Peak US ARM reset to come in October

There’s an article in the New York Times about adjustable rate mortgages and their impact on the US housing market:

House prices will need years to work off their irrational values, more people are going to lose their homes and Wall Street can probably look forward to some more nasty surprises.

In fact, the mortgage meltdown has arrived at something of a turning point. So far, most of the loans gone bad were among the worst of the worst. Some were based on outright fraud, either by the lender or the borrower. In many cases, buyers were never going to be able to make their monthly payments and were instead banking on a rapid appreciation in home values.

But the pool of people falling behind on their house payments is starting to widen beyond this initial group, and adjustable-rate mortgages are the main reason. Starting in the spring of 2005, these mortgages began to get a lot more popular, largely because regular mortgages no longer allowed many buyers to afford the house they wanted.

The drop in the US market so far has happened before the bulk of adjustable rate mortgages jump up to their new rate. According to credit suisse the peak mortgage reset will happen in October when more than $50 billion worth of ARMS will switch over to their new rate for the first time.

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patriotz
patriotz
13 years ago

I'd sooner buy a million dollar house in Vancouver than a $750k house in Port AlberniHey I can top that. How about…. Condo conversions in Port Alice!Fantasy Island.

Gianni33
Gianni33
13 years ago

"what i have discovered,victoria is land covered by oceans." -satvYou could have discovered this by looking at a map.

Tax Investigator
Tax Investigator
13 years ago

Hi Satv:Do you think some people not only cheat on the deductions, but also underreport revenue?i.e. you might report the income from the three suites in the tri-plex but not report the revenue from the guys who store the 2 RV’s in the garage and pay cash?Or:Your might give the basement guy free rent for one month for painting your daughters condo?Or:Pay your office cleaning service a little extra, but get them to clean up your house?

satv
satv
13 years ago

no tony never been to san diego,but I for got to mention I had visit to california in 95,and seattle 4 times funniest trip was point robert.vancouver rocks.

van-realestate-crash
van-realestate-crash
13 years ago

Patient: One or two persistent posters at Chipman’s blog seem to suggest that some of the revenue property holders may be abusing the tax system, in terms of tax deductions.

Tony Danza
Tony Danza
13 years ago

Yes satv sky is limit for Vancouver and sure to blast like rocket. Please for the love of god buy as many condos as can possibly! BTW have you ever been to San Diego? You can buy a house there for less than here and the weather is a little better. Oh and wages are a little higher too!

Patiently Waiting
Patiently Waiting
13 years ago

van-realestate-crash,What is the "other blog"?

satv
satv
13 years ago

freako !noI have spend almost 6 hour in ferry process and 6hours over there may be not enough to comment on victoria,but my conclusion is based on future of that city compare to city of vancouver.we have lots here, but not much there .even beach over there are actually part of ocean.so edges are just a cut of to be close we can not call them sandless beach and despite it was sunny I have notice only 15 to 20 people. I have seen calgary,edmonton,and victoria,london,germany,new delhi so far.vancouver is worth living despite high cost of living.we can feel the heat, with eyecostic stuff here every where which is hard to capture by cameras. people just give up and buying is a bottom line here in vancouver for this world.I think vancouver is a dream land for this world "who… Read more »

van-realestate-crash
van-realestate-crash
13 years ago

Satv: I think our friend the Tax guy has you bastards by the balls.If you try to squelch him/her on the other blog, it will certainly raise a red flag.Yet if you accommodate the rant, sooner or later it will attract the attention of the tax police for sure.Although there is a possibility it may be a real investigator, who is looking ahead to prosecution time and may not want to be challenged as gone on a fishing expedition, and may be a decoy to attract some whistle blowers.

freako
freako
13 years ago

I had visit parliament,and london museum.those wers trace of buckingham palace and madam tausad.What? You didn't go to Miniature World?

satv
satv
13 years ago

taxthat would cost almost $50.00 to save few bucks on tax so I just bend those receipts.that is very much different expereience,to travel through ferry and parking cars for $40.00 one way,thats the best part to travel.

