Posted on 08/27/2007 4:06:37 AM PDT by Notary Sojac
I know people are going to hate me for saying this, but I'm not sorry that foreclosures nearly doubled last month and are increasing every day.
I'm not sorry that real-estate prices are creeping down by the glut of desperate "for sale" signs all over Southern California.
I'm not sorry that all those developers building lofts downtown and in Hollywood and North Hollywood with no parking might have to eat their investment when they find they can't get half a mil for the 400-square-foot corner of a former sweatshop.
I'm not sorry that people who kept taking the "free" home-equity money from the banks beyond all reason are now finding out how not free that money was.
I'm certainly not sorry that the huckster mortgage companies and banks that thought it was a good idea to make subprime loans to people with bad credit ratings are now taking a bath. I only wish it involved some sort of public humiliation involving glue, sand and glittery body paint.
I'm not even sorry that people will lose their homes and be forced to give up the Hummer they bought with a home-equity loan, and move into a one-bedroom apartment in Panorama City or, worse, in with the in-laws in Porter Ranch because suddenly their adjustable home rates adjusted higher than they can pay and they can't unload their McMansions for $1.3 million, as was the plan, despite the newly installed horizon pool and cork flooring.
I tell people I am sorry, but I'm really not. I am, in fact, gleeful.
And I'm not the only one.
Most everyone who is not employed by a mortgage company or is not a real-estate agent or is not trying to sell a house or can't pay the mortgage anymore feels the same. We are secretly dancing little happy jigs because it seems that the insanity is about to, finally, end and the snake-oil hucksters will fold up their tents, take their sleazy subprime offers and slink out of town.
Then maybe life can slowly come back to normal, and regular people with regular incomes can buy regular houses again without agreeing to loans so abusive they ought to be handed out of the back of gangster bars. We don't even care that it means our own property values will drop, if it means we might avoid another block of luxury lofts.
It's a relief, too, because we all knew this was coming, just like you know the Poppin' Fresh dough carton is going to make that loud noise when you pull the tab, and you can't really relax until it comes. Even people like me with math anxiety could work out that at some point the hot real-estate market, built in part on risky loan deals, was someday going to reach critical mass and start to crumble.
Well, here we are, and it's beautiful. And that's why I must implore all the well-meaning politicians proposing bailout measures (You know who you are, Richard Alarcon and Hillary Clinton) to just go away and work on curing cancer, or something that will actually help humanity, not enable it to continue on its financially irresponsible path.
Homeowner bailouts, as warm and loving as they seem, are, in fact, bailouts for mortgage companies, and they don't deserve it. But bailouts play well on the news, and everyone from L.A.'s Alarcon to state legislators to U.S. senators are proposing deals to help people continue to pay their mortgages.
Sure, some poor grandmas and inner-city families will get to keep their homes, at least until the next rate shift on their interest-only loans, but at what price? Is it helping people to keep them tied to abusive mortgages that only help the abusers profit? (C'mon, Hillary, it's the other guys who are supposed to be helping big business exploit consumers.)
To Clinton's credit, she's also proposing penalties on mortgage companies, though it's hard to see the sense of punishing with one hand and rewarding with the other. Better to support restructuring of the loan industry and government-sponsored mass refinancing for at-risk homeowners.
It's hard for Democrats not to rush to the aid of the victimized homeowners. It's a good instinct, but sometimes it's in everyone's interest to step aside and let faulty systems fall apart. This is one of those times when we ought to let it burn. I'll bring the marshmallows.
I am betting on a fed cut, so I will be in the markets myself. You can hold your cash hoping for a crash. That's your call.
It is a great buying opportunity period. So what if we see a sub-12,000 DOW? I don't invest in the Dow and I don't care what the market does in the next month (or six, or 12).
Eh. Nobody who was prudent with their money is getting burned by the subprime mortgage bust. The first law of investing: Money always returns to its rightful owners.
No, I am still in the market, I am 37 and am in for the long term in 401k and roth. But I am also looking for a new house in a year or two. So my wife and I are saving up to put well over 20% down plus closing. Added benefit is that we have money at the read for emergencies and opportunitities.
