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.
He can't. Nearly all buyers are going to need financing. To get financing an appraisal needs to be done. Sell it for $480,000, and when the appraisal says it is worth $440,000 there goes the sale out the window, or owner reduces the price to $440,000 so the sale can close.
Lets imagine the owner keeps the house for 5 more years, and then due to a job transfer the home needs sold. The value at that time, may be $390,000 or it may be $490,000. There is no guarantee as to what any house will be worth in the future.
Quote:
You can thank the banksters and Wall Street gangsters for the housing bubble burst of 2008. It's all a house of cards, my friend (no pun intended). Unless we can reform banks/Wall Street, it can and will happen again. This last crash of 2008 (and the foreclosures that followed) wiped out many homeowners' home equity. It's a rigged game. No guarantees.
Actually the real cause of the housing bubble was the Dodd Frank Bill that congress passed. Barney Frank was the big mouthpiece for it. He said it was to force the housing mortgage companies to make it possible for poor people to buy homes. Part of the Dodd Frank bill required a certain percentage of loans had to be made to people that could not qualify to buy under regular financing terms. They could not qualify to buy homes under normal lending rules, so new ones had to be made to get these sales made. Towards the end, the federal requirements was that 22% of the loans had to be to people that could not buy homes under normal mortgage financing terms. To stay in business, the mortgage lenders had to loan on homes to people that should never have bought in the first place. This was when they brought in the loans that had to refinanced in 5 years with small payments for the first 5 years and then to go to normal amortized loans, and some with no down payment. Some were no doc loans, meaning no credit checks, etc. The problem was that they could not limit them to poor people, so speculators, etc., jumped on the band wagon. The supply of homes for sale exceeded the amount available and people started to fight over homes each raising the bid price. Builders were building as fast as they could, just to keep up with the demand and making big profits.
One of largest home building companies, raised the price on homes after selling 5 homes at a price. In some hot areas, they raised the price several times a day. Prices went crazy. People were buying homes before the prices went up, that would not be built for a year or two. Some then sold their purchase contract after a few months and made a big profit. Speculators were buying homes right and left and the market went crazy.
Then when those loans had to be rewritten after 5 years, a big percentage of the owners could not qualify as many buyers could not afford the higher payments, and they put the homes for sale thinking they were going to get a lot of money. First few succeeded but suddenly there was a huge oversupply of homes on the market in relationship to demand, and the prices suddenly were cut to try to dispose of the homes before foreclosure. As prices started dropping, people quit buying forcing the prices down even more. In some areas of t he country, prices actually fell to 50% of value. Homes were foreclosed and this only increased the supply forcing prices down more.
The bankers and mortgage companies got the blame due to the foreclosures. But the truth is, they were only making loans as the federal regulations required them to make. A certain percentage of their loans had to be to people that could not afford to buy homes under normal conditions. Make those loans, or close down their business, so they did what congress required them to do.
President Bush administration told what would happen if this practice was not stopped. Barney Frank gave a speech to congress that the Republicans and Bush were trying to cut off poor people from owning homes, and how terrible the Republicans were (I saw that speech on the news). Congress voted to continue as was happening. Then when it happened as Bush said it would, and was a major cause of the big recession we are getting near the end of in most of the country they blamed Bush and the Republicans.
You still have people like in the insert above, that blame it all on the bankers. They do not realize, the bankers have to work under the rules that congress, and the regulatory agencies set for them. As long as they were allowed to only make loans that the buyers could afford for the homes, there was no problem. Then congress and the regulators got into the act, changed t he rules bankers had to follow, with requirements they make bad loans or go out of business, the housing market went to H*** in a handbasket as they say. And people still blame the bankers, who were only following orders that congress ordered them to do.
Trying to predict which areas the high rollers are going to move into is always a gamble. And you have areas that high rollers moved into and retain the high incomes to this day, but there aren't so many younger high rollers moving in, depressing the prices somewhat despite the higher household incomes. A perfect example are certain exurban suburbs that became popular in the 1990s and commanded high property prices, but 20 years later the next generation of buyers aren't so interested in living so far out, so property prices didn't appreciate as much as closer in suburbs despite still having fairly high average household incomes. There is enough of a generational shift in attitudes and expectations that it's having an impact on real estate prices.
And in suburban areas, school boundary lines shift constantly and can have an impact on house prices.
If people were in the habit of buying and selling houses every year then you could move easily with market trends. But real estate isn't like that.
