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June 1, 2011 at 4:28 AM #701494June 1, 2011 at 4:30 AM #700306
CA renter
Participant[quote=briansd1]In economic theory, it’s a good time to buy when buying is cheaper than rent. Because in theory you can jump in an out of the market at will. In theory, you have unlimited capital and perfect liquidity.
In practice, you need a downpayment and credit to buy a house. If you have the sell the house, you have to pay commissions and you might have to sell at a low price just to get rid of it.
In practice, most buyers max out on their mortgages and the vagaries of life can make the purchase unaffordable.
Who knows where your job and family situation will take you a few years down the road.
To me, this statement below is very indicative of borrowers in over their heads. They need prices to remain high, in order to refinance (kick the can further down) or sell.
Despite talk by some that homeowners have plenty of equity and wherewithal, the facts are that the $8,000 rebates and the GSE increasing the limits following the 2008 crisis did spur homebuying.
Now that the incentives are gone, the market is taking the appropriate hit.
If a homebuyer really needs an $8,000 rebate to buy a house, then we have still have an affordability problem.
With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Spot on, Brian.
June 1, 2011 at 4:30 AM #700402Participant[quote=briansd1]In economic theory, it’s a good time to buy when buying is cheaper than rent. Because in theory you can jump in an out of the market at will. In theory, you have unlimited capital and perfect liquidity.
In practice, you need a downpayment and credit to buy a house. If you have the sell the house, you have to pay commissions and you might have to sell at a low price just to get rid of it.
In practice, most buyers max out on their mortgages and the vagaries of life can make the purchase unaffordable.
Who knows where your job and family situation will take you a few years down the road.
To me, this statement below is very indicative of borrowers in over their heads. They need prices to remain high, in order to refinance (kick the can further down) or sell.
Despite talk by some that homeowners have plenty of equity and wherewithal, the facts are that the $8,000 rebates and the GSE increasing the limits following the 2008 crisis did spur homebuying.
Now that the incentives are gone, the market is taking the appropriate hit.
If a homebuyer really needs an $8,000 rebate to buy a house, then we have still have an affordability problem.
With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Spot on, Brian.
June 1, 2011 at 4:30 AM #700992Participant[quote=briansd1]In economic theory, it’s a good time to buy when buying is cheaper than rent. Because in theory you can jump in an out of the market at will. In theory, you have unlimited capital and perfect liquidity.
In practice, you need a downpayment and credit to buy a house. If you have the sell the house, you have to pay commissions and you might have to sell at a low price just to get rid of it.
In practice, most buyers max out on their mortgages and the vagaries of life can make the purchase unaffordable.
Who knows where your job and family situation will take you a few years down the road.
To me, this statement below is very indicative of borrowers in over their heads. They need prices to remain high, in order to refinance (kick the can further down) or sell.
Despite talk by some that homeowners have plenty of equity and wherewithal, the facts are that the $8,000 rebates and the GSE increasing the limits following the 2008 crisis did spur homebuying.
Now that the incentives are gone, the market is taking the appropriate hit.
If a homebuyer really needs an $8,000 rebate to buy a house, then we have still have an affordability problem.
With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Spot on, Brian.
June 1, 2011 at 4:30 AM #701140Participant[quote=briansd1]In economic theory, it’s a good time to buy when buying is cheaper than rent. Because in theory you can jump in an out of the market at will. In theory, you have unlimited capital and perfect liquidity.
In practice, you need a downpayment and credit to buy a house. If you have the sell the house, you have to pay commissions and you might have to sell at a low price just to get rid of it.
In practice, most buyers max out on their mortgages and the vagaries of life can make the purchase unaffordable.
Who knows where your job and family situation will take you a few years down the road.
To me, this statement below is very indicative of borrowers in over their heads. They need prices to remain high, in order to refinance (kick the can further down) or sell.
Despite talk by some that homeowners have plenty of equity and wherewithal, the facts are that the $8,000 rebates and the GSE increasing the limits following the 2008 crisis did spur homebuying.
Now that the incentives are gone, the market is taking the appropriate hit.
If a homebuyer really needs an $8,000 rebate to buy a house, then we have still have an affordability problem.
With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Spot on, Brian.
June 1, 2011 at 4:30 AM #701499Participant[quote=briansd1]In economic theory, it’s a good time to buy when buying is cheaper than rent. Because in theory you can jump in an out of the market at will. In theory, you have unlimited capital and perfect liquidity.
In practice, you need a downpayment and credit to buy a house. If you have the sell the house, you have to pay commissions and you might have to sell at a low price just to get rid of it.
In practice, most buyers max out on their mortgages and the vagaries of life can make the purchase unaffordable.
Who knows where your job and family situation will take you a few years down the road.
To me, this statement below is very indicative of borrowers in over their heads. They need prices to remain high, in order to refinance (kick the can further down) or sell.
Despite talk by some that homeowners have plenty of equity and wherewithal, the facts are that the $8,000 rebates and the GSE increasing the limits following the 2008 crisis did spur homebuying.
Now that the incentives are gone, the market is taking the appropriate hit.
If a homebuyer really needs an $8,000 rebate to buy a house, then we have still have an affordability problem.
With prices falling again, economists fear that the nation’s housing market could enter a new downward spiral, with declines pushing more borrowers underwater, triggering more foreclosures and setting off further drops.
Spot on, Brian.
June 1, 2011 at 4:44 AM #700311Participant[quote=bubba99][quote=walterwhite]in terms of what, though? i agree that in terms of making actual money, it’s a bad bet; we’re broke.
but I think it’s a pretty damn good bet that at some point int he next 30 years, the US government, although it’s just been playing with fire lately, is going to ge the hang of creating some serious inflation,a nd while you may not make any real money, it will seem smart to ahve borrowed a large amount of dollars today becauseit will beeasier to pay them off someday. I hate to say it’s a sure thing, cause no one really knows, but it sure seems that that’s waht the powers that be want…[/quote]
I have been thinking down the same lines. That sooner or later, inflation and dollar destruction will make owning assets a good thing – maybe the only thing that will prevent wealth destruction. Real rates of interest on CD’s etc are negative so savings are a real loss.
Housing is a leveraged asset play and soon it may make financial sense. Pricing is critical, but we may see the housing decline actually reverse amid the dollar decline.[/quote]
Here is the scary version of inflation:
Instead of wages going up (not likely, with “globalism”), that money is “invested” overseas, or in commodities, or housing, or stocks… While asset holders are wealthier on paper, unless they extract money from these assets by selling them, that wealth is of no use to them if they need to buy something without taking on additional debt — using their assets as collateral.
What I fear is that “rich” foreigners end up with more US dollars and/or stronger currencies, and buy up all of our assets, essentially becoming our lords; and we, their serfs. We would also see asset and commodity prices rising, while our wages stagnate — creating a far more hideous financial situation that what deflation would deliver. This isn’t a prediction, as much as it’s an observation of what is currently going on, and has been going on for a couple of years, now.
Dollar destruction would wreck havoc on all working people in the U.S. It is only something to be desired by capitalists (asset owners), not laborers.
Nobody should get into debt now with the expectation that inflation will make their debt payments “smaller” in real terms. This is very unlikely to happen, IMHO.
BTW, if you’re looking for inflation and dollar destruction, you only have to look at the past ~2 years. What other reason is there for housing prices to levitate like they have, and for the stock market, bond market, and commodity market to skyrocket like they did? I think the time for massive inflation is in our past, not in our future. We have only managed to increase our national debt (by trillions), and all we have to show for it is another bubble economy that was entirely driven by the Fed’s monetary policies. It seems the winds in D.C. have changed, and there is less tolerance for this irresponsible financial behavior. We can only hope.
June 1, 2011 at 4:44 AM #700406Participant[quote=bubba99][quote=walterwhite]in terms of what, though? i agree that in terms of making actual money, it’s a bad bet; we’re broke.
but I think it’s a pretty damn good bet that at some point int he next 30 years, the US government, although it’s just been playing with fire lately, is going to ge the hang of creating some serious inflation,a nd while you may not make any real money, it will seem smart to ahve borrowed a large amount of dollars today becauseit will beeasier to pay them off someday. I hate to say it’s a sure thing, cause no one really knows, but it sure seems that that’s waht the powers that be want…[/quote]
I have been thinking down the same lines. That sooner or later, inflation and dollar destruction will make owning assets a good thing – maybe the only thing that will prevent wealth destruction. Real rates of interest on CD’s etc are negative so savings are a real loss.
Housing is a leveraged asset play and soon it may make financial sense. Pricing is critical, but we may see the housing decline actually reverse amid the dollar decline.[/quote]
Here is the scary version of inflation:
Instead of wages going up (not likely, with “globalism”), that money is “invested” overseas, or in commodities, or housing, or stocks… While asset holders are wealthier on paper, unless they extract money from these assets by selling them, that wealth is of no use to them if they need to buy something without taking on additional debt — using their assets as collateral.
What I fear is that “rich” foreigners end up with more US dollars and/or stronger currencies, and buy up all of our assets, essentially becoming our lords; and we, their serfs. We would also see asset and commodity prices rising, while our wages stagnate — creating a far more hideous financial situation that what deflation would deliver. This isn’t a prediction, as much as it’s an observation of what is currently going on, and has been going on for a couple of years, now.
Dollar destruction would wreck havoc on all working people in the U.S. It is only something to be desired by capitalists (asset owners), not laborers.
Nobody should get into debt now with the expectation that inflation will make their debt payments “smaller” in real terms. This is very unlikely to happen, IMHO.
BTW, if you’re looking for inflation and dollar destruction, you only have to look at the past ~2 years. What other reason is there for housing prices to levitate like they have, and for the stock market, bond market, and commodity market to skyrocket like they did? I think the time for massive inflation is in our past, not in our future. We have only managed to increase our national debt (by trillions), and all we have to show for it is another bubble economy that was entirely driven by the Fed’s monetary policies. It seems the winds in D.C. have changed, and there is less tolerance for this irresponsible financial behavior. We can only hope.
June 1, 2011 at 4:44 AM #700997Participant[quote=bubba99][quote=walterwhite]in terms of what, though? i agree that in terms of making actual money, it’s a bad bet; we’re broke.
but I think it’s a pretty damn good bet that at some point int he next 30 years, the US government, although it’s just been playing with fire lately, is going to ge the hang of creating some serious inflation,a nd while you may not make any real money, it will seem smart to ahve borrowed a large amount of dollars today becauseit will beeasier to pay them off someday. I hate to say it’s a sure thing, cause no one really knows, but it sure seems that that’s waht the powers that be want…[/quote]
I have been thinking down the same lines. That sooner or later, inflation and dollar destruction will make owning assets a good thing – maybe the only thing that will prevent wealth destruction. Real rates of interest on CD’s etc are negative so savings are a real loss.
Housing is a leveraged asset play and soon it may make financial sense. Pricing is critical, but we may see the housing decline actually reverse amid the dollar decline.[/quote]
Here is the scary version of inflation:
Instead of wages going up (not likely, with “globalism”), that money is “invested” overseas, or in commodities, or housing, or stocks… While asset holders are wealthier on paper, unless they extract money from these assets by selling them, that wealth is of no use to them if they need to buy something without taking on additional debt — using their assets as collateral.
What I fear is that “rich” foreigners end up with more US dollars and/or stronger currencies, and buy up all of our assets, essentially becoming our lords; and we, their serfs. We would also see asset and commodity prices rising, while our wages stagnate — creating a far more hideous financial situation that what deflation would deliver. This isn’t a prediction, as much as it’s an observation of what is currently going on, and has been going on for a couple of years, now.
Dollar destruction would wreck havoc on all working people in the U.S. It is only something to be desired by capitalists (asset owners), not laborers.
Nobody should get into debt now with the expectation that inflation will make their debt payments “smaller” in real terms. This is very unlikely to happen, IMHO.
BTW, if you’re looking for inflation and dollar destruction, you only have to look at the past ~2 years. What other reason is there for housing prices to levitate like they have, and for the stock market, bond market, and commodity market to skyrocket like they did? I think the time for massive inflation is in our past, not in our future. We have only managed to increase our national debt (by trillions), and all we have to show for it is another bubble economy that was entirely driven by the Fed’s monetary policies. It seems the winds in D.C. have changed, and there is less tolerance for this irresponsible financial behavior. We can only hope.
June 1, 2011 at 4:44 AM #701145Participant[quote=bubba99][quote=walterwhite]in terms of what, though? i agree that in terms of making actual money, it’s a bad bet; we’re broke.
but I think it’s a pretty damn good bet that at some point int he next 30 years, the US government, although it’s just been playing with fire lately, is going to ge the hang of creating some serious inflation,a nd while you may not make any real money, it will seem smart to ahve borrowed a large amount of dollars today becauseit will beeasier to pay them off someday. I hate to say it’s a sure thing, cause no one really knows, but it sure seems that that’s waht the powers that be want…[/quote]
I have been thinking down the same lines. That sooner or later, inflation and dollar destruction will make owning assets a good thing – maybe the only thing that will prevent wealth destruction. Real rates of interest on CD’s etc are negative so savings are a real loss.
Housing is a leveraged asset play and soon it may make financial sense. Pricing is critical, but we may see the housing decline actually reverse amid the dollar decline.[/quote]
Here is the scary version of inflation:
Instead of wages going up (not likely, with “globalism”), that money is “invested” overseas, or in commodities, or housing, or stocks… While asset holders are wealthier on paper, unless they extract money from these assets by selling them, that wealth is of no use to them if they need to buy something without taking on additional debt — using their assets as collateral.
What I fear is that “rich” foreigners end up with more US dollars and/or stronger currencies, and buy up all of our assets, essentially becoming our lords; and we, their serfs. We would also see asset and commodity prices rising, while our wages stagnate — creating a far more hideous financial situation that what deflation would deliver. This isn’t a prediction, as much as it’s an observation of what is currently going on, and has been going on for a couple of years, now.