Heck....hitting the side of the carton against the counter-top to open those Pillsbury cinnamon rolls was part of the fun. ;^)
Only for fools. Payed off two houses, my children's education, and all my debt through the Market.
Are you a hedge fund manager?
Or its not the end of the world for those who live and have lived...within their means; much less read the fine print on their mortgages.
A downturn in defense stocks in reaction to a collapsing housing market is irrational panic on the part of the herd. There is little real connection between the two markets. You make money by observing the herd and generally doing the opposite. When the herd realizes its mistake, the defense stocks will recover and money will be made by the anti-herd.
Bump to all that. There is so much EMOTION involved in the stock market and ignorance to cyclical patterns in the overall economy that it borders on ridiculous. Booms (or bubbles) don't last forever.
Hubby built our house over a period of 5 years. Paid for it as he went along. Never had a mortgage on it. Paid off 20 acres of land at the same time. Paid for his son’s degree too, not that the kid has ever used it, but I digress........
We have no debt. Unfortunately, the taxes on our land have just tripled and we may have to tap our savings to pay for it if our protest over the increase is denied.
If you can play the stock market and be successful at it, more power to you. I knew I knew nothing about it so I stayed away from it.
The stock market is virtually the only way for the 'common man' to overcome the effects of inflation on his savings. Over the long term, it's hardly a fool's game - it's the only wise game. Otherwise, you can save all you like but in the end you'll have less than you saved.
Um...no...many people are going to want to sell a home. They will be affected. That then filters down.
House values won’t plummet 50%. They never have and never will. As for those areas that were driven up by speculation - they might decline 10 or 20% and... well, I really don’t care. As they say, pigs get slaughtered.
Not playing the stock market over the long hall is a fool’s game. Relying on short term CDs, Bonds and money markets generally means you’ll barely beat the rate of inflation. Long term strategic investment in mutual funds and strong companies with long histories is the key component for long term success. Obviously, flipping stocks and doing risky trading that we saw in 99-00 isn’t prudent but over the last 100 years, stocks absolutely destroy the rate of return of any other investment. Dividend rates of many stocks are as high as CDs and money markets these days plus you get 6-10% growth rate. Not having a portfolio with at least a strong portion in stocks is foolish.
Your stuck on legalities and formenting argument. I did not say this would be exactly as the late seventies recession, was saying similar conditions. I stand behind my prediction of quarters. I sent you and email and you can hang on to it. I very much hope you are right and I am wrong. Either way, I’ll be prepared for whatever the recession is or becomes.
I love this article!!!
Yeah! just ask John Edwards, cashing in on foreclosures in the Katrina area! Nice Presidential hopeful!
People like me, who reached the age where it was time to buy a house, had watched the market bubble-inflate 500% in the few years immediately preceding "our turn" to buy a first home. The result is that we've been renting much longer than we would have, just to avoid getting swindled by jerks who bought and sold houses to turn a quick profit....thereby driving the housing prices up artificially.
Now that it's looking like the bubble is bursting, I might be able to find a reasonably priced home in the next 5 years. Sounds good to me.
But I am sorry about the people who bought into the greed and are getting burned.
I am of an age and situation to be in the same position. Yet, I feel no schadenfreude. *shrug*
The result is that we've been renting much longer than we would have, just to avoid getting swindled by jerks who bought and sold houses to turn a quick profit....thereby driving the housing prices up artificially.
What's "artificially"? Supply and demand. You could have bought; you didn't want to, because you considered the availabel price a "swindle". Well, that's your right. But others paid that price, and bought. What use is your envy?
Now that it's looking like the bubble is bursting, I might be able to find a reasonably priced home in the next 5 years.
I could be wrong, but this belief strikes me as naive. I've been hearing for literally years this idea that "homes are too high now but maybe if the bubble bursts, homes will come back down to [some level that is considered 'normal']". I know people who've been 'waiting' for this mythical drop-to-"normal" for years and years. It doesn't really seem to happen quite that way. Particularly in certain areas.
If you’re not going to read what I said, why respond?
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