Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
Did you actually read the article by the Center for Responsible Lending that this author cited and linked???? It said exactly what Major Barbara and I and others have been saying about low down payments, and it actually opposes even requiring a minumum 10% down payment!
You kinda got me on this one!
I had read a different article on the same subject, not that one, and somehow got confused when putting up the link.
Point taken. I will, however, quibble with that article for not considering whether the long-term impacts of home ownership among people who failed to save a down payment are good or bad, all things considered. It seems too focused on the short term effects. To give one example, we have the following:
Quote:
However, because the down payment requirement
would result in fewer people qualifying for mainstream mortgages, overall housing demand would fall,
putting downward pressure on housing prices. Given that minority families will comprise the majority
of new households over the next decade and that a down payment requirement would pose particularly
10
high barriers to homeownership for African-Americans and Latinos, the impact of a down payment
requirement on home prices could be substantial. Therefore, on a macro-level a down payment
requirement could actually expose homeowners to an increased risk of negative equity.
In other words, the authors are considering that lower prices would make current homeowners more likely to be underwater, which is a very valid point. However, they neglect that fact that lower current prices mean that the buyers of today will be less likely to be underwater in the future. So it seems we have a tradeoff between short-term and long-term considerations. Furthermore, lower prices mean that it would not be as difficult to save up a 20% down payment.
Actually, if we all decided to be fiscally smart and bought 100k starter homes then that would gentrify the ghetto areas and the wouldnt be ghetto anymore
That would take years. There are already people living in the ghettos. Do you kick them all out? Many of them around here have lived in the same house for generations. The city next to me has a ghetto because NYC dumped a large number of welfare cases here back in the 80's. The ghetto neighborhoods didn't exist there until NYC went on their dumping spree. And I certainly don't want to live with shootings, drugs, and gangs. Why do you think Detroit is practically empty? You can get a dirt cheap house there. Practically free.
We sold last year and lost around $40,000.00 due to the people who walked away. Our neighborhood was new in 2005-07. We were stupid and though everyone else must have jobs, savings, down payments, good credit. WRONG. We learned, quickly, that people with no jobs and even illegals were given mortgages. They loaded up their Uhauls in the night during '08-10 destroying our home's value.
I guess after being burned that badly, I wish people would have more skin in the game. However, it seems we are loosening up lending once again.
Writing a check to close when we paid our debt has taught us you cannot be sure of how your neighbors got in the same home right next to you.
Are you being sarcastic? I'm 28 and in grad school!!!
Well, that pretty much explains your continual ideological bullheadedness on just about all of the economic threads you start or participate in. Come back and lecture us on credit, owning a car, and especially on home ownership when you've had some real world experience living outside of academia.
A few??? Obviously, your experience with rentals has been very limited. It must be nice to live such a sheltered life.
Obviously it depends on area, but the poster I responded to was being at least as presumptuous as me - if I assume, unfairly, that one is in an area with fewer slumlords, so that previous poster assumed one lives in an area with many of them. Ok if reality is in the middle somewhere.
In the parts of town that are nothing but renters, the property values are decreasing. The properties aren't being maintained. This is why the town is greatly concerned. They don't want what was once a decent neighborhood to turn into the slums. Typically homeowners who reside in their homes do a significantly better job at maintaining it...even things like mowing the lawn after the neighborhood.
If values continue to decrease, the tax base will also decrease. Then cuts will have to be made to the entire town not just these particular neighborhoods.
Renters can do plenty to help themselves out and take pride in where they live. I know people who are supposed to mow their lawn and it's their lease. They'll mow it once every month or two.....you could have horses feed there! Not keeping junk outside or junk cars. Plenty of rental properties have tons of old crap outside. That doesn't mean there aren't any homes with resident owners doing the same thing.
This has happened in entire sections of some bigger cities in the Great Lakes areas. Detroit is the epic example but cities like Cleveland and Buffalo have suffered this, too: entire urban neighborhoods that were once filled with owner occupied homes are now filled with empty lots and abandoned houses.
The neighborhoods where there's a higher percentage of homeowners, even if they're low income owners (like those bad folks getting loans with 3% down!), the properties have held their values and some of these neighborhoods are making comebacks.
Well, that pretty much explains your continual ideological bullheadedness on just about all of the economic threads you start or participate in. Come back and lecture us on credit, owning a car, and especially on home ownership when you've had some real world experience living outside of academia.
Here you go with the condescending remarks again. Ultimately one does not have to personally experience something to speak about it, so this attack is misguided. Think about it: How could you ever make a decision to do something (or not) for the first time, if lack of direct experience implies lack of knowledge?
Personal experience is one way to learn about things, but is not the only way. Would you argue that I am not in a position to say that using heroin is a bad idea, simply because I have not done it myself?
I am NOT intending to compare anything economic to illegal drugs, merely I am arguing that your premise that one must personally have experienced something to be qualified to say anything about it whatsoever, is absurd.
You are using this as an argument against whatever I say due to severe confirmation bias, as your argument has not been thought through at all.
What if the Yellowstone caldera explodes tomorrow???
Then most people living in the western half of the US are in trouble, depending on the size of the eruption, but this is hardly worth avoiding since the risk of it is lower than the risk of severe weather in the eastern states (for example). It's not a good analogy to the housing decisions, except in cases where there would be a larger risk associated with 20% down than with less (I assume this would be applicable if this were to mean depleting one's emergency fund for example). In those cases, if there is truly no other option, then the volcano analogy is a good one.
Why? There are plenty of other options. Small condo, mobile home, rent cheaply, etc.
It is the unwillingness to consider alternatives that is the problem, not requiring 20% down.
Many, if not most, municipalities in and around large metros do not allow mobile homes. The fast growing metros in some parts of the South may be exceptions but in most of the rest of the country, it ain't happening. At best, if you can find an existing mobile home on private land, you may be allowed to replace the existing mobile with a new one. Maybe you can find an existing mobile home park within commuting distance but most older MHPs are barely better than living in a ghetto area.
Condos are not common in most communities in the US, and in may places where they do exist, they are newer construction and/or aimed at higher end occupants, and so are very pricey to buy or rent.
ss20ts explained that there were no rentals. "Rent cheaply" would mean moving into a slum apartment in a ghetto neighborhood in virtually all major metros in the US. Hell, even in my backwater little city where you can buy a livable single family house in a safe decent neighborhood for < $80k, "rent cheaply" puts you in ramshackle slums next door to a redneck bar on one side and a drug-dealer on the other with a dysfunctional family of five downstairs.
Condos are not common in most communities in the US, and in may places where they do exist, they are newer construction and/or aimed at higher end occupants, and so are very pricey to buy or rent.
Not in my area, but OK. I live in the Mid-Atlantic if it matters.
Please register to post and access all features of our very popular forum. It is free and quick. Over $68,000 in prizes has already been given out to active posters on our forum. Additional giveaways are planned.
Detailed information about all U.S. cities, counties, and zip codes on our site: City-data.com.
Please register to participate in our discussions with 2 million other members - it's free and quick! Some forums can only be seen by registered members. After you create your account, you'll be able to customize options and access all our 15,000 new posts/day with fewer ads.
