Posted on 09/05/2010 10:12:18 AM PDT by Nachum
If you've recently had your house reappraised for sale or refinancing, and wonder where the equity went, consider this:Since the real estate boom ground to a painful close about 31/2 years ago, the nation's housing stock has shed from about $4 trillion to $7.1 trillion in value.The amount depends on who's counting. A study by Equifax Inc. and Moody's Analytics Inc. says the downturn began in early 2007 and cost $4 trillion through March. The Federal Reserve says the downturn began in the fourth quarter of 2006 and cost $7.1 trillion through March.
(Excerpt) Read more at philly.com ...
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...more like “housing market overpriced by $4 trillion coming back down to earth...”
“Down” from an artificial “up” means that a process of revaluation is in progress. Folks should not get convinced that prices will return to previous levels anytime soon, if ever.
Heard an example the other day of a house that was put up for sale for around $1 million. After 90 days there had been exactly one telephone inquiry and zero showings. Is this house “worth” $1 million?
77 million retiring Baby Boomers want out of their mcmansions. There are already 19 million vacant homes in the U.S.
What are homes worth? Cash value. Loan values do not reflect true market pricing.
Bingo. We just refinanced, and our appraisal was about $20,000 over our purchase (2003) price. That was down about $15,000 from the highest sale price of our model, but oh well.
A sick chicken, or a “million dollar” house, is worth exactly what a buyer is willing to pay.
The Kenyan-Reid-Pelosi increased spending 4 trillion since 2007. A coinkydink?
The Kenyan-Reid-Pelosi increased spending 4 trillion since 2007. A coinkydink?
Exactly.
...more like “housing market overpriced by $4 trillion coming back down to earth...”
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We can all thank Barney Frank, Chris Dodd and Fannie and Freddie for the housing collapse and economic disaster in our country today.....why are voters SO BLIND to these facts?
Because the msm covers for them and they are not smart enough to search out the facts.
People are being told by the MSM that deregulation under the Bush Administration allowed banks to make loans to unqualified buyers. Andrew Wilkow had a caller the other day who repeated this line ... rather like a talking parrot.
When Wilkow asked what, specifically, were the regulations that were removed, and why banks would be eager to lend money to people who wouldn’t pay it back, the caller was stumped.
If you bought a $100K home in 1975 with a 30-year mortgage -the total payments were $300K by 2005 at maturity.
Retirees selling those homes in 2005 figured they were getting the *fair* price and buyers were willing to pay it.
IMHO this was the first of the baby boomer blips. If only those first-time, younger buyers had properly qualified - the artificial high prices would not have exploded and then bombed.
I'm not all that sure the older baby boomers who are now retiring are the ones who went in for the McMansions. At least in my circles, my peers were kind of dumbfounded about the kids (in their 30s and 40s) getting real impractical houses in the middle of nowhere.
Most of the people I know in their mid-60s are staying put, or what they've sold are smaller houses, to move into over-55 developments.
But yeah, everyone's equity is down. That's a pretty good reason to stay put if the mortgage is paid off.
What that means is the Housing Bubble was overinflated with $4 Trillion worth of hot air, lies, and plenty of fraud, and the collapse of that bubble continues.
GW Bush's Ownership Society. Kind of like LBJ's 'Great Society', which we are still suffereing the effects of. Anyways, builders, banks, lumber states, anything to do with products/equipment for house manufacturing, labors in construction like me, towns/states that tax land on rising values, everybody with a house that bought cheap and sold high all liked the gov drug.
The web site for Fannie Mae says their mission is to support "affordable home ownership".
First off - what business is it of the federal government to get into the real estate market? They created a broad array of policies, along with two massive gov sponsored entities that completely dominate and distort the financing markets.
Fan/Fred created mortgage products for people with little or no equity to put down on a loan (no personal capital at risk) and loosened the allowable debt coverage ratios (cash flow to cover all debts).
In the decade after Fannie dropping the requirement for a down payment of at least 20% and verification of sufficient, stable income - home prices doubled. This created a need for ever more lenient lending standards.
Before the introduction of huge price distortions from artificial demand, engineered by the Statists in Washington - a person who's primary goal was to put a roof over their family and not invest for profit from a quick sale - could afford a house or rental unit with average income. That was obliterated by the people who's stated goal was to create affordable housing (sound like Obamacare?)
In some cases, finance companies offered zero down, 50-60 year interest only, optional monthly payment loans where skipped payments get rolled back onto the balance due - paying 60 years of interest on payments of pure, peak-level interest. Where's the "ownership society" in this scenario?
This grand scheme is one of the biggest financial crimes in the history of our nation. It was pushed by congress to broaden the perceived prosperity of lower-middle class families and it fits the DemocRATS "entitlement" agenda where everything becomes a "right", emanating from a central government, confiscated from the producers in our society.
We'll never see anyone from the government take responsibility or receive punishment for this blatant market takeover and its predictable devastation of personal wealth, topped off by the burden of a giant load of new national debt that's impossible to dig out from under (since the taxpayer paid to prop up the system to support the lust of ever greater power and control by our politicians).
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