Tax Investigator
Tax Investigator
13 years ago

"there were lots of place I just skipped them to save my time, and money."Satv: Why worry about saving money-aren't travel expenses, tax deductible?You can claim as research.Review tapes from your course on purchasing with nothing down.There is a vague section on tax advantages.

satv
satv
13 years ago

hey ron jermy,tax investigator=robs numbershere is I am.I had visit victoria yesterday.I have found this ot, topic from freako about victoria today.beleive me vancouverites hardly can find it exciting.what i have discovered,victoria is land covered by oceans.lots of island buildings are few but quite,and low rise only ,no high rise.street level are not up to vancouver standarad.I have notice lots of big banners advertised along the drive way one of them was missing and request for sponsored to place their add,that banner was sayung"I watch 63,000 cars every day".I had visit parliament,and london museum.those wers trace of buckingham palace and madam tausad.there were lots of place I just skipped them to save my time, and money.victoria is lack in activities,and in things to do.otherwise its nice,quite,and clean on my way back cops blocked some exits ,spend 45 min extra to… Read more »

freako
freako
13 years ago

OK, fair enough, that is for all of Seattle-Tacoma-Bellevue.Well greater Victoria covers Langford, Saanich, heck even Sydney.

Tax Investigator
Tax Investigator
13 years ago

Ron Jeremy said… I am looking for Satv.Has anybody heard from him latelyI am looking for Satv as well. I want to talk to him, and a few of his “investor” friends.

JMK
JMK
13 years ago

OK, fair enough, that is for all of Seattle-Tacoma-Bellevue. There is a huge gradient across that market. You can live it up in Tacoma for almost half the price of Seattle.

Ron Jeremy
Ron Jeremy
13 years ago

I am looking for Satv.Has anybody heard from him lately

freako
freako
13 years ago

At the end of Q1, NAR pegged median Seattle SFH at $380,200 (too lazy to tinyurl, so check for yourself at <a href="http://www.realtor.org.www.realtor.org.<br />I punched that into xe.com for dollar conversion, which gives me 400,565.16 canuck smackaroos. Dividing 515 by 400, I get an increase of 28.75 percent, which is "almost 30%".Of course the Seattle numbers are Q1, so could have gone up or down since.

dont click here
dont click here
13 years ago

dosh said… whats with the obsession with the US market? last i checked we were in a different country. i know we do some trading with them, but geez, lets get real! I wonder why the doshes of the world lurk around the blogsphere if they were so sure of themselves.

freako
freako
13 years ago

New GV detached benchmark price: $714,810, a decrease of $905. Odd since sales were at record pace, smashing last July's pace. Surely pre-approvals rusing in.

JMK
JMK
13 years ago

I think there is some confusion about Victoria house prices. The quoted numbers for Victoria are for SFHs only, and are $574k average, $515k median. SFHs in Greater Vancouver are $711k average, unless I am grossly misreading the GVREB stats sheet. Victoria is about 45% detached, so the weighted residential mean is something like $411k. I can't find prices for just SFHs in Seattle, but the overall residential market is between $511k and $580k. So even if all of these were SFHs (and there are a lot fo SFHs in Seattle) there is no way that Victoria is 30% higher than Seattle.

freako
freako
13 years ago

he latest news is no longer sub-prime, cause that's so out of style. Now it's Alt-A, baby. American Home is the latest lending to go under, and it's NOT subprime.The secondary market has gone totally illiquid, so some companies can't unload the mortgages they originate, and that means are holding the bag themselves. The result is that they will not originate less than prime mortgages. The impact of this is severe. Since it affects the lower end of the market more, it will actually raise median prices, but that is only an illusion, and apples for apples data such as Case-Shiller will tell the true story.

markx
markx
13 years ago

On Forestry and strike: coastal BC forestry sector is on strike as well. Apparently that's not a bad thing, as there's a glut of lumber right now. My guess is interior BC alone is enough to meet the demand for a long, long time, with US housing sector in the ditch.

freako
freako
13 years ago

whats with the obsession with the US market? last i checked we were in a different country. i know we do some trading with them, but geez, lets get real!Now that is funny. You will soon see what the relevance is.

markx
markx
13 years ago

The latest news is no longer sub-prime, cause that's so out of style. Now it's Alt-A, baby. American Home is the latest lending to go under, and it's NOT subprime. What ever happened to sub-prime "contained" theory?RE is local, but credit is national, and this bubble is truly global.