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All of the signs of the top of the last bubble are re-emerging


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2018 May 1, 8:25pm   2,576 views  7 comments

by Patrick   ➕follow (55)   💰tip   ignore  

http://investmentresearchdynamics.com/homebuilder-stocks-overvalued-over-leveraged-and-going-lower/

All of the signs of the top of the last bubble are re-emerging. Home equity “cash out” loans are soaring again at what is likely peak home prices. According to Freddie Mac, cash-out “refis” are at their highest level since 2008.

We saw how this movie ended the last time around. If you forgot, rent “The Big Short.” A private investment management company in California, Carrington Holding Company, has a mortgage lending facility that will now underwrite and fund mortgages to borrowers with credit scores as low as 500. Carrington will do loans up $1.5 million on homes/condos and home equity cash outs up to $500k. Recent credit events like foreclosure, bankruptcy or a history of late payments are acceptable. This business plan will not end well.

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1   FNWGMOBDVZXDNW   2018 May 2, 7:23am  

I would imagine that there are a number of people taking out helocs in anticipation of rates going up. But if the trend continues, that would be troubling. Property values have increased unsustainably in MD suburbs of DC. In NOVA, prices haven't been appreciating much more than inflation. The whole DC area seems to be on a 2.5% appreciation trajectory over the last 8 yrs based on Case Schiller.
It would be interesting to see plots like houses available, months on the market, number of sales, rent prices, yearly appreciation, etc. plotted from 2000-2009, and then superimpose 2011- present on the same plot.
2   RWSGFY   2018 May 2, 8:17am  

WarrenTheApe says
Hmmmm...this is a great investment opportunity! I should call Carrington and get one of these ridiculous loans, by a house I can't even hope to pay even interest-only payments on.

..then, walk away.

So what if I have a foreclosure on my credit record? In another six years or go another Carrington will come along and not car


I know a guy from Georgia (country, not US state) who did exactly that last time around. He's now living like a king in his home country because $1M is yuuuuuuge money there.
3   lostand confused   2018 May 2, 8:23am  

Chicago-who wants to live there. DEmocrats want to tax everything.
4   Strategist   2018 May 2, 10:45am  

Patrick says
All of the signs of the top of the last bubble are re-emerging. Home equity “cash out” loans are soaring again at what is likely peak home prices. According to Freddie Mac, cash-out “refis” are at their highest level since 2008.

Terrible analysis. These are cherry picked correlations. There is no cause and affect with the variables mentioned.

Feux Follets says

If rents are crashing, why did the 2 bedroom rents increase?
5   FNWGMOBDVZXDNW   2018 May 2, 10:49am  

Strategist says
If rents are crashing, why did the 2 bedroom rents increase?

1 bedroom rents increased as well - just not as fast as before.
6   rootvg   2018 May 2, 9:07pm  

I think we all know the bubble is about to burst. My theory is, as soon as Trump gets his second term we're going to have a bad recession. We're overdue.
7   Strategist   2018 May 2, 9:12pm  

rootvg says
I think we all know the bubble is about to burst.


Yup. It may happen very soon. Like 2028.

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