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they don't want to mention that housing is still too expensive because too many powerful people stand to lose money and POWER if real estate corrects to its REAL market price! i'd venture to say that every major bank is technically insolvent. if commercial and residential real estate falls further not even the fed will be able to bail the banks out. it is for this reason that they're distorting inventory numbers by keeping the majority of their homes off the market.
the conspiracy theorist in me believes that the powers that be want us to take on more debt.
Right. What few people realize but is quite obvious is that the foreclosure sales are the market prices right now.
Who is going to buy a house in the midst of a crumbling job market? What a liability. If your job evaporates and you need to move to find work, owning a home you can't unload is a tombstone. Browse the Michigan forums to see people trapped by homes they can't unload and without jobs.
Michigan now, somewhere else next. This is a good time to be maximizing personal liquidity, preserving the ability to pack up and take off if need be. Buying a home right now, at any kind of price, could be the mistake of a lifetime.
it'd hilarious. i see people who commit to a $500k mortgage. when asked why they say they can easily afford the $3000 a month repayment and for heavensake it's a million dollar home.
i always ask the same questions. what if you lose your job? what if you can't find another job? what if you have to take a big pay cut? how long can you survive on the cash you have?
ofcourse my questions are stupid because this will never happen. the same way the enron and worldcom didn't happen. or the same way that bear stearns, lehmans, wamu, circuit city, gm, ford, chrysler, delta, ....... didn't happen.
Maybe if the builders went back to some more traditional style homes then prices would come down.
Go look at a late 80's neighborhood. They don't have 3 car garages, media rooms, etc.
They're typical 1700-1800 3/2 homes with simple designs that ARE affordable starter homes.
they won't be able to get their money back. they'll be competing for the same money against homes which cost double.
it'd hilarious. i see people who commit to a $500k mortgage. when asked why they say they can easily afford the $3000 a month repayment and for heavensake it's a million dollar home.
i always ask the same questions. what if you lose your job? what if you can't find another job? what if you have to take a big pay cut? how long can you survive on the cash you have?
ofcourse my questions are stupid because this will never happen. the same way the enron and worldcom didn't happen. or the same way that bear stearns, lehmans, wamu, circuit city, gm, ford, chrysler, delta, ....... didn't happen.
The conventional foolishness has held that mortgage payments are better than rent because it's equity. People even believed it was worth paying a premium to pay a mortgage rather than rent something comparable.
I certainly hope a new collective wisdom will take root - that homeownership is a liability and an expense and is only worthwhile when the risk is justified by paying 30-50% less than comparable rent would be.
The reduction of house prices is the biggest fear in the minds of financiers. SO much funny money has been leveraged on inflated home values that reasonable home values would destroy all the new money of the last few years. A collapse of home prices would sweep money from the do nothings and put it back in the pockets of wage earners. Local governments would also suffer as their bloated tax revenues dry up. South Florida is a prime example of this. To this day homes are still extremely overpriced and wages have been falling. It is a disaster in the making. The funny money people have to keep pumping or they will have to actually do meaningful work. That cannot happen.
most people don't understand this. govco would like people to believe that the small guy has the most to lose. this simply isn't true. the big guys are the ones who stand to lose serious bread. what they don't tell people is that without bailouts the $500k home becomes worth $100k or less. so we earn less but things cost less. we can't afford the battery operated pepper shakers but we work only half the hours. tptb want us on that treadmill!
Maybe if the builders went back to some more traditional style homes then prices would come down.
Go look at a late 80's neighborhood. They don't have 3 car garages, media rooms, etc.
They're typical 1700-1800 3/2 homes with simple designs that ARE affordable starter homes.
Put in energy efficient design/appliances and I'd buy that in a heartbeat. Not just for starters, for keeps. I don't need or want to take care of anything much larger. Wish they would build smart homes instead of fancy ones.
Good god, if I could swing it responsibly, I'd be out there tomorrow bidding on three or four that I know about. At the very least, I'll be able to work one or two into my budget without worries by this time next year.
I honestly think this is part of the problem. Right now there are too many investors/speculators still trying to game this diseased market. I'll take it as a good sign when I see that the majority of homes purchased are bought by people who WANT TO LIVE IN THEM.
Wish I could get a chart showing the historical proportion of homes sold to investors/speculators. My instinct is we were way out of whack and still are.
Who is going to buy a house in the midst of a crumbling job market? What a liability. If your job evaporates and you need to move to find work, owning a home you can't unload is a tombstone. Browse the Michigan forums to see people trapped by homes they can't unload and without jobs.
Michigan now, somewhere else next. This is a good time to be maximizing personal liquidity, preserving the ability to pack up and take off if need be. Buying a home right now, at any kind of price, could be the mistake of a lifetime.
I was ridiculed for saying the same thing in the Real Estate forum.
Speculators welcome, and even create, inflation. They make money in an inflating market. They do not welcome deflation. They lose and lose big when prices are collapsing. I figure I will be able to buy a much better home in five years than I could ever afford during the bubble.
I do not think government intervention with all the bailouts will result in more inflation. It will just delay the deflation until the big boys can get out. Keep your current jobs and hang onto your houses. If you sell now you will be unable to recover your losses for a decade or more.
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