Wednesday, August 22, 2007

The Mortgage Mess

A quick note:

As mortgage lenders tighten underwriting standards and home prices fall, Bank of America analysts estimated that 40% of home buyers who got a mortgage in 2006 probably wouldn't qualify for a home loan now.

That's a lot of houses, hey.

Lack of mortgage availability will mean demand for new homes could fall 35% in 2007, the analysts said. That's bigger than the 20% drop they were predicting earlier this year when subprime problems emerged. New-home sales could fall as low as 700,000 a year, down from 1.283 million in 2005, they said, noting that traffic at real estate agents is down sharply in August. ...

The dwindling supply of home loans will also crimp remodeling activity, Oppenheim and colleagues said. Remodeling could drop by 20%

So if you're heavy on Loew's and Home Depot, it's time to review the portfolio.

More at the link; Calculated Risk did the HT homework.

1 comment:

diana said...

Sorry, but I say thank goodness...a family moved into our neighborhood with payments over their head and their house suffers...because no one computes upkeep, saving for retirement, illness,etc into affordability.
My husband says a person can afford a house that costs double and a half of your income--so if you earn $100000 a year you can afford a $250000 house. We always went lower than that and are very comfortable affording things. Other people I know are always struggling, because they are earning less than my husband and living in homes much more expensive.

Do we wonder why we have a negative savings rate?