HARVARD study on The State of the Nation’s Housing

[The-Shoveler]

[quote=scaredyclassic]Cars probably wouldn’t cost that much less without financing. They have long useful lives and help generate income. Financing at low interest therefore a good idea.

College would cost a tiny fraction of its price without financing.[/quote]

Like it or not, a collage education will be a lot lot cheaper soon.

The internet online collage will forever change this.

it cannot be stopped

[scaredyclassic]

[quote=HLS][quote=scaredyclassic]Cars probably wouldn’t cost that much less without financing. They have long useful lives and help generate income. Financing at low interest therefore a good idea.
[/quote]

Cars are a status symbol for many, and another large segment of the economy. NEW cars are not a necessity.
If there were no new cars produced for the next 10 years, I don’t think that there would be a shortage. Older cars would be kept running, people would still be able to get around and there would be a lot less debt carried.
If financing was not available, I think that cars would be selling for less.

If there were no new clothes produced for 10 years would people be walking around naked ??[/quote]

Reduce
Reuse
Recycle.

Well…used car prices would definitely go up without new cars.

Basically. I don’t believe big change is possible anymore absent catastrophe.

[CA renter]

Owning a home has long been the #1 way for families to gain some wealth. It also provides predictable, lower-cost housing for seniors if people are able to buy earlier in life and have a paid-off house before retiring. Additionally, communities with high owner-occupancy rates tend to be cleaner and safer, with more engaged residents (though it’s likely that the types who could traditionally qualify for mortgages are more likely to be responsible neighbors). For these reasons alone, it makes sense for the govt to push for more owner-occupied housing.

The main reason for prices shooting up so much during the bubble, and even now, is because speculators and investors have been flooding into the housing market. I think this is damaging to the economy over the long run, not only because of the boom-bust nature of speculative markets, but also because it prevents stable ownership and the benefits it tends to bring to individual families and society, as a whole.

If we want to see stable communities while also giving as many people as possible the opportunity to own their own **affordable** home (which I believe is the right thing to do), we should enact policies that encourage this by keeping speculators out of the market, while providing assistance to buyers of a single, primary residence.

We should never have government-backed/subsidized mortgages for speculators/investors. No GSE, FHA, USDA, VA, etc. loans except for a single, primary residence. For FHA/VA loans with low downpayment requirements, the loan limits should be at or below the median price for the area; I agree with BG that these loans should be geared toward working-class neighborhoods, not beachfront properties or homes in exclusive areas.

All government-backed loans should have strict underwriting guidelines with low debt-to-income ratios and high credit score requirements.

Speculators should have to use the “free market” to get their financing; no need for the taxpayers/government to subsidize their profits.

[spdrun]

Like it or not, a collage education will be a lot lot cheaper soon.

The internet online collage will forever change this.

it cannot be stopped

Sitting in isolation taking Intarweb correspondence courses really doesn’t compare with interacting with professors and other students in real life. Humans were designed for personal interaction, not to sit in a room and go back and forth with some kum-pootah.

[FlyerInHi]

[quote=HLS]The housing market is a HUGE part of the economy in this country and correlates with the general mood of the country and a sense of wealth & security for many.

The govt has stepped in to create a market for mortgage backed securities along with govt subsidies, guarantees and insurance.

If there was no financing available for houses and
buyers had to pay cash, is there any doubt that houses would sell for less ?
If 50% down was required, they would sell for a bit more. If 25% down was required, prices would be even higher and when you get to almost nothing down, the prices become inflated.

What’s ironic is that the responsible ALL CASH buyer who has worked hard and saved to buy a house,
has to pay the same price that someone with crappy credit and no down payment has to pay.
[/quote]

You’re assuming that all else is being equal.

If there was no financing, the building industry would not be as huge, as you put it. There would be lower economies of scale and costs would be higher overall.

We now have large builders who can technically put up thousands of houses very quickly.

We need financing to generate economies of scale for constructing the commodities that houses are.

I think that zoning, building codes, and lack of supply of new houses, have much more to do with prices.

There’s a “housing establishment” that’s used to doing certain things that acts to protect its way of life. If we had innovative prefab houses and looser zoning restrictions, house prices would drop.

If you could put a prefab container house in your backyard, you could rent it out to a single tenant who would enjoy a nice modern, comfortable space.

Creative thinking can help solve the housing shortage very quickly.

[CA renter]

[quote=spdrun]

Like it or not, a collage education will be a lot lot cheaper soon.

The internet online collage will forever change this.

it cannot be stopped

Sitting in isolation taking Intarweb correspondence courses really doesn’t compare with interacting with professors and other students in real life. Humans were designed for personal interaction, not to sit in a room and go back and forth with some kum-pootah.[/quote]

ITA

[an]

[quote=FlyerInHi]
I think that zoning, building codes, and lack of supply of new houses, have much more to do with prices.

There’s a “housing establishment” that’s used to doing certain things that acts to protect its way of life. If we had innovative prefab houses and looser zoning restrictions, house prices would drop.

If you could put a prefab container house in your backyard, you could rent it out to a single tenant who would enjoy a nice modern, comfortable space.

Creative thinking can help solve the housing shortage very quickly.[/quote]
I totally agree with this 100%. If you want lower housing price, just loosen up the zoning laws. It’s simply supply and demand. If you loosen up zoning law to allow more supply, that would drive down price. If we prefab houses in a factory and ship to the location, you can also lower the cost of building the house as well.

