Posted on 08/31/2009 1:24:03 PM PDT by Kartographer
THE number of homeowners whose mortgages exceed the value of their home — who are “underwater,” in industry parlance — recently hit a grim milestone.
(Excerpt) Read more at nytimes.com ...
I think one thing driving the increase in existing home sales is that people who bought big expensive houses, full financed, are buying smaller houses and walking away from the underwater one. One other is the first time home buyer tax credit, that ends in a few months.
Not willing to click the link and drive traffic to the NYT site, but my wife (and a number of friends) work in the title insurance industry processing foreclosure reports and they’re busier than they’ve ever been, so I don’t doubt it at all.
It’s funny that the term used was “underwater” because we’ve always called it “upside down.” Same thing, different term.
There will be buying opportunities ahead for those that have the means to snatch up a good bargain.
Tell me crooks including a few in Congress and the WH weren’t making a killing off this deal.
When are the boobs at the NYT gonna get around to blaming the banking queen?
You know, the one who denied there were problems not that long ago.
You know, the one with an IQ of a Kennedy (e.g., subterranian), but without the charisma?
The major reason why the NY area didn't see investment speculation as much as CA: property taxes are 3 times higher. That puts a cap on how much prices can balloon without real tax pain being felt.
The article points out during the last housing bust it took 7 years to recover from being underwater. There will be great investments out there but the time to jump in is years away. First, Democrat control of the economy has to end.
I find it hard to understand that, since it would be almost impossible to get financing now if they are under water on their current homes.
One other is the first time home buyer tax credit, that ends in a few months.
Yup, another bubble that could burst.
Not necessarily. "Underwater" just means they owe more than the current home is worth, not that they cannot afford the current mortgage. Many may have enough income to qualify for a "second" home - which then becomes their primary home after they allow the first one go into foreclosure.
While it is immoral, from a purely business standpoint it might be a good move, especially in a state like California. Here, as long as the mortgage is a "purchase money" contract, the lender is limited to foreclosure - they cannot sue you for the difference, even if they can prove you could have afforded to pay the original mortgage.
That's why I have my doubts. It used to be called "debt ratio" before lenders started throwing money around. If your debts were higher than your worth, it was hard, well, harder to get another loan. But I can't make any sense out of this "down is up" economy anyway, so I can't say that either of you are wrong.
The mortgage deduction needs to be phased out. People need to stop looking at housing as an investment. The fact that your house is worth more or less than the mortgage amount is really not very important. If you’ve ever bought an automobile on payments, you’ve owed more than the car is worth from the minute you left the dealer’s lot. So what?
Businesses get to write off the interest on loans as a business expense. If a family house can't work like a business asset then a family could form a small real estate investment company to own the house and not only write off all the interest, but the taxes, utilities, and repairs too.
Don’t we need to get away from managing our lives and businesses based on tax policy? To put it another way, don’t we need to change the tax system to stop politicians from using it to manipulate people’s decisions, and aslso to stop the incredible amount of time and resources wasted trying to game the system in the way you describe?
Yes, but that’s not going to happen. I’d be happy if the government could just keep the rules stable, but that’s not going to happen either. CPAs love tax simplification changes because the tax law books just get thicker. The best we can do at this point is vote for gridlock.
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