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September 21, 2008 at 4:20 PM #273939September 22, 2008 at 9:08 AM #273834Omega PointParticipant
[quote]If you think through these scenarios, you can see that this will not stop homes from coming down in price.[/quote]
Yes, but at this point, we just need people to continue to make payments even if it is dragged out over 40-50 years at a low interest rate. If more people stop paying their mortgage, I’m afraid the game is over and how low home prices are will be the least of our worries.
September 22, 2008 at 9:08 AM #274081Omega PointParticipant[quote]If you think through these scenarios, you can see that this will not stop homes from coming down in price.[/quote]
Yes, but at this point, we just need people to continue to make payments even if it is dragged out over 40-50 years at a low interest rate. If more people stop paying their mortgage, I’m afraid the game is over and how low home prices are will be the least of our worries.
September 22, 2008 at 9:08 AM #274085Omega PointParticipant[quote]If you think through these scenarios, you can see that this will not stop homes from coming down in price.[/quote]
Yes, but at this point, we just need people to continue to make payments even if it is dragged out over 40-50 years at a low interest rate. If more people stop paying their mortgage, I’m afraid the game is over and how low home prices are will be the least of our worries.
September 22, 2008 at 9:08 AM #274129Omega PointParticipant[quote]If you think through these scenarios, you can see that this will not stop homes from coming down in price.[/quote]
Yes, but at this point, we just need people to continue to make payments even if it is dragged out over 40-50 years at a low interest rate. If more people stop paying their mortgage, I’m afraid the game is over and how low home prices are will be the least of our worries.
September 22, 2008 at 9:08 AM #274153Omega PointParticipant[quote]If you think through these scenarios, you can see that this will not stop homes from coming down in price.[/quote]
Yes, but at this point, we just need people to continue to make payments even if it is dragged out over 40-50 years at a low interest rate. If more people stop paying their mortgage, I’m afraid the game is over and how low home prices are will be the least of our worries.
September 22, 2008 at 10:16 AM #273839HuckleberryParticipantThat’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.
This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.
This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.
The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.
September 22, 2008 at 10:16 AM #274086HuckleberryParticipantThat’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.
This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.
This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.
The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.
September 22, 2008 at 10:16 AM #274090HuckleberryParticipantThat’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.
This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.
This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.
The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.
September 22, 2008 at 10:16 AM #274135HuckleberryParticipantThat’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.
This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.
This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.
The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.
September 22, 2008 at 10:16 AM #274158HuckleberryParticipantThat’s exactly the problem here. The Dems are insisting this package have some sort of homeowner foreclosure protection, keeping them in their homes by use of some sort of loan amount decrease.
This is a HUGE mistake. Anyone, even those that are in positive equity positions will consider stopping their payments and fraudulently “working” the system to get loan modifications.
This will have massive valuation consequences down the road. The govt. think they are helping the RE markets by curtailing foreclosures, but all this will accomplish is expedient mark to market revaluation.
The biggest impact is on all of those people that live on the same block with older mortgages. Their houses will now be worth 100’s of thousands of dollars less.
September 22, 2008 at 11:43 AM #273873underdoseParticipantLet’s make one clarification of the question. When you say “what will happen to prices”, do you mean in real terms or nominal terms? That’s a vital distinction.
In real terms, houses are still overvalued, no question. Prices must fall in real terms, that is, adjusted for inflation.
But nominal terms, that’s anyone’s guess. Paulson and Bernanke are causing so much monetary inflation through all this that across the board price inflation is not unlikely. So maybe home prices will recover in nominal terms. We may see a 5% increase in home prices nominally, and the govt. will declare victory. Of course, if this comes at the price of gas and milk both hitting $10 a gallon, that 5% nominal gain will still represent a significant decline in real terms.
Or, of course there is always the massive flight from dollar, hyper-inflation scenario, in which case homes skyrocket to trillions of dollars and milk and gas jump to hudreds of millions of dollars. That’s quite a gain in nominal terms, but still a devastating loss in real terms…
September 22, 2008 at 11:43 AM #274122underdoseParticipantLet’s make one clarification of the question. When you say “what will happen to prices”, do you mean in real terms or nominal terms? That’s a vital distinction.
In real terms, houses are still overvalued, no question. Prices must fall in real terms, that is, adjusted for inflation.
But nominal terms, that’s anyone’s guess. Paulson and Bernanke are causing so much monetary inflation through all this that across the board price inflation is not unlikely. So maybe home prices will recover in nominal terms. We may see a 5% increase in home prices nominally, and the govt. will declare victory. Of course, if this comes at the price of gas and milk both hitting $10 a gallon, that 5% nominal gain will still represent a significant decline in real terms.
Or, of course there is always the massive flight from dollar, hyper-inflation scenario, in which case homes skyrocket to trillions of dollars and milk and gas jump to hudreds of millions of dollars. That’s quite a gain in nominal terms, but still a devastating loss in real terms…
September 22, 2008 at 11:43 AM #274126underdoseParticipantLet’s make one clarification of the question. When you say “what will happen to prices”, do you mean in real terms or nominal terms? That’s a vital distinction.
In real terms, houses are still overvalued, no question. Prices must fall in real terms, that is, adjusted for inflation.
But nominal terms, that’s anyone’s guess. Paulson and Bernanke are causing so much monetary inflation through all this that across the board price inflation is not unlikely. So maybe home prices will recover in nominal terms. We may see a 5% increase in home prices nominally, and the govt. will declare victory. Of course, if this comes at the price of gas and milk both hitting $10 a gallon, that 5% nominal gain will still represent a significant decline in real terms.
Or, of course there is always the massive flight from dollar, hyper-inflation scenario, in which case homes skyrocket to trillions of dollars and milk and gas jump to hudreds of millions of dollars. That’s quite a gain in nominal terms, but still a devastating loss in real terms…
September 22, 2008 at 11:43 AM #274170underdoseParticipantLet’s make one clarification of the question. When you say “what will happen to prices”, do you mean in real terms or nominal terms? That’s a vital distinction.
In real terms, houses are still overvalued, no question. Prices must fall in real terms, that is, adjusted for inflation.
But nominal terms, that’s anyone’s guess. Paulson and Bernanke are causing so much monetary inflation through all this that across the board price inflation is not unlikely. So maybe home prices will recover in nominal terms. We may see a 5% increase in home prices nominally, and the govt. will declare victory. Of course, if this comes at the price of gas and milk both hitting $10 a gallon, that 5% nominal gain will still represent a significant decline in real terms.
Or, of course there is always the massive flight from dollar, hyper-inflation scenario, in which case homes skyrocket to trillions of dollars and milk and gas jump to hudreds of millions of dollars. That’s quite a gain in nominal terms, but still a devastating loss in real terms…
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