Another report says housing prices will not return to 2007 levels until 2020 (Phoenix: sales, apartment complex)

[actinic]

Has Arizona learned from its mistakes? Nope, you can still purchase a house and then walk away without spending another dime regardless of how much it has tanked. A speculator's dream. Compare that to other states where you're on the hook for any deficiency. Ditto for Canada. Any sign of a housing bottom or recovery the speculators will be back, fueling unsustainable price increases before the next crash.

Let's not put all the blame on Wall Street either. We all know of people who shouldn't of got loans ... others who used their house as an ATM. It's time to look in the mirror.

[Finger Laker]

All that 40% down would have done was have more people with sunk cash when everything collapsed ....... well that and create a vast sea of apartments and sending rent prices sky rocketing

It's a fun discussion until you step back and realize in many places homes lost a ton of value

In my neighborhood you could have bought for $170,000 in 2005 ...... that would be a $68,000 down payment ...... you'd still be well upside down today with what remains of that $102,000 loan and unable to sell in a conventional manner .... but at least the banks got more cash

[Home Addict]

Originally Posted by actinic

Has Arizona learned from its mistakes? Nope, you can still purchase a house and then walk away without spending another dime regardless of how much it has tanked. A speculator's dream. Compare that to other states where you're on the hook for any deficiency. Ditto for Canada. Any sign of a housing bottom or recovery the speculators will be back, fueling unsustainable price increases before the next crash.

Let's not put all the blame on Wall Street either. We all know of people who shouldn't of got loans ... others who used their house as an ATM. It's time to look in the mirror.

This would mean more regulations in mortgage lending. Personally, I think some regulations to lay down the ground rules are good for all. For example:

1. 20% down a must (so people has a real stake in the purchase).
2. make AZ (or the country) a recourse state.
3. make it taxable the amount you owe if you walk away.

Of course, these rules cannot be applied retroactively. But once the housing market stabilize, these rules should secure a better housing market for future generations.

No mortgage regulation is like chess without rules - the white pawn could just fly over to take the black king on the first move; white wins everytime.

[Finger Laker]

no thanks .... I like the relatively open market here in AZ and am not looking for knee jerk solutions in an attempt to address the collateral damage from a series of unique and in some cases fraudulent circumstances

this holds double if the knee jerk solution just puts more leverage into the hands of the financial institutions that were so reckless to begin with .... especially since the precedent has been sent that they do not have to pay for their failures and that the taxpayers will cover their speculative losses

btw - point 3 does exist ... however, for many currently it is worked around because people are essentially insolvent at the time of walking away .... the chasm is that broad

if you want to start with creating solutions going forward, you would have to look at the financial and investment nature of the holdings ..... individual homeowners are small potatoes in the grand scheme of things ...... this game is controlled by the financial institutions and loans aren't what they used to be ... the investment portfolio and financial products are so much more complex that there is a serious gap in understanding and risk management

[Ponderosa]

Originally Posted by Finger Laker

no thanks .... I like the relatively open market here in AZ and am not looking for knee jerk solutions in an attempt to address the collateral damage from a series of unique and in some cases fraudulent circumstances

this holds double if the knee jerk solution just puts more leverage into the hands of the financial institutions that were so reckless to begin with .... especially since the precedent has been sent that they do not have to pay for their failures and that the taxpayers will cover their speculative losses

btw - point 3 does exist ... however, for many currently it is worked around because people are essentially insolvent at the time of walking away .... the chasm is that broad

if you want to start with creating solutions going forward, you would have to look at the financial and investment nature of the holdings ..... individual homeowners are small potatoes in the grand scheme of things ...... this game is controlled by the financial institutions and loans aren't what they used to be ... the investment portfolio and financial products are so much more complex that there is a serious gap in understanding and risk management

Yes, those are all (but mostly the down payment minimum) terrible ideas that would do nothing but destroy the housing industry, the mortgage industry, and 40% of the US economy. People who think borrowers are at fault in this crisis need a course in banking and finance. They were nothing more than pawns in the game and now they are the victims of the outcome. The "people" who need to have skin in the game are the investment banks and hedge funds who bilked the investors and then walked away with a taxpayer bailout. I think as disgusting as it was, TARP was a bitter but necessary pill. Things would have been much worse if treasury had just let it all collapse. I am mixed on regulation. Certainly we need more transparency in trading derivatives, CDSs etc than we had back then. Looking at how rating agencies make their money is appropriate as well. But burdening banks with increased capital requirements and loan reserves seems counter-productive at this juncture. Get the money on the street.

[azriverfan.]

I will take it one step further, I doubt prices will return to 2007 levels in 9 years. If it does, that is actually good news.

[Finger Laker]

I agree with azriverfan - if we are at 2007 in 2020 that would be good news ........ i don't see if happening though

[Ponderosa]

Originally Posted by azriverfan.

I will take it one step further, I doubt prices will return to 2007 levels in 9 years. If it does, that is actually good news.

I tend to agree. At least here where they came down from such lofty heights. That would put our prices above the extension of the trend line established over the years. I do think we will get back to trend - the point we would have been had all of this never happened. And I don't think that will take 9 years.

[Boompa]

Originally Posted by Ponderosa

Yes, those are all (but mostly the down payment minimum) terrible ideas that would do nothing but destroy the housing industry, the mortgage industry, and 40% of the US economy. People who think borrowers are at fault in this crisis need a course in banking and finance. They were nothing more than pawns in the game and now they are the victims of the outcome. The "people" who need to have skin in the game are the investment banks and hedge funds who bilked the investors and then walked away with a taxpayer bailout. I think as disgusting as it was, TARP was a bitter but necessary pill. Things would have been much worse if treasury had just let it all collapse. I am mixed on regulation. Certainly we need more transparency in trading derivatives, CDSs etc than we had back then. Looking at how rating agencies make their money is appropriate as well. But burdening banks with increased capital requirements and loan reserves seems counter-productive at this juncture. Get the money on the street.

Ah, the banks, there's the problem. The whole thing started to fall apart the minute they got into it. There are just more properties than there are qualified buyers and the minute a ray of sunshine hits the ground the developers will put houses on it and flood the market again. Arizona, Florida, and Vegas bought a line being sold by the developers and we're stuck with it.

[Ponderosa]

Originally Posted by Boompa

Ah, the banks, there's the problem. The whole thing started to fall apart the minute they got into it. There are just more properties than there are qualified buyers and the minute a ray of sunshine hits the ground the developers will put houses on it and flood the market again. Arizona, Florida, and Vegas bought a line being sold by the developers and we're stuck with it.

I don't think it was the banks, per se. Investors demanded mortgage derivative products. Ratings agencies labeled them as low risk investments with a good return. Investment banks packaged these things on one end of the house while the other end of the house sold bets that they would fail. Ridiculous as it seems in hindsight, investors like pension funds couldn't get enough of it. So originators "recruited" borrowers. You remember the ads no? Full size newspaper ads, CountryWide jingles, radio talk shows and infomercials. Nobody checked, nobody cared. Borrowers either lied or brokers did it for them falsifying loan papers for investment houses to package, sell, and bet against, then sell the bets and bet against those. It was totally out of control and you would think that savvy financial managers would have known better. But greed clouds judgment, I guess.