Dollar destruction would wreck havoc on all working people in the U.S. It is only something to be desired by capitalists (asset owners), not laborers.
Nobody should get into debt now with the expectation that inflation will make their debt payments “smaller” in real terms. This is very unlikely to happen, IMHO.
BTW, if you’re looking for inflation and dollar destruction, you only have to look at the past ~2 years. What other reason is there for housing prices to levitate like they have, and for the stock market, bond market, and commodity market to skyrocket like they did? I think the time for massive inflation is in our past, not in our future. We have only managed to increase our national debt (by trillions), and all we have to show for it is another bubble economy that was entirely driven by the Fed’s monetary policies. It seems the winds in D.C. have changed, and there is less tolerance for this irresponsible financial behavior. We can only hope.
June 1, 2011 at 4:44 AM #701504Participant[quote=bubba99][quote=walterwhite]in terms of what, though? i agree that in terms of making actual money, it’s a bad bet; we’re broke.
but I think it’s a pretty damn good bet that at some point int he next 30 years, the US government, although it’s just been playing with fire lately, is going to ge the hang of creating some serious inflation,a nd while you may not make any real money, it will seem smart to ahve borrowed a large amount of dollars today becauseit will beeasier to pay them off someday. I hate to say it’s a sure thing, cause no one really knows, but it sure seems that that’s waht the powers that be want…[/quote]
I have been thinking down the same lines. That sooner or later, inflation and dollar destruction will make owning assets a good thing – maybe the only thing that will prevent wealth destruction. Real rates of interest on CD’s etc are negative so savings are a real loss.
Housing is a leveraged asset play and soon it may make financial sense. Pricing is critical, but we may see the housing decline actually reverse amid the dollar decline.[/quote]
Here is the scary version of inflation:
Instead of wages going up (not likely, with “globalism”), that money is “invested” overseas, or in commodities, or housing, or stocks… While asset holders are wealthier on paper, unless they extract money from these assets by selling them, that wealth is of no use to them if they need to buy something without taking on additional debt — using their assets as collateral.
What I fear is that “rich” foreigners end up with more US dollars and/or stronger currencies, and buy up all of our assets, essentially becoming our lords; and we, their serfs. We would also see asset and commodity prices rising, while our wages stagnate — creating a far more hideous financial situation that what deflation would deliver. This isn’t a prediction, as much as it’s an observation of what is currently going on, and has been going on for a couple of years, now.
Dollar destruction would wreck havoc on all working people in the U.S. It is only something to be desired by capitalists (asset owners), not laborers.
Nobody should get into debt now with the expectation that inflation will make their debt payments “smaller” in real terms. This is very unlikely to happen, IMHO.
BTW, if you’re looking for inflation and dollar destruction, you only have to look at the past ~2 years. What other reason is there for housing prices to levitate like they have, and for the stock market, bond market, and commodity market to skyrocket like they did? I think the time for massive inflation is in our past, not in our future. We have only managed to increase our national debt (by trillions), and all we have to show for it is another bubble economy that was entirely driven by the Fed’s monetary policies. It seems the winds in D.C. have changed, and there is less tolerance for this irresponsible financial behavior. We can only hope.
June 1, 2011 at 6:37 AM #700316scaredyclassic
ParticipantYou could be right and probably why I Derek like taking cash advance credit offers and buying commodity etfs
Keep rolling em over and seems like a good bet over the next 5 years.
On the other hand as the saying goes when you owe the bank 100k u can’t sleep at night. When you owe the bank 100 mill the banker can’t sleep at night.
Maybe that’s the global situation.
June 1, 2011 at 6:37 AM #700411ParticipantYou could be right and probably why I Derek like taking cash advance credit offers and buying commodity etfs
Keep rolling em over and seems like a good bet over the next 5 years.
On the other hand as the saying goes when you owe the bank 100k u can’t sleep at night. When you owe the bank 100 mill the banker can’t sleep at night.
Maybe that’s the global situation.
June 1, 2011 at 6:37 AM #701002ParticipantYou could be right and probably why I Derek like taking cash advance credit offers and buying commodity etfs
Keep rolling em over and seems like a good bet over the next 5 years.
On the other hand as the saying goes when you owe the bank 100k u can’t sleep at night. When you owe the bank 100 mill the banker can’t sleep at night.
Maybe that’s the global situation.
June 1, 2011 at 6:37 AM #701150ParticipantYou could be right and probably why I Derek like taking cash advance credit offers and buying commodity etfs
Keep rolling em over and seems like a good bet over the next 5 years.
On the other hand as the saying goes when you owe the bank 100k u can’t sleep at night. When you owe the bank 100 mill the banker can’t sleep at night.
Maybe that’s the global situation.
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