The So Called "Housing Crisis" Is Bull! (loans, free market, real estate)

[KevK]

You hear the screaming headlines everyday! Housing is falling! Foreclosures through the roof!!! Oh my gawd!!!! Gawd help us!!!! Ohhhhhhh! Well relax and don't worry. Here is myth and here is fact:

1. Myth- Home Values are Falling. Fact: Yes they are. More in some markets than others. But here is why- homes were way overvalued in the first place. People buy housing to live in yet it was being sold as an investment. Housing prices increased whopping amounts in many parts of the country- some topping 50% a year! Well common sense should tell you that the people buying the houses- us wage earners- were not getting raises near the rate of housing inflation. While real wages were going up at 3% a year, housing cost were going up 12% or more a year. It does not take a scientist to figure out that something had to give. But here is the GOOD news- sooner or later value will equal demand and the the values will begin to rise again. So just hold on and sit tight in the meantime. If you have to move, consider renting your house until the market improves.
2. Myth- Foreclosures are becoming a big problem. Fact: Foreclosures have doubled. They new account for about 2% of the mortgages in the country. That means 98% of the mortgages in the nation are being paid on time. Hardly a "crisis".
3. Myth- This could get alot worse. Fact: The government and the big banks will not let it get any worse. There is an old saying that says "if a man owes the bank $1000 and he cannot pay, that man has a big problem but if a man owes the bank $10,000,000 and he cannot pay, the bank has a big problem". Such is the case with the housing situation. Neither the Fed nor the big banks are going to allow this to get any worse. It will cost them way too much to do so. Foreclosure in a housing market where prices are falling is the LAST thing banks want. Especially when millions of people took out smoke and mirror loans and have no equity in the house. That means the banks will eat all the losses in a foreclosure. And that means the big banks are going to do everything they can to keep people in their homes. And if that means work arounds, renegotiations or whatever, you can bet they will do it.

[litlux]

So happy your glass is half full when so many others are half empty.

[NJ Chutzpah]

Housing prices have skyrocketed in areas like SoCal, and NYC metro because the illegals have taken up way too much prime real estate, and that creates a ridiculously high demand on the areas that are still white.

And since it is the white people who are demanding, sellers figure they can pay higher price.

But I agree, it should get a lot better. And that is really good for me.

[pghquest]

Originally Posted by NJ Chutzpah

Housing prices have skyrocketed in areas like SoCal, and NYC metro because the illegals have taken up way too much prime real estate, and that creates a ridiculously high demand on the areas that are still white.

And since it is the white people who are demanding, sellers figure they can pay higher price.

But I agree, it should get a lot better. And that is really good for me.

If only that was true...

The reason housing prices have skyrocketed is because people dont buy a house based upon total cost.. They buy a house based upon monthly payments.

When the federal government lowered the interest rates, it caused people to be able to afford to purchase more. When there was a larger number of buyers then sellers, housing prices had no where to go but up.

When the "average" qualified buyer had a house they could afford, in order to keep the economy moving, the government lowered the interest rates again, causing those people who were unable to afford properties, or unable to budget, former renters, to go out and begin shopping for a house. When these individuals did not qualify for standard mortgages, they were sold on the idea that, if they simply paid X amount for so many years, they could refinance their adjustable mortgages and get into a fixed rate.

Well those promises never materalized, usually because the payors didnt make every single payment on time, or they went out and ruined their credit even further and no one wanted to refi at a lower interest rate..

[coldwine]

Well, although I don't exactly agree with the analysis (I'm really not real estate savvy, but I think I understand what happened) it was kind of obvious what was going to happen.

I mean, even K-marts requires a down payment on merchandise in lay-a-way. How out of touch with reality would an investor have to be to understand that there's significant amounts of literature and financial mistakes written/made concerning lending to people with terrible credit?

[8 SNAKE]

Originally Posted by KevK

3. Myth- This could get alot worse. Fact: The government and the big banks will not let it get any worse. There is an old saying that says "if a man owes the bank $1000 and he cannot pay, that man has a big problem but if a man owes the bank $10,000,000 and he cannot pay, the bank has a big problem". Such is the case with the housing situation. Neither the Fed nor the big banks are going to allow this to get any worse. It will cost them way too much to do so. Foreclosure in a housing market where prices are falling is the LAST thing banks want. Especially when millions of people took out smoke and mirror loans and have no equity in the house. That means the banks will eat all the losses in a foreclosure. And that means the big banks are going to do everything they can to keep people in their homes. And if that means work arounds, renegotiations or whatever, you can bet they will do it.

In essence, you're saying that banks and the government are going to continue to prop up this "house of cards" that the real estate market is built on? I disagree and think that the market needs the correction that is starting to take place now, and will really pick up steam in 2008. If not, home prices are going to have to hold steady for a long, long time before wages can catch up.

