Remember the NINJA mortgage? No income, no job, no assets.
Exotic U.S. mortgages are disappearing in the Spartan post-meltdown era, supplanted by a decidedly old-school mode of financing – cash.
In what experts say is a sign the battered U.S. housing market is cautiously finding a bottom, more Americans than ever are choosing to plunk down cold, hard cash to buy homes.
Cash was the currency of choice in 27 per cent of all homes purchased in the United States in March, according a survey by the U.S. National Association of Realtors (NAR).
The Web of Debt: The S...
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That’s up from 18 per cent a year earlier – and well above the historic norm of less than 10 per cent. Even those who do get mortgages are making much larger down payments than in the past.
“We’ve had this huge pendulum swing – from liar loans, no-doc loans and no-income loans – to no loans at all,” NAR spokesman Walter Molony said. “We’ve gone to the opposite extreme.”
Blame it on a combination of extremely tight credit conditions, a glut of foreclosed properties, sellers eager to get their money out without strings attached and a surge of buying by investors, who see the best real estate values in years and don’t want to share the profits with lenders.
The Mystery of Banking
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Even with interest rates at historic lows, banks are no longer offering the generous terms that were once commonplace.
Nowhere is this more the case than in the areas of the country that saw the most speculative excess in the boom years – California, Florida, Nevada and Arizona. In Miami, for example, well more than 50 per cent all transactions are now in cash.
“Nine out of 10 deals we do are all cash,” said Miami real estate agent Peter Zalewski of Condo Vultures Realty.
“It’s virtually the only way to get a deal done in south Florida, especially if the property is a condo.”
The preference for cash is a function of both cautious lenders and nervous sellers, suggested Mr. Zalewski, who specializes in brokering bulk condo sales.
After being so badly burned during the boom, major national lenders have virtually pulled out of the Miami housing market, he said.
April 1, 2010
