I was reading an article today about the house loan bust going on right now and saw this interesting comment:

"All but five states — Kentucky, New Mexico, Oklahoma, South Dakota and Utah — reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said."


Why do you think that is? Is our economy that independent of the rest of the country, are houses just that much cheaper here that most folks aren't applying for jumbo loans, or is it a little bit of both?

I was reading an article today about the house loan bust going on right now and saw this interesting comment:

"All but five states — Kentucky, New Mexico, Oklahoma, South Dakota and Utah — reported a year-over-year increase in foreclosure filings, which include notices of default, auction sale notices or bank repossessions, the company said."


Why do you think that is? Is our economy that independent of the rest of the country, are houses just that much cheaper here that most folks aren't applying for jumbo loans, or is it a little bit of both?

I havent researched these states, but Id be willing to bet one major factor is the average family median income is more in line with the average price for housing in the states you mentioned than in states such as California, Florida, New York, and so on. This wave of the credit crunch has hit over-priced housing markets first. Locations where the land is hard to come by, and the area is viewed as a more "desierable" place to live. For those reasons, people invested in these places, often buying multiple properties on ARMs or Interest-only loans. This created 2 problems, as time went on, rates rose, it over-extended the people who purchased the property, AND drove the cost up for everyone else. The affordability of Oklahoma, and the amount of land available for expansion has made the state somewhat immune to the problem.... so far.

Bingo... and people also used their homes as ATM machines.. borrowed against perceived equity to finance cars, vacations and other luxuries.. when the payment adjusts ie ARMs, but incomes don't increase to cover the payments ( and refinancing is now out of the question because the appraised value has dropped) you have the perfect storm for a housing bust. Our market never experienced the double digit appreciation that some did ( of course, all on paper) so we aren't feeling the effects as deeply as some markets.... so far.

We're looking to buy property in Oklahoma in anticipation of returning in the next few years. The realtor we just spoke to says that forclosures are just now starting in Okahoma and she expects to see the housing bust start to make an inpact. I didn't get the impression that she thought it would hit as hard in Oklahoma as in other places, but she did suggest we wait a little bit because bargains might be coming.

To give you an idea of how crazy the housing market is in some parts of the country, we bought a $150,000 house in 1998 (it would have been worth about $70,000 in OKC - MAYBE). Sold it, "as is" with ruined carpet and destroyed inside due to a bad renter for $350,000, two years ago. We didn't even advertize - he came to us. Cost us about $300.00 because no one was using agents - just a closing company.

In a separate neighborhood, our neighbors bought a house in 2002 for just under $300,000. Two years later, comparable houses in the neighborhood were selling for $600,000 and people would be bidding against each other before it officially went on the market. Now, they could probably get about $425,000 for it and it would take months. Imagine what those people who bought when housing was high are up against.

A large new subdivision with 100s of McMansions (average 4,000 sq. feet, 3 - 4 stories counting the basement) was built behind our house with houses going for $600,000 to over a million. They sold primarily to low income, minority and recent immigrants (subprime). Investors were also buying them because between the time they contracted and the time the house was built, you could theoretically make about $75,000 and $125,000. No joke. We thought about doing that and are so glad we didn't because now the piper has come calling. That neighborhood has houses for sale all up and down the blocks, multiple families are living in them trying to make the mortgage (and bringing down the value of the neighborhood). They aren't selling and all our homes in this area can't get much since the big McMansions two blocks over, which are bigger and newer, are selling for whatever the buyer can scrape together while the owners, including banks are just trying to unload them. It is pretty grim.

Although the 'slow' appreciation here in Oklahoma may not have gotten anyone the mouth watering returns seen in other markets, I think it probably benefited us. Reasonable home prices mean that younger people can become responsible homeowners and belong to and invest in a community. Because they don't need to spend their entire income covering a mortgage, they can make home upgrades or feel more secure in starting a family. It also seems that having availability of housing in urban communities, helps to reinvigorate these communities with new blood. In high appreciation markets, the availability of housing tends to be exclusively in suburban new home construction. Seems like this would cause an age-based segregation, urban sprawl, and less diversity overall.

OKCCrime
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Oklahoma City Crime - Crime Maps, Reports and Statistics (http://okccrime.com)

In high appreciation markets, the availability of housing tends to be exclusively in suburban new home construction. Seems like this would cause an age-based segregation, urban sprawl, and less diversity overall.

Actually, when prices go up it often gives developers motivation to invest in neglected urban areas, because this is where the deals emerge. This is why so much of America has experienced a rejuvenation of their urban cities the last 15-20 years and why so much of young America has returned to the cities. Oklahoma City may have missed out on this trend becuase of it's sprawl and cheap housing, atually.

Having moved from California a year before things went crazy, I watched in dismay as my previous home appreciated and appreciated beyond anyone's expectations. I was so bummed! ( even though we sold for a nice profit at the time, I couldn't help but think of how much more we could have gotten had we waited a few years). It clouded our move here because I felt we had made a huge mistake financially.

But, I knew something wasn't right with the numbers and I knew the increases weren't sustainable.

Now, my previous house has been sitting on the market for a year ( the buyers were transferred out ) and the house has continued to drop.

Many of my close friends are in the mortgage/real estate fields and they are all feeling the pinch. Some have changed professions ( as I have ) and many are struggling.

Many of my friends and relatives living in CA enjoyed the ride up and took advantage of equity lines and refinancing... big mistake. Now with situations changing ( military transfers, job loss etc) they are faced with trying to sell homes that aren't worth what the appraiser said they were a few years and with Realtor fees and closing costs, they can't get out from under the loans.

It's sad to see but not entirely unexpected.

I think things will continue to slide here for a bit... I wouldn't purchase anything right away unless it's your dream home and you negotiate a decent deal.. (just my opinion, not to taken as anything else)!