The Economy is Back (balloon payment, real estate, 2014)

[CoastalGAGuy]

The article in today's paper, Area warehouse space filling up again | savannahnow.com , shows that industrial space around the region is filling up and speculative building is resuming once again. You can't keep a port city down...

[DanielAvery]

I can see some optimism in hearing that new warehouse space is being planned, but the main reason existing warehouses for retailers may be filling up would have something to do with the rapidly-approaching Christmas season.

[CoastalGAGuy]

Actually, the article pretty much spells out that things haven't been this good since 2008. So, that's not a seasonal cycle.

[bellhead]

We are about a year out from things being good again, the economy is in recovery right now but will get stronger as the year progresses. Will we see a 2004 to 6 housing boom again, I doubt in our lifetime but it may happen.

[CoastalGAGuy]

I'm certainly not interested in another housing bubble (or any other kind of speculation-dominant market), but it would be nice to hear that business is growing in most sectors over repeated years. I don't know what constitutes "good" for most economists along those lines, but that's my loose definition, anyway.

[bellhead]

The housing market is still soft in the $300 to $500k market, higher end production built home. Usually 3000 ft plus with a lot of upgrades to them and bigger premium lots. When the economy gets stronger people will trade up from their 150 to 300k homes to these.

[CoastalGAGuy]

Maybe a $500k home being a regular thing for most people to trade up for is actually a sign of an overheated economy? Just sayin'... That kind of thinking is what led to the last economic disaster.

[bellhead]

Originally Posted by CoastalGAGuy

Maybe a $500k home being a regular thing for most people to trade up for is actually a sign of an overheated economy? Just sayin'... That kind of thinking is what led to the last economic disaster.

Not really.. You have dual income people making 70 to 90k a year and they easily make qualify for that. What killed us was one family where income was 90 to 110k just making the payment and the bread earner was laid off, their balloon payment came due and they could no longer afford the mortgage. Saw this scenario a lot more.

[CoastalGAGuy]

Even before the crash, I knew that if I needed to take a loan with balloon payments on my primary residence, I would be stretching too far past what I should be spending for my home. Voices of reason got drowned out in the overheated economy where everyone was trying to get in on the action. I view it from exactly the opposite perspective - one of personal responsibility requiring people to educate themselves and not just casting them as innocent victims without a hand to play in their own destiny.

[counterclockwise]

Another thing helped cause the real estate bubble to bust was a lot of people got loans from lending institutions to buy homes they really could not afford speculating the price of the new home value would increase more than the payments. Then the plan was to sell after living in the new home a year at the higher price and buy a lower priced home and use the gain to pay toward the new house. It worked for awhile.