Quote:
Originally Posted by Larry Caldwell
Housing prices in any given neighborhood gravitate toward 3.5x the median family income in that area. If high rollers move in, the price goes up. If they move out, the price goes down. You can get demographic data for an area fairly easily, and can predict the probable results of a real estate investment from that.
OP, have you been cryogenically frozen for the last nine years? Let me get you up to speed. Shortly after you bought your house the biggest crash in real estate prices values in national history occurred. It was so big it almost triggered another great depression. You're fortunate that you're able to sell your property at a small loss today. If you'd like to sell it for a profit, I suggest holding onto it for a another 10 years or so.
He can't. Nearly all buyers are going to need financing. To get financing an appraisal needs to be done. Sell it for $480,000, and when the appraisal says it is worth $440,000 there goes the sale out the window, or owner reduces the price to $440,000 so the sale can close.
Lets imagine the owner keeps the house for 5 more years, and then due to a job transfer the home needs sold. The value at that time, may be $390,000 or it may be $490,000. There is no guarantee as to what any house will be worth in the future.
Actually the real cause of the housing bubble was the Dodd Frank Bill that congress passed. Barney Frank was the big mouthpiece for it. He said it was to force the housing mortgage companies to make it possible for poor people to buy homes. Part of the Dodd Frank bill required a certain percentage of loans had to be made to people that could not qualify to buy under regular financing terms. They could not qualify to buy homes under normal lending rules, so new ones had to be made to get these sales made. Towards the end, the federal requirements was that 22% of the loans had to be to people that could not buy homes under normal mortgage financing terms. To stay in business, the mortgage lenders had to loan on homes to people that should never have bought in the first place. This was when they brought in the loans that had to refinanced in 5 years with small payments for the first 5 years and then to go to normal amortized loans, and some with no down payment. Some were no doc loans, meaning no credit checks, etc. The problem was that they could not limit them to poor people, so speculators, etc., jumped on the band wagon. The supply of homes for sale exceeded the amount available and people started to fight over homes each raising the bid price. Builders were building as fast as they could, just to keep up with the demand and making big profits.
One of largest home building companies, raised the price on homes after selling 5 homes at a price. In some hot areas, they raised the price several times a day. Prices went crazy. People were buying homes before the prices went up, that would not be built for a year or two. Some then sold their purchase contract after a few months and made a big profit. Speculators were buying homes right and left and the market went crazy.
Then when those loans had to be rewritten after 5 years, a big percentage of the owners could not qualify as many buyers could not afford the higher payments, and they put the homes for sale thinking they were going to get a lot of money. First few succeeded but suddenly there was a huge oversupply of homes on the market in relationship to demand, and the prices suddenly were cut to try to dispose of the homes before foreclosure. As prices started dropping, people quit buying forcing the prices down even more. In some areas of t he country, prices actually fell to 50% of value. Homes were foreclosed and this only increased the supply forcing prices down more.
The bankers and mortgage companies got the blame due to the foreclosures. But the truth is, they were only making loans as the federal regulations required them to make. A certain percentage of their loans had to be to people that could not afford to buy homes under normal conditions. Make those loans, or close down their business, so they did what congress required them to do.
President Bush administration told what would happen if this practice was not stopped. Barney Frank gave a speech to congress that the Republicans and Bush were trying to cut off poor people from owning homes, and how terrible the Republicans were (I saw that speech on the news). Congress voted to continue as was happening. Then when it happened as Bush said it would, and was a major cause of the big recession we are getting near the end of in most of the country they blamed Bush and the Republicans.
You still have people like in the insert above, that blame it all on the bankers. They do not realize, the bankers have to work under the rules that congress, and the regulatory agencies set for them. As long as they were allowed to only make loans that the buyers could afford for the homes, there was no problem. Then congress and the regulators got into the act, changed t he rules bankers had to follow, with requirements they make bad loans or go out of business, the housing market went to H*** in a handbasket as they say. And people still blame the bankers, who were only following orders that congress ordered them to do.
Bankers and Wall Street types lobby for and often write the laws that our legislators pass. So to say the poor little bankers had nothing to do with the 2008 housing crash is pure nonsense. Moreover, countless cases of bold-face lying on mortgage applications was part of this mess, too. The mortgage bankers and loan officers involved in the sub-prime loan debacle are crooked liars. No question about it.
