I’m So Worried About State Of The World Today
I am very concerned about the state of the world today. I mean, the more closely you look, the more things seem to be coming apart at the seams. Maybe those people who are saying “The End Is Nigh!” actually have it right!
Let’s start with our homes. We all know that house values have been destroyed, just destroyed in the past year or two. How can this happen? And now it seems we are in for even worse news. The Fed drops interest rates, but mortgage rates just keep going up. I hear that mortgage rate predictions are on the rise again.
The presence in the market of a large number of homes in foreclosure and pre-foreclosure makes it increasingly difficult to sell homes for their full appraised value. Buyers know there are bargains to be had, and many simply don’t make offers on homes at full price.
This bargain-hunting behavior, while natural, further destabilises the market and increases the security risk across all loans - if the market is not sustaining sales at appraised value, then all property offered as security is potentially worth far less than its book value.
This type of situation makes the risk managers in lending organisations very uncomfortable, and they will be advising higher interest rates for mortgages across the board until the real estate market settles down. Therefore, mortgage rates predictions are headed one way, and one way only - upward even further.
There we have our cars. Lord knows, we have had a love affair with SUVs for years - but could it be that rising oil prices will make us Romeo and Juliet?
SUV resale values have fallen since last year, due to the rising price of gasoline. Demand for SUVs is falling rapidly, as people move to reduce their gas consumption. As a result, the value of a three-year-old GMC Yukon has fallen 8.5% since July last year, to just 34.2% of the value of a new vehicle. Oil prices are not likely to fall in the near future, so SUV resale values are likely to remain low for the long term.
The worst affected values are the Ford Expedition resale values - the value of a three-year-old Ford Expedition has fallen 12.2% since July last year, to just 32.48% of the value of a new vehicle.
And if we go looking for a way to make a bit of extra cash to cover the rising costs of home and transport, what do we find? Sharks and wolves at every turn, scams and swindles - like all those work from home scams they warn us about over at the Second Income blog. Good blog, by the way - if you’re looking for some extra cash, check it out!
So we have all the bases under threat - our homes, our cars, and our incomes. Sigh. Time for a stiff drink and a pile of dark chocolate, I think!