The Subprime Housing Market Crash | The FHA Loan Disaster

The subprime mortgage housing market crash. What Reventure Consulting didn't tell you about the WSJ opinion piece.

[MattsMkia]

Prices are too high. With rates not subsidised in ’24 and mortgage still high, currently seeking alternatives to maximise savings without an RV move or taking a loan. I’m seriously contemplating the latter.

[oliviaHill-we]

In my opinion, a housing market crash is imminent due to the high number of individuals who purchased homes above the asking price despite the low interest rates. These buyers find themselves in precarious situations as housing prices decline, leaving them without any equity. If they become unable to afford their homes, foreclosure becomes a likely outcome. Even attempting to sell would not yield any profits. This scenario is expected to impact a significant number of people, particularly in light of the anticipated surge in layoffs and the rapid increase in the cost of living.

[MargaretWest-mu]

A key factor often overlooked is that over 25% of new homes are being acquired by investors, rather than individuals seeking primary residences. Even if Baby Boomers decide to offload their properties or more housing stock enters the market, it won’t alleviate the underlying issue. Wealthy investors will continue to absorb the available inventory, which will keep home prices elevated.

[DeanSteven-gckg]

"Building wealth is like climbing a mountain; investing is the steady ascent, retirement is the summit."

[ravenwolfgamingshow]

We need a market crash. Houses are too expensive, and we also need companies like Black Rock to not be able to own houses in rural areas. This needs to change to get normal people into the house again.

[rafaeldelgado]

The issue is that prolonged forbearance is considered market manipulation. It goes against a free market. If HUD cuts the forbearances and loan mods, then we would have more inventory and hence REAL PRICE ACTION (negative price pressure).

[veiledspice]

Kevin, keep in mind various increases that have occurred, such as: property taxes, insurance of all types, hoa dues, food costs, credit card interest rate increase, among other expenses, combine these unexpected increases to a borrower that is maxed out on his DTI at the time of ownership, and there could be a problem for a lot of borrowers, and with the layoffs increasing, “the water is beginning to simmer”

[MensIntelligenceAgency]

Fair point it is a small portion. However, this ignores that this weakness and subprime probably has seeped into the other area of mortgages as well and hard to see in data. Also, people are already starting to default and fall behind on other types of debts: automobiles, credit cards, etc which can directly affect the ability to pay normal mortgages and these ones. We are in a dangerous dangerous place

[argentpur]

This really does not matter one bit this time. Commercial Real Estate and then Auto Loans will be the supposed trigger this time. Though this is far bigger in score this time as well.

[itsclarissa]

Is it always better to do conventional over FHA if you were also approved to do 3% down payment for conventional not just fha?

[josephpetretee]

FHA home loans last two years were 7-8% on on 400k homes to people who were under qualified.

[jjquan]

I just have to point out that there are a ton of people out there who qualified for both conv and FHA loans but the FHA loan simply had the lower payment. Since income doesn’t affect the rate you get (only if you qualify or not I.e. “Pass /Fail”), credit is a big influence. If you have amazing income but low credit, you could still qualify for conv but at a higher rate than the FHA loan. So even with PMI, the FHA loan made more sense with the lower payment. My point is, not ALL FHA loans are for shitty borrowers

[jacksepiceyejack]

There is so much more to add to this conversation
, how about 30% of Airbnb market is made up of ARMS, homeowners moving to Florida paying way above asking price during COVID and then hit with higher insurance, taxes, special assessment fees, higher HOA fees. We are are already seeing auto delinquencies rise to GFC levels for the same reason.

[robertc]

Remember kevin calling for a real estate crash back in 2022? I remember. And now the crash is starting to show up he is fighting the trend. This dude is not a good trader.. doesn't understand trends or shifts in regimes.

[jamesyoukhanis]

You are the best in explaining financial news. Thank you!

[nicolascarrera]

Does this take for account all the forbearance availability last year?

[CaliTrucker]

What I'm concerned about is the amount of people that have had to use a substantial amount of their HELOC to pay for groceries, then their home value goes down due to the amount of inventory hittingthe market. If they can't sell their home, then that will lead to even more defaults and even more foreclosures hitting the market.

[adt]

Kevin, if the stock market crashes, it will impact housing, primarily in the higher end communities that have exploded to the upside. It does not mean there will be fire sales, but it will mean prices will come down in those communities that have experienced explosive price appreciation over the last five years, due to extremely low rates and massive price appreciation in stocks.

[cheemayassir]

What is your opinion on opendoor technologies?

[Cyberbronco]

Already feeling the pinch in SW Florida