[spdrun]

CA-Renter — Landlords should have good access to credit, assuming the deals make sense. Perhaps via small business loans (after all, the gov’t subsidizes other types of business).

Honestly — most Americans have no business making a $100k+ investment, especially with gov’t money. I’d rather more property be in the hands of professionals and generally smart people.

Note that heavily non-owner-occupied markets like Manhattan and San Francisco actually held their value decently during the crash. I’d trust a person out for income (not a flipper) to make a rational property purchase a lot more than a first-time buyer who gushes about the kitchen tile.

Yeah, that’s an elitist idea. So sue me.

[CA renter]

[quote=spdrun]CA-Renter — Landlords should have good access to credit, assuming the deals make sense. Perhaps via small business loans (after all, the gov’t subsidizes other types of business).

Honestly — most Americans have no business making a $100k+ investment, especially with gov’t money. I’d rather more property be in the hands of professionals and generally smart people.

Note that heavily non-owner-occupied markets like Manhattan and San Francisco actually held their value decently during the crash. I’d trust a person out for income (not a flipper) to make a rational property purchase a lot more than a first-time buyer who gushes about the kitchen tile.

Yeah, that’s an elitist idea. So sue me.[/quote]

The government might subsidize certain businesses, but that’s because they provide some kind of benefit to society and/or grow the economy (at least, that’s how it should be). Landlords of existing homes do neither. Most people would be better off owning their own homes (affordable, with no gimmicky loans). Now, if you want to *build* rental housing, which provides a new good/shelter that wasn’t there before, then you might have an argument for govt-backed loans, but to buy existing homes? No, that just takes properties off the market that could otherwise be owner-occupied.

[spdrun]

Are people really better off owning vs renting? If you own a home, you’re tied to a given geographical area, which isn’t a good thing in the current labor market.

[Coronita]

[quote=HLS]The housing market is a HUGE part of the economy in this country and correlates with the general mood of the country and a sense of wealth & security for many.

The govt has stepped in to create a market for mortgage backed securities along with govt subsidies, guarantees and insurance.

If there was no financing available for houses and
buyers had to pay cash, is there any doubt that houses would sell for less ?
If 50% down was required, they would sell for a bit more. If 25% down was required, prices would be even higher and when you get to almost nothing down, the prices become inflated.

What’s ironic is that the responsible ALL CASH buyer who has worked hard and saved to buy a house,
has to pay the same price that someone with crappy credit and no down payment has to pay.

Is it fair ?
If crazy financing didn’t exist, houses would sell for less. The prudent, responsible, all cash buyers would be able to buy 2 or 3 houses for the same amount of dollars and rent them out to those without the cash down.

The availability of financing a purchase allows for an inflated price.
If student loans were not available, I believe that higher education would cost less and those that truly wanted one would figure out how to pay for it.
Part of me believes that there shouldn’t be any auto financing and that credit cards should be ‘charge cards’ and required to be paid in full every month, carrying a balance should not be allowed.[/quote]

No it’s not fair.

But most americans being fiscally responsible? Come on…

Just look no further than the auto industry…
84-96+month new car loans?????Seriously?

We have learned anything….Consequently…

If you can’t beat them, join them…If someone wants to take out a 100% financed loan and pay $300k for each of my condos, fine by me.. I’ll sell. I’ll wait for the next crash. And I’ll buy again….

Not my problem…

[Coronita]

[quote=spdrun]On the one hand, you have a liberal twit Mel Watt in charge of FHFA (even he is going incrementally, trying deeper loan mods in Detroit first, which has nothing to lose). On the other, you have Julian Castro at HUD who wants to wind down Fannie and Freddie. We also has QM come into force this year.

I think the net effect will be zero-sum. And why would you want higher prices? Wouldn’t you rather be able to buy MORE rental property and have more tenants?

My ideal world would be cheap homes and high rents.[/quote]

Cheap homes and high rent isn’t going to happen for the long term because cheap homes means people that would normally pay for high rent ends up buying, leaving you with people that can’t qualify to own or afford to own….

And I’m being more realistic. Short of some big event, I don’t think people who are “owners” these days are in a hurry to sell. They weathered a big meltdown, some bought more dirt cheap….There’s no panic, no itch to hurry up and sell…

[bearishgurl]

[quote=flu]Cheap homes and high rent isn’t going to happen for the long term because cheap homes means people that would normally pay for high rent ends up buying, leaving you with people that can’t qualify to own or afford to own….

And I’m being more realistic. Short of some big event, I don’t think people who are “owners” these days are in a hurry to sell. They weathered a big meltdown, some bought more dirt cheap….There’s no panic, no itch to hurry up and sell…[/quote]

Absolutely agree with flu here. These are major reasons for the dearth of residential listings in many micro-areas in coastal CA counties. After we add props 58 and 193 into the mix (ability to legally “hand down” home to child/granchild free of reassessment on into perpetuity), we have a situation where hundreds (if not thousands) of established micro-areas in the state will have very little turnover as the years roll by. Why? There is absolutely no reason whatsoever for longtime owners to sell. When there is a “chronic shortage” of housing in a given “desireable” micro-area, it only means one thing. Upward pressure on prices, or, at the very least, a very stable market in which sellers do not need to budge on price because they can eventually get their price if it is in line with recent sold comps in the immediate area.

The big event which could change this market landscape will be nothing short of nuclear attack or tsumami hitting the CