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No. I had houses overseas. Until about 15 years ago it was impossible for the average person to get a loan. Then the world bank and others came in making money available for borrowing to buy a home.
The average house was 20-30k before the loans were made. That was because people had to save to buy one or build little by little.
Today the average hose is 150k. Big huge jump in prices after loans were offered.
In many parts of Europe the common to USA thirty year mortgage did not exist or only recently has arrived. Mostly people took out a fifteen year note and either paid it off or refinanced when the mortgage ended.
Problem with long term mortgages is you build equity very slowly, thus if something happens and you must sell early unless willing to do so at a loss (and make up the difference in mortgage out of pocket), you need to get a very high selling price.
I'd like to know where these 20-30k houses are overseas. I did a little research on real estate in Greece and Italy and it wasn't cheap. If there are 30k houses to be had I want to buy a few.
Often when banking comes up we see a clip from this piece-of-crap movie with its bankrupt collectivist philosophy and misrepresentational straw-man smearing of an industry. It's A Wonderful Life is garbage, pure and simple. Absolute crap. I hated it natively when I was a kid because I could see right through its maudlin manipulative agenda. A terrible and TRULY EVIL movie philosophically. Disgracia!
Without the benefit of mortgages, there would be many fewer people buying houses. Large numbers of people now are unable to exert the discipline necessary to save even a 10% down payment for a home purchase. There is no reason to believe they would suddenly become able to exert the discipline necessary to save the entire purchase price if there were no more loans.
i built my house myself, three bedroom two bath 1200 sq ft. everything land, house, shop, concrete driveway septic $49k , eight years ago. if i would of fiance and had a builder, it would of been $220k at 30 years
Whenever there's a shortage of anything, the price goes up. That's basic macro economics 101.
There is no reason for there to be a shortage though. Everyone would still live in apartments and houses, but demand for home *purchase* would decline and prices would be lower.
There are two components to RE price, the cost of construction and land values. The land values are highly influenced by demand, but construction not so much. For young buyers demand would be greatly reduced because they hadn't saved the money to buy a house yet.
There is no reason for there to be a shortage though. Everyone would still live in apartments and houses, but demand for home *purchase* would decline and prices would be lower.
There are two components to RE price, the cost of construction and land values. The land values are highly influenced by demand, but construction not so much. For young buyers demand would be greatly reduced because they hadn't saved the money to buy a house yet.
You guys forget that people need a place to live. Someone would take the risk. If you can't buy you rent. The demand for purchase may decline from homeowners but it can be taken up by investors. If nobody is buying houses and people still need a place to live someone will provide that service.
Thanks guys and gals for all the replies, i really enjoyed reading all of them. i've come to the conclusion with the help of some of your advice that the prices would only be a little lower when originally i thought they would be a lot lower...i guess it would come down to the houses prices are in line and in relation to the rental prices....and if a 200k house in the mortgage era dropped to 30k if everyone had to pay cash, some really rich person would swoop in and buy like 50 houses and collect 50 rent checks, but they another rich person would offer more for the house, maybe 31k and pretty soon the price would adjust to a much higher rate, especially if rents were 1 or 2k a month.
Save for 15-30 years? How about those who have to rent and can't save?
Usually money will always find another use other then the planned use. That is why buy term and invest the rest rarely pans out or why rent and invest the down payment money and the difference each month rarely pans out.
Odds are not only would living together with kids ,spouses and parents end up blowing up family's but the savings aspect would likely never happen.
It's a Wonderful Life...Jimmy Stewart
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