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Crewleader

(17,005 posts)
Wed Jun 18, 2014, 12:15 AM Jun 2014

Dr. Housing Bubble 06/17/14

Who needs a mortgage? Cash sales continue to dominate market while mortgage applications run near levels last seen in 2000. Housing starts remain weak and expectations for price increases run wild.

Apparently very few people need mortgages to purchase homes in the market today. One out of every three homes sold (at least those on the MLS) are going to those “all cash” buyers. Investors continue to dominate the percentage of all sales but the total number of sales is actually pathetically weak given the rise in prices. You would expect that somewhere in the rush to purchase regular buyers were the engine of this price increase. They are not. Even builders are not tempted to go out and build. Why build? For the younger broke generations living at home because of the weak economy? In California we have 2.3 million adults living at home. These people live at home because even a rental is out of reach let alone a $700,000 box with walls that are so thin, you can poke your finger through the crappy drywall and waive high to your other massively indebted neighbor. Looking at mortgage application data, it seems that people are simply not applying for loans. This is why in this housing “recovery” I’m not hearing the constant glee from mortgage brokers and real estate agents. Sales volume is low and mortgages are for the plebs in the streets trying to squeeze into these overpriced homes. Who needs a mortgage? Apparently traditional buyers but they are hard to find in this market. Even in high priced California, sales fell in May to 37,734 from 37,988 in April. This is a time when sales heat up. To put this in perspective, we had 67,958 homes sold back in 2004, a full decade ago.

Cashy cash cash

While investors slowly begin to pullback their suitcases of juicy Fed induced money, cash sales still make up a large portion of all sales. Going back to 2009, nearly 1 out of 3 purchases has gone to non-traditional buyers circumventing the mortgage process. It is actually higher because in the panic days, many big investors were buying in bulk off the MLS books via auctions and direct deals with banks. These were the best deals and of course, the public (the folks bailing out the banks) got no shot at these fantastic deals. Did you have access to borrowing rates near zero percent from the Fed? Of course not! You should be happy with the current 4 percent mortgage rates so long as you pay $700,000 for some Cracker Jack box with one functional toilet.

Here is the latest cash sales data:



http://www.doctorhousingbubble.com/cash-buying-real-estate-who-needs-a-mortgage-application/
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Dr. Housing Bubble 06/17/14 (Original Post) Crewleader Jun 2014 OP
A House of Cards... DreamGypsy Jun 2014 #1

DreamGypsy

(2,252 posts)
1. A House of Cards...
Wed Jun 18, 2014, 01:15 AM
Jun 2014

...and a pack of Lies -

Easy credit, no money down. That's the way we built this town.

From the banker's ledger we watched it rise.

A house of cards and a pack of lies...

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