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The housing market was a Ponzi scheme designed to effectively impoverish most of this generation. I was not meant to provide a house for everyone but to make everyone have a mortgage. Credit at usurious rates (>15%) were another card in this deck.
We bought our home at a good price and never expected our house to be a money maker. If we have to sell we will have effectively rented the property from the bank by selling it, in constant dollars, for less than we paid for it. Fortunately we left our 401K intact and it has regained value.
I never subscribed to the idea if a house being a growth investment because I saw the eventual bust would eliminate the profit. What we need to do now is let the prices fall through the floor and the financial system take the hit. Then we need to regroup our industrial economy behind protective tariffs and eliminate income tax on the bottom 90%. This will stop the transfer of wealth from the people that create it from the people that gamble with it.
What we need to do now is let the prices fall through the floor and the financial system take the hit.
Or we could inflate the wage structure to support the higher prices of the last bubble and make everyone whole.
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Originally Posted by GregW
Then we need to regroup our industrial economy behind protective tariffs and eliminate income tax on the bottom 90%. This will stop the transfer of wealth from the people that create it from the people that gamble with it.
These two things can coexist. Rebuilding our manufacturing base and higher housing prices.
Or we could inflate the wage structure to support the higher prices of the last bubble and make everyone whole.
Then how would our products be competitive internationally?
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These two things can coexist. Rebuilding our manufacturing base and higher housing prices.
Who is going to invest in manufacturing in the US when they can make much more on their investment in China/India? Who can pay higher prices for housing without secure higher paying jobs?
It is ridiculous to talk about home prices "needing to be higher" until all the toxic mortgages are cleared off the market instead of being held onto by banks to artificially decrease supply.
Even if new constructions cease, the old homes really need to be torn down or renovated. This would cause further depreciation of home prices over time even if supply starts to match demand.
Many areas will never recover due to the property taxes one must pay to own a home. I know some people who pay more per month than I pay a year in prop taxes. home for sale 500$, take over taxes
We haven't even seen the beginning of real property tax increases. Government is broke, and property owners are the only ones they can squeeze.
If you want the housing market and with it the economy to recover any time soon, then we need to have more income to support the higher housing prices.
The rental market in my area is doing quite nicely, thank you, and rents are going up.
Median income for renters is less than half of that for homeowners, so renters have less income and higher prices (rents).
Then how would our products be competitive internationally?
Easy it would tend to trigger a restructuring of the exchange rates worldwide. With that much inflation in the US (Oil is priced in US dollars) the rest of the world would have to let the dollar slide or to have a matching inflation.
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Originally Posted by Bideshi
Who is going to invest in manufacturing in the US when they can make much more on their investment in China/India? Who can pay higher prices for housing without secure higher paying jobs?
With the minimum wage bumped up to $30hr then you would have anybody that held a fulltime job in the market for a $180k house. Worldwide there was an increase in the world’s monetary base from $3 Trillion ten years ago to $10 trillion now. This increase was used to buy US debt with. Why did the fed stop publishing M3 numbers back in 2004? Because money was flowing into the economy from foreign printing presses that is why.
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Originally Posted by freemkt
The rental market in my area is doing quite nicely, thank you, and rents are going up.
Median income for renters is less than half of that for homeowners, so renters have less income and higher prices (rents).
How do you explain that?
Think it through. Housing bubble pops, people move out of houses and into rentals, houses down rentals up.
Housing has to decline to match up with salaries.
Buying a home 6-10 times your salary was delusional as we sadly came to find out.
More like 2-3 times your salary.
Housing has to decline to match up with salaries.
Buying a home 6-10 times your salary was delusional as we sadly came to find out.
More like 2-3 times your salary.
As salaries stagnate/decline so will home prices.
There are houses in my town that go for $600,000, yet the rental price for a similar home is approximately $2,100 - $2,500, versus of a mortgage payment of $2,700, not including taxes, which are approximately $700 a month, plus insurance, utility bills, and maintenance.
This housing bubble was created by the greed of bankers, mortgage brokers, hedge fund managers, real estate agents and last but not least, Alan Greenspan a Ayn Rand supporter. He knew the poor suckers who bought homes would be blamed in the end and he was right.
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