The Dodd Frank bill wasn't passed until 2010. It was written to prevent the issues associated with the 2008 housing crash. Congress is in the process of rolling back the consumer protections in the bill allowing banks to start playing with derivatives again using customer deposits. With Dodd-Frank Rollback, The Big Bad Banks Are Back - Forbes
Bankers and Wall Street types lobby for and often write the laws that our legislators pass. So to say the poor little bankers had nothing to do with the 2008 housing crash is pure nonsense. Moreover, countless cases of bold-face lying on mortgage applications was part of this mess, too. The mortgage bankers and loan officers involved in the sub-prime loan debacle are crooked liars. No question about it.
This shows you have never taken a good economics class, and know nothing about how the financial system works. You really don't know where the problems came from. I was in the commercial/investment real estate business back when they started making the loan changes, and at conferences I attended and talking to bankers who were good friends, I know the worry they had about making the loans they were required to make, or they had to quit making loans. They had no choice on the matter as it was federal law. It was make those loans, or close down the business. And yes, a lot of people lied on their loan applications, and still do today. People lie, to try to finance their dreams.
Quote:
The Dodd Frank bill wasn't passed until 2010. It was written to prevent the issues associated with the 2008 housing crash. Congress is in the process of rolling back the consumer protections in the bill allowing banks to start playing with derivatives again using customer deposits.
The Dodd Frank bill that caused the problems, started clear back under Carter being president. And the requirements for the banks to make bad loans (loans to people that could not qualify for regular loans), kept getting a bigger percent of total loans as time went by. Dodd and Frank, were very long serving congressmen, and were very influential in how banks were regulated.
I saw a newscast about a year ago, where Barney Frank was interviewed and said that he had made a mistake, and that he now knew making banks make those bad loans was a big mistake, and wished he had never done it. He had only thought about helping people, not the consequences it would cause.
This shows you have never taken a good economics class, and know nothing about how the financial system works.
FACT: I was a registered financial rep (and passed several FINRA exams to be so) for 10 years, oldtrader. I think I know how the system works. Working with other financial advisors, broker/dealer pros, and the commission analysts in this industry etc. has made me jaded, I admit. I left the business because of all of the crooked, greedy people this business attracts. (Not all--but a lot.) The execs at the tops of the food chain in this industry didn't appreciate my honesty. Before that, I was a real estate appraiser for six years in southern California (high-end value and income property specialist). Please don't assume you know what I know. I was an insider for nearly two decades in both real estate and investments. Both industries are rife with corruption, dishonesty and waaaay too many greed-meisters for my taste.
The Dodd Frank bill that caused the problems, started clear back under Carter
You are wrong!
Barney Frank first became a congresscritter in 1981. Reagan's time.
Yes, Barney took office while Carter was President -- for 3 weeks until Reagan's inauguration.
Freshman congresscritters do not get legislation passed during an interregnum.
Actually the real cause of the housing bubble was the Dodd Frank Bill that congress passed. Barney Frank was the big mouthpiece for it. He said it was to force the housing mortgage companies to make it possible for poor people to buy homes. Part of the Dodd Frank bill required a certain percentage of loans had to be made to people that could not qualify to buy under regular financing terms. They could not qualify to buy homes under normal lending rules, so new ones had to be made to get these sales made. Towards the end, the federal requirements was that 22% of the loans had to be to people that could not buy homes under normal mortgage financing terms. To stay in business, the mortgage lenders had to loan on homes to people that should never have bought in the first place. This was when they brought in the loans that had to refinanced in 5 years with small payments for the first 5 years and then to go to normal amortized loans, and some with no down payment. Some were no doc loans, meaning no credit checks, etc. The problem was that they could not limit them to poor people, so speculators, etc., jumped on the band wagon. The supply of homes for sale exceeded the amount available and people started to fight over homes each raising the bid price. Builders were building as fast as they could, just to keep up with the demand and making big profits.
The 22% figure you're referencing is from the Community Reinvestment Act, and that had nothing to do with the collapse of the subprime market in March 2007. Only one of the top 40 subprime lenders (by volume) that went bankrupt after the market crash was actually bound by the CRA. The other 39 were not deposit taking institutions, thus exempt from that rule. Nice try linking the two, but if you actually look at who issued the subprime loans that kicked off the collapse it wasn't banks lending based on CRA requirements, it was private mortgage lenders.
The other problem with this story is that most of the subprime loans that failed were refinances, not purchase money. CRA was primarily focused on providing purchase mortgages. Sorry - the story you were fed was political BS.
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.
What?!
Sorry - the story you were fed was political BS.
