Re: buying another before foreclosing?


Posted by Julio Martinez-Clark on February 27, 2008 at 10:39:01:


In Reply to: buying another before foreclosing?
Posted by Steve on February 27, 2008 at 09:10:41:

Steve,

I recommend you think twice (rationally, not emotionally) before pursuing your plans to purchase another home. Data through December 2007 for the Case-Shiller Home Price Index shows broad based declines in the prices of existing single family homes across the United States. This marks 2007 as a full year of declining home prices.

As the charts here (//calculatedrisk.blogspot.com/2008/02/s-case-shiller-prices-fall-sharply-in.html) shows, annual returns of the national home price indices declined -8.9% versus the 4th quarter of 2006. This is the largest decline in the series' 20-year history. Comparatively, during the 1990-91 housing recession, the annual rate bottomed at -2.8%.

Shiller:

“We reached a somber year-end for the housing market in 2007,” says Robert J. Shiller, Professor at Yale University and Chief Economist at MacroMarkets LLC. “Home prices across the nation and in most metro areas are significantly lower than where they were a year ago. Wherever you look things look bleak, with 17 of the 20 metro areas reporting annual declines and the remaining three reporting flat or moderate growth rates. Looking closely at these negative returns, you will see that 14 of the metro areas are also reporting record lows and eight are in double digit decline. The monthly data paint a similar picture, with all metro areas now reporting at least four consecutive negative monthly returns.”

So, you if you purchase a new home now, all economic data that I've seen so far indicates that it will also decrease in value significantly (as your currently home has); thus leaving you in the same position you are in (property value less than what you owe on it), and your will have a double severely damaged credit history with possibly two foreclosures on it. Please read my article titled "Investing In Residential Real Estate: What the media or the gurus won't tell you" at my blog ( )

If you purchase another home, you will end up with another asset that creditors (your previous lender) can potentially go after.

I also recommend you read my article titled "Homeowners’ Dilemma: To be or not to be in Foreclosure" at my blog ( )

I hope this helps,

Julio Martinez-Clark


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