never be able to own a home.

It's especially tough for young people. In a recent survey of 20-30 year old residents of US, they were asked what they saw as the most pressing issues worldwide. Climate change, war in the Middle East perhaps? Those didn't even make the top 10. Top 3 where inflation, health care and housing, although I don't recall what the actual order of these three were.

[Punatang]

Does anyone know of a search tool that shows which listings have recently returned to the market?  The total ticked back up to 31 sometime in the last day or two.  There is no new listing since 5/25.  So it is likely one that had gone under contract and the deal fell through for some reason.

https://www.zillow.com/homes/for_sale/?s...%3Atrue%7D