Phoenix, AZ : Imagine eating a Thanksgiving dinner of 6,500 calories and then two years later some how the amount of calories you ate at that meal two years ago changed to 9,500 calories. Your body gained that extra weight from your eating of two years ago. Wow your pants don't fit !

 That is what is exactly happening financially to thousands of nationwide homeowners as the interest rates change on their adjustable mortgages.

Finances are breaking at there seams and the peak in changes of interest rates is yet to come. If you bought your home in the last two years and want to sell, your BIG ASS-et is looking ugly. 

Jumbo loans are those mortgages over $417,000. Last Friday Wells Fargo Mortgages bumped their interest rates on those loans from 6.8% to above 8%. J. Hill of Northern California was going to buy out his ex-wife one week ago and the monthly mortgage payments would have been $2,900 per month, now the same loan would cost him $3,700 per month this week.

Many people already approved for loans are going to find out their loan is no longer available or affordable. The standards to obtain a mortgage have been raised substantially. Eliminating many home buyers from the market.  Sub-prime loans are not being brought by private investors and many loan programs have been dropped over night.

Add to the changes in interest rates and the availability of mortgages, is the fact that housing is declining in value and will continue to for at least the next 24 months. Your BIG ASS-et is now worth less than two years ago and next year will be worth less. Those are the facts.

In Las Vegas, people who have made offer's on property, find that the property is worth even less by the time it closes. It may become a spiral down in the Las Vegas market. Stay tune.

 

Low interest rates and easy mortgages drove up housing prices. Now the pendulum will go the other way until prices come down to offset the higher rates.

 The Arizona Republic runs a weekly fact article entitled "How much has your home appreciated?". Their printing of August 5, 2007 showed declines of 3.4% to 35.9% and no appreciations! Maybe they should rename it " How much has your home depreciated?"

 If you bought a house in the last two years, you are upside down and can only sell it for less then you paid.

A family in Surprise bought a home 18 months ago and paid $435,000 dollars and due to a job transfer need to sell it. A realtor told them that in order to sell it, they need to price it at $350,000. They are trapped by their BIG ASS-et.

Another Surprise family has two beautiful small children in their home and due to an adjustable rate mortgage, have had to take in a roommate to help make the mortgage payment. The parents are nervous having a stranger in their house with their two kids, understandably.

Security Title Agency has closed it's Wickenburg office. Wickenburg Ranch spokes person stated that they are waiting at least one year before starting to sell any properties and possible longer. Wickenburg Ranch was just sold to new owners this year at this years land prices. Calamity Ranch spokes person stated they are  several years away from breaking ground and are looking for a Resort Developer for their project. These land owners have BIG ASS-ets.

A Wickenburg Builder had bought a fixer upper in Sun City and after the remodeling and realtor fees ended up selling it at a loss, even after over eight months on the market. They have a spec home on hold just south of Wickenburg.

Wickenburg as of July 28 had 175 houses for sale on the market versus around 80 a year ago.

People who bought their homes in the last two years and want to sell now, can only sell at a loss. However if they can hold their property for four to five years they will make money. That's the story.

Robert Hipman : Economist.