Is the subprime mortgage meltdown a sign of things to come?

Question

Countrywide said that the housing market won't recover until at least 2009.

Stocks lost major ground again--falling 311 points.

Many homeowners are facing reality in terms of higher interest rates, mortgage payments and a record number of home foreclosures--not to mention a glutton of unsold homes on the market.

Is this what Bush meant by a "home ownership society"?

Answer 1

Housing has been increasing in double digit percentages for the last five years. Energy costs have doubled. Yet income has only risen in the 2-4% bracket. As with the tech bubble what we are seeing is the housing bubble, which has become un affordable to the majority of people, and as with the tech bubble a correction is being made. Housing has been overpriced, and overtaxed. This is just the beginning folks, and we will be lucky if this does not put us in a recession.

Answer 2

if you can believe the media today and yesterday----we have another 24 months+ of the real estate downturn.

good deals to be had by some in this type of economy.

and remember this is not the first time this has happened. it took place in the early 80's as well --when we had all these goofy loans with "Balloon" payments coming do. the homeowners did not save adequatly and when it was time for $50,000 - $80,000 Balloon payment...there were major foreclosures...people walked away from properties then also...and the market took a hugh dive!

It will eventually right itself--

NOTE: take a look at what the stock market did today...it took a 300 point dive due to major mortgage industry concerns

Answer 3

That's exactly what he meant.

The subprime mortgage mess is just the tip of the iceburg.

Remember this if you never remember anything else your entire life.

"There is NEVER just one cockroach"

That, my friend will keep you out of harms way.

Over the next few months every "Knucklhead" economist will tell you how the sub-prime is manageable, how it really won't hurt the stock market, how we'll get through it, how it will not spread to Alt-A loans.

Remember my cockroach analogy.

Think I'm blowing smoke?

Look at the mortgage resets for the subprime mortgage market next year.

Aug (07) 52 Billion Dollars
Sep 58
Oct 55
Nov 52
Dec 58
Jan (08) 80
Feb 88
Mar 110!!! WOW
Apr 92
May 72
June 75
July 50