Posted on 09/22/2006 8:47:25 PM PDT by churchillbuff
"Show me just what Mohammed brought that was new, and there you will find things only evil and inhuman, such as his command to spread by the sword the faith he preached." -Manuel II Paleologus
>Greenspan recently wrote an article (UFB! with coauthors) about how overpriced 30-year fixed rate mortgages are relative to ARMS.<
With rates still near historic lows? I look at a fixed rate on a mortgage as a kind of insurance against the possibility we get another disaster of a president, a la Carter, and that interest rates spiral back into double digits.
Another episode of "The Idiots Who Bought Too Much House."
I'd like to see a poll on how many of these people voted for John Kerry.
The past five years, a lot of people have said to me, "Why don't you get a bigger home in one of those new subdivisions. You can afford it."
Perhaps, but I'm not a slave to my mortgage and have a nice little weekend place on the lake with over 50 percent equity in both.
"They could buy a $60k home in fly-over country. California dreamin'"
Isn't it amazing? Sure, wages are probably higher, on average, in the sky high real estate areas, but I doubt that they are proportionally higher. I've seen several houses in this area, in the past year, that were priced under twenty thousand, needed some tlc but they were liveable. That is what I would call a "starter house", but in another place I'm familiar with, a 400K house is called a "starter house". Crazy!
So you either don't own a home (ever heard of rent?) or move. That's life.
"Of course, you are correct, Petronski. But my experience with RE borrowers is that they get a bit giddy and euphoric, and have a tendency NOT to read the fine print."
You mean they act like the majority of people do when they are close to realizing a cherished dream, and aren't necessarily idiots?
The first time I was looking at buying a house, I spent $10 on a book about buying one's first home.
It was money well spent.
What ever its sex, it is a source of bulls**t
Unfortunately, in California, for many people, it's almost impossible to own a house without "living beyond their means."
"So you either don't own a home (ever heard of rent?) or move. That's life."
Yes, it is life. I rent, I'm fine with that. I'm not fine with overpaying 200% on a house to pay for someone's retirement or get rich schemes, or be a slave to a bank the rest of my life paying off a $600K mortgage with negative amortization for a piece of #@!@ sheetrock McMansion that's worth half of what I'm paying for, and unable to refi out.
What I'm also NOT fine with is the probability this bust will drive us into recession, effecting us ALL. There is too much tied to housing that will fall - employment, retail, wages - across the board, from contractors to Home Depot employees. Much of the new jobs created in CA were real estate related, and look to be wiped out in the next couple of years, with no signs of any other industry replacing them. This, coupled with massive layoffs coming from Intel and other companies, could trigger a bigger recession than a couple decades ago. This happened in the late 80's and early 90's - everyone and their brother became real estate agents because of the boom in house prices, and a year or so later they were all broke, looking for jobs, or taking unemployment.
We havent even really resettled all the .com Flash kiddies in SF who still demand 100K to do web work, and now this time next year, the streets will be full of out of work real estate moguls crying bitterly about their fate. I've seen it before.
I'm also NOT happy with the eventual Fed bailouts that will almost certainly be floated and eventually passed to pay for it all. Banks and hedge funds are teetering on the cliff over this, it could get NASTY. The finger pointing has ALREADY started.
This run-up of prices, which as happened nationwide, was not natural, and was not sustainable, and the people selling cheap credit for extremely risky terms to people who had no business borrowing the amounts of money they did knew it, but put all common sense and integrity and rational thought aside for the allmighty dollars. Yet again.
If you think your neck of the woods will be uneffected, good luck to you. Your neighborhoods may soon be flooded by illegals looking for cheap homes, as that's the exciting new frontier the mortgage folks are babbling about. You may weather the storm, but it will effect you, as there is no town or city or hamlet in the country that is recession proof. We're NOT just talking home prices here. The housing boom has ties to almost every facet of our economy.
Go look at your 401, and if there's any investment with anything even remotely housing related...
I love the snide remarks about people just being negative. I'd love the country to be on firm ground financially, and have no looming storm like this housing bust. I truly do. But it's coming, and it scares the #@#$$ out of me what it could do to our economy and our country, and to my family and freinds and to me. At least with the illegal issue, we can SEE it every day here in CA as neighborhoods go barrio, and less and less English is spoken, and we can see video of them coming over the border.
As for moving elsewhere, I've thought about it, and it would mean giving up a career I've put 20 years into, and starting over somewhere else, which means taking a big pay cut. It's also be leaving behind almost 30 years of friends and family. It's not that simple, or easy, to just cut and bail.
Besides, I placed my bet. I'm thinking in about 4 -5 years, I'll just buy a modest 2-3 bedroom house for pennies on the dollar...if I still have a job.
On an amusing note, i just got a cold call yesterday, from a nice, freindly mortgage broker, who'd received refi application, and I was pre-approved! Whoohoo! We'll forget the lie that I applied, the funny part is, the refi is for an aprtment I rented and moved out of last year.
Oh, and the caller was named Manuel. Mexican accent and all.
I guess it's one more job Americans won't do, huh?
Bitter about housing? You betcha! I just want to buy a house, and it's now impossible, without having to uproot my life and career and move somewhere where I don't know anyone, don't have many job prospects, where the locals would probably just rather I not move there thank you. It's not that cut and dried, guys. I'm fine with renting, as I'm single and looking to keep it that way for the foreseeable future, but that doesn't mean i have no right to comment on the greed and insanity that has gripped this nation about real estate. I agree with a lot of the posters, a house is a great investment! But under today's terms, at today's prices? Get real. It's not investment, it's virtual serfdom to a bank.
I think the premise of this article is being repeated in tens of thousands of households across america. I saw on CNN today that 1 in 300 homes in Colorado is in foreclosure.
What I mean is that since a lender generally accepts an appraisal at face value, they can refinance the 244000 they owe fairly easily.
Prime Rate - the Fed-set rate we all know and love. Few first mortgages are set to this-but home equity lines of credit almost always are
LIBOR - London InterBank Offered Rate - based on the interest rates at which banks offer to lend unsecured funds to other banks in the London wholesale (or "interbank") money market, usually US Dollars.
COFI - Cost of Funds Index - a regional average of interest expenses incurred by financial institutions, which in turn is used as a base for calculating variable-rate loans.
The person taking the loss gets to write it off of their taxes, that's why they person getting the benefit has to pay taxes on the money.
What would you rather owe, $40,000 or the taxes on $40,000?
To morons, you mean.
Better vote for a Democrat, then...
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