Comments on: Mortgage Defaults Rising In Higher Priced Neighborhoods http://donklephant.com/2009/04/15/mortgage-defaults-rising-in-higher-priced-neighborhoods/ Big Teeth. Huge Ass. Surprisingly Reasonable. Tue, 14 Feb 2012 14:03:13 +0000 hourly 1 http://wordpress.org/?v=3.2.1 By: kranky kritter http://donklephant.com/2009/04/15/mortgage-defaults-rising-in-higher-priced-neighborhoods/comment-page-1/#comment-447036 kranky kritter Thu, 16 Apr 2009 16:22:57 +0000 http://donklephant.com/?p=14475#comment-447036 There are some people somewhere who know almost exactly where and when it's going to go sour, and how sour. Bad loans of various types were NOT spread evenly across the nation, nor throughout time. The places that had the greatest artificial appreciation over the past decade will be hit the hardest. Places where price growth was more in line with income growth will fare better. One thing you'll likely see is a lot of defaults and big price drops in the mcmansion developments. Because so many of the bad loans went to people buying new 4 and 5 BR homes. The 4 and 5 BR 3 garage houses were comparatively rare beasts prior to the just popped bubble. To get out of the crash era, these homes will have to be priced based on what the pool of viable buyers can afford to pay. Numbers vary by region and cost of living, but let's use my area as a ballpark. We saw many mcmansion developments with prices in the 500 to 750k price range. That's beyond the ability of most folks to pay, and if we see lots of defaults, those prices will have to drop down to the 350-500k range. There are some people somewhere who know almost exactly where and when it’s going to go sour, and how sour. Bad loans of various types were NOT spread evenly across the nation, nor throughout time.

The places that had the greatest artificial appreciation over the past decade will be hit the hardest. Places where price growth was more in line with income growth will fare better.

One thing you’ll likely see is a lot of defaults and big price drops in the mcmansion developments. Because so many of the bad loans went to people buying new 4 and 5 BR homes. The 4 and 5 BR 3 garage houses were comparatively rare beasts prior to the just popped bubble.

To get out of the crash era, these homes will have to be priced based on what the pool of viable buyers can afford to pay. Numbers vary by region and cost of living, but let’s use my area as a ballpark. We saw many mcmansion developments with prices in the 500 to 750k price range. That’s beyond the ability of most folks to pay, and if we see lots of defaults, those prices will have to drop down to the 350-500k range.

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