Bad things happen when the government tries to artificially manipulate a free market system.

[8 SNAKE]

Originally Posted by NJ Chutzpah

Housing prices have skyrocketed in areas like SoCal, and NYC metro because the illegals have taken up way too much prime real estate, and that creates a ridiculously high demand on the areas that are still white.

And since it is the white people who are demanding, sellers figure they can pay higher price.

But I agree, it should get a lot better. And that is really good for me.

You're actually claiming that illegal immigrants are buying up prime real estate in places like LA and NYC?? Come on. Illegals aren't earning the incomes necessary to buy up prime real estate anywhere near these areas.

[baystater]

[quote]

Originally Posted by KevK

You hear the screaming headlines everyday! Housing is falling! Foreclosures through the roof!!! Oh my gawd!!!! Gawd help us!!!! Ohhhhhhh! Well relax and don't worry. Here is myth and here is fact:

1. Myth- Home Values are Falling. Fact: Yes they are. More in some markets than others. But here is why- homes were way overvalued in the first place. People buy housing to live in yet it was being sold as an investment. Housing prices increased whopping amounts in many parts of the country- some topping 50% a year! Well common sense should tell you that the people buying the houses- us wage earners- were not getting raises near the rate of housing inflation. While real wages were going up at 3% a year, housing cost were going up 12% or more a year. It does not take a scientist to figure out that something had to give. But here is the GOOD news- sooner or later value will equal demand and the the values will begin to rise again. So just hold on and sit tight in the meantime. If you have to move, consider renting your house until the market improves.

While I agree with that houses 1. housing price rose to astronomical height 2. there was a lot of speculation in housing 3. That eventually things will balance out in the end. I have my suspicion that it going to be painful for alot of people who bought in Late 2004 to late 2006. Their pain will be felt in our economy probably led to a consumer lead recession. I Also suspect that it going to take a while to clear the 10 inventory of houses I say 2 years or more. And the only way that going to happen if the sellers of homes lower there prices significantly. I'd be cocky enough to say at this point because of the overhang of homes in a lot of area that they should drop their prices to that of homes prices of 2000. Perhaps even slightly earlier of that. Of course all real estate it local so the drop in price will vary.

2. Myth- Foreclosures are becoming a big problem. Fact: Foreclosures have doubled. They new account for about 2% of the mortgages in the country. That means 98% of the mortgages in the nation are being paid on time. Hardly a "crisis".

The problems is these for closures just keep adding to the over hang houses on the market. So selling a house will be tough. Also this whole "bubble deflating" thing has freaked the bank out enough to overkill tighten lending standards. Or perhaps they see something we don't that's making them very worried? In any respect it not helping hopeful buyer of homes and it is not helping the housing market.

3. Myth- This could get alot worse. Fact: The government and the big banks will not let it get any worse. There is an old saying that says "if a man owes the bank $1000 and he cannot pay, that man has a big problem but if a man owes the bank $10,000,000 and he cannot pay, the bank has a big problem". Such is the case with the housing situation. Neither the Fed nor the big banks are going to allow this to get any worse. It will cost them way too much to do so. Foreclosure in a housing market where prices are falling is the LAST thing banks want. Especially when millions of people took out smoke and mirror loans and have no equity in the house. That means the banks will eat all the losses in a foreclosure. And that means the big banks are going to do everything they can to keep people in their homes. And if that means work around, renegotiations or whatever, you can bet they will do it.

Perhaps. But the problem is the FEDs interference in the free market in this matter is slowly making the dollar worthless outside our boarders so anything that we import in is just going to get more expensive. So it six of one, half dozen of the other. You save the housing market but you make daily costs of living that much higher. Something tells me alot of people out there will see the cost of living rise and see the value of there house fall substantially and I think these people will say Fook it and just walk away from the home and mortgage.

All in all not a rose picture for most. Of course I didn't spend get myself in absorbent debt and have save money through out the years. So I thinking in about 2 year in my area it going to be like the NAR says "A great time to buy!" As I pick the rotten flesh from the carcasses of the sellers
He He He! I love being a vulture!

[NJ Chutzpah]

Originally Posted by 8 SNAKE

You're actually claiming that illegal immigrants are buying up prime real estate in places like LA and NYC?? Come on. Illegals aren't earning the incomes necessary to buy up prime real estate anywhere near these areas.

They have taken over Hudson county in NJ just across the hudson river from Manhattan. I would call that prime real estate.

In SoCal they have taken over areas that were once considered decent. LA is a majority hispanic right?

Anyway they are taking up a lot of space ( I mean a lot ) in the major metros. That has to have a negative effect no matter what.

[pghquest]

[quote=baystater;2140261]

He He He! I love being a vulture!

Absolutely, these are the times that seperate those successful, from those failures.

Excuse me while I run to shop for another house today, where I'll get it at 1/2 off their appraised value, because they need to be unloaded quickly.