Posted on 06/21/2005 9:42:59 AM PDT by ambrose
Now in California where the home CAN be surrendered for the debt the lender takes the hit, again not the taxpayers.
Not only that, but for borrowers that do default and leave the lender holding the bag, the IRS gets involved. Say someone borrows $400k for a home, then defaults and the lender is able to sell it but only gets $300k because of a deflated bubble. The IRS will count that as $100k of income to the defaulter, and they will have to pay income tax on that amount. Bankruptcy won't help, because IRS debts are not forgiven in someone declares bankruptcy.
I don't understand - was that a typo or were you being sarcastic?
"Nope, I live on the extreme north end of Columbus - an hour and 15 minutes from the airport."
Ahh - my bad.
Hey - it's not Macon County, so I was half-right!!
Does this gloom and doom sell?
I've been listening to people gripe about "hyper inflated homes" for 25 years now. The only difference is that it's happening pretty much nationwide instead of just a few markets.
My wife and I were nearly $100k in debt and renting an apartment 8 years ago. Today we've got nearly $300k in equity, and that's without really trying. Had we made a few moves we seriously considered a few years ago, we'd have 2-3 times that.
When Will Rogers advised his readers in the early 30's to "buy land, cause they're not making any more of it", the three miles of beach in Santa Monica he owned was considered virtually worthless. Today, they call it "Malibu", and if he still owned it, the sales price would probably pay off the national debt of a few Caribbean islands.
Real Estate will never drop much below the margin that's mortgaged. Never. Because neither mortgage companies or home owners will pay some one to take their property. They'll just sit on it forever, and thus the price is stable.
The griping about "how will young people buy their first house with prices so high" is falling on deaf ears here. The fact is that home ownership (a few years ago anyway) was at an all time high. Don't tell me those people up and sold out and are renting now.
Yeah, yeah, ARMs are evil. But they were worse in Jimmah Carters day when the ARM started at 17%, and that was considered good, cause it scheduled to go up above 20% in a year. But the world didn't open and swallow the country, so just don't worry about it.
Boy, that's a real fixer-upper...
I know, we sold our house in West Bloomfield, MI for a HUGE profit a few months ago and downsized to a smaller one (all but one child moved on their own) because we knew the market was stretched way too tight for this market and it could only go down from there.
No problem. Lots of people in Georgia forget that Columbus is here. :)
I'm only counting on the sale of one of my houses to do that. One has already nearly doubled in value in 4 years, and the other was worth 15% more than I paid for it 4 months ago. I can keep both till I retire, and with even modest gains the sale of one will pay off the other.
Real Estate will not crash like the stock market can. Neither people or mortgage companies will pay people to take their property.
As long as the population is growing (it is), and they're not building more freeways in large cities (most aren't, thus trapping workers in a fixed radius) then real estate will continue to go up. Even if they have to bulldose homes and put up high density housing in order to pay the higher prices.
The mortgage lender biz is booming from all the re-fis... people are borrowing against the inflated value of the home.
"Lots of people in Georgia forget that Columbus is here. :)"
True, even though I'd personally rather live in Columbus than Macon. Canton is nice, though Atlanta creeps closer by the day...
No doubt man - essentially, prices HAVE to flatten, if not soften, here in Cali, or else we'll lose lots of jobs as employers move out of state due to the housing costs. Even execs cannot afford to move here (unless they want to live in very plain, old ranch homes!).
Speculators.
Columbus will *really* grow if they ever continue the interstate *through* the town instead of just *to* it.
Indeed, might be a twofer. Oil prices cannot continue as they have. It is telling that oil speculators are now issuing "reports" - in which they try to portray themselves as "analysts" - which are meant specifically to play into the whole "Earth Changes" / "Peak Oil" / "Art Bell" crowd's hysteric mentality. I heard T. Boone Pickens trying to play up the price, claiming ongoing rise through next year. You known when you see these things, that those who have large, recently acquired futures positions are getting worried, and are resorting to all sorts of trickery to try and prolong the totally unrealistic market long enough to get out with a gain.
It's a seeming article of faith that globalism is here for all eternity and that we are "beyond history." Look at all the books about it - most recent example being Friedman's "flat earth" book. But history would indicate that this particular wave of globalization (hardly the first) will end just like all the others have. Any businesses whose value propositions depend on globalization will be hosed not if, but when, the current wave ends.
"people moving into the area can't afford the 400k single family homes, so they buy nice townhomes for 395k"
Man, I am Mr. typo this week.
read as...can't afford 400k single family homes....buy nice townhomes for 295k.
Too bad for all of them .... suckers!
What your house is "worth" on the market is only relevant if you want to sell. If you plan to continue living in it (and that is what houses are for, right?), it makes no difference what it could fetch at the moment. The reason housing prices are going up in the bubble areas is supply and demand - more buyers than sellers. What that means to me is - people are staying put, despite the prospect of inflated profits. As long as this situation pertains, how is the bubble going to pop?
Estimates vary - but about 25 to 30% of recently purchased homes (last 5 years) are not owner occupied.. They were purchased by investors/speculators, and then rented out at a loss (or even left vacant), based on the belief that they could flip it in a couple of years for a quick profit.
bttt
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