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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August 5th, 2007 at 1:32 pm
I’d sooner buy a million dollar house in Vancouver than a $750k house in Port Alberni
Hey I can top that. How about…. Condo conversions in Port Alice!
Fantasy Island.
August 3rd, 2007 at 12:33 pm
“what i have discovered,victoria is land covered by oceans.” -satv
You could have discovered this by looking at a map.
August 3rd, 2007 at 9:11 am
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?
August 3rd, 2007 at 8:44 am
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.
August 3rd, 2007 at 8:18 am
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.
August 3rd, 2007 at 7:41 am
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!
August 2nd, 2007 at 9:14 pm
van-realestate-crash,
What is the “other blog”?
August 2nd, 2007 at 8:43 pm
freako !no
I 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 ever lift the sheet will be surprised.on otherside all artist-architects.engineers,and all the labour force are making sure to avoid histroy of baloons.we have heard lot about river band developers,but there are also some big names which make this construction industry proud like concord paciific has just become number one developer of canada,bosa is also an award winning developer.
August 2nd, 2007 at 8:10 pm
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.
August 2nd, 2007 at 7:23 pm
I had visit parliament,and london museum.those wers trace of buckingham palace and madam tausad.
What? You didn’t go to Miniature World?
August 2nd, 2007 at 6:47 pm
tax
that 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.
August 2nd, 2007 at 6:02 pm
“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.
August 2nd, 2007 at 5:28 pm
hey ron jermy,tax investigator=robs numbers
here 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 find alternative way to catch the ferry.
I think because usa market is down so victoria have advantage as one of canadian city.
I have notice some projects are under construction.
I would say when victoria is 17%,
30 over seattle, than vancouver deserve space rocketing.
in victoria only ocean islands are limit.
in vancouver so far sky is a limit.
August 2nd, 2007 at 4:34 pm
OK, fair enough, that is for all of Seattle-Tacoma-Bellevue.
Well greater Victoria covers Langford, Saanich, heck even Sydney.
August 2nd, 2007 at 4:31 pm
Ron Jeremy said…
I am looking for Satv.
Has anybody heard from him lately
I am looking for Satv as well. I want to talk to him, and a few of his “investor†friends.
August 2nd, 2007 at 4:24 pm
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.
August 2nd, 2007 at 4:22 pm
I am looking for Satv.
Has anybody heard from him lately
August 2nd, 2007 at 4:01 pm
At the end of Q1, NAR pegged median Seattle SFH at $380,200 (too lazy to tinyurl, so check for yourself at http://www.realtor.org.
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.
August 2nd, 2007 at 3:55 pm
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.
August 2nd, 2007 at 3:42 pm
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.
August 2nd, 2007 at 3:29 pm
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.
August 2nd, 2007 at 3:26 pm
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.
August 2nd, 2007 at 3:22 pm
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.
August 2nd, 2007 at 3:20 pm
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.
August 2nd, 2007 at 3:15 pm
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.
August 2nd, 2007 at 3:02 pm
Yeah Dosh, you’re right, Canada only exported 82.3% of our goods to the US last year (courtesy http://www.cia.gov world fact book).
It’s financial geniuses like you that keep this real estate freak show rolling and I guarantee that it will be people like you that will be crying on the nightly news about how you never saw the end of the boom coming.
Please ignore everything reported in the US and on these blogs and keep buying!
August 2nd, 2007 at 2:07 pm
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!
August 2nd, 2007 at 1:25 pm
“Makes me mad that I pay for garbage removal in my taxes and then have to line up and pay again to get rid of it.â€
Makes me mad I pay my taxes, and real estate speculators, and flippers, make renovations on their own residence, and claim it as a deduction against rental/investment income.
Skeptic,
if you knew somebody who has made such false claims, would you report them now, or wait till the market turns bad, for added effect?
August 2nd, 2007 at 1:24 pm
“It continually amazes me how many legs this bubble has”.
Aside from the bizarre metaphor, if you ascribe to the theory that the market is not supported by fundamentals, why should the disconnect surprise you?
August 2nd, 2007 at 1:20 pm
It continually amazes me how many legs this bubble has. The forestry sector has the worst downturn in generations and RE prices go up, interest rates rise and are expected to rise again and RE prices go up. Foreclosures increasing here and reports about the US crash getting some local play and RE prices go up. Huge amounts of construction with below-average population growth and… you get the picture.
It seems like it’s going to take a real shock to turn things around, something along the lines of a 1% rate increase or a huge slowdown in the economy.
August 2nd, 2007 at 1:12 pm
let the onslaught begin!! not only are those ARMs resetting in october, but that’s the beginning of the slow period for the housing market…
August 2nd, 2007 at 12:48 pm
think Victoria is more overpriced than Vancouver, if that is possible.
Absolutely. Victoria and the rest of the island are going to crash horribly. I’d sooner buy a million dollar house in Vancouver than a $750k house in Port Alberni (advertised in today’s Sun. LOL!)
August 2nd, 2007 at 12:47 pm
In case anyone doesn’t have it, here’s a link to the reset schedule:
http://tinyurl.com/2qucvy
August 2nd, 2007 at 11:03 am
$1.50 a month on a $3K mortgage that is. Article from MSNBC, http://www.msnbc.msn.com/id/7148582/
August 2nd, 2007 at 11:02 am
OT
Mortgages rates dip, good news for homebuyers
Freddie Mac: Average for 30-year, fixed-rate drops to 6.68 percent
Check out this headline for a good laugh. The actual drop? .01% from 6.69. Definitely worthy of a “good news” headline. That lowers payments by 0.05%, a whopping $1.50 a month. Good news indeed.
August 2nd, 2007 at 10:54 am
As for the resets, the wave of foreclosures will crush the market. The mortgage bag holders have NOT been aggressive about liquidating their holdings, perhaps they are hoping for a turnaround, or are trying to keep losses off the books. But sooner or later it will catch up with them, and it will be price slashing time into zero demand.
The NAR will publish Q2 numbers on August 15th. Because the shift to a higher sales mix and the fact that incentives and buyer cash backs are still widely used, it wouldn’t surprise me if most medians are flat or only down slightly. But once the sales mix returns to normal, we will see double digit declines. My guess is that the Q3 numbers will have some of this goodness, but more likely the Q4 or Q1 2008. I am surprised that the Case-Shiller futures aren’t down more.
August 2nd, 2007 at 10:49 am
OT Victoria numbers are in.
As per Victoria bubble blog, sales are at 15 year highs, prices up 17%+, new median SFH is $515,000. I think Victoria is more overpriced than Vancouver, if that is possible. For the love of god, Victoria prices are almost 30% higher than Seattle, who’s had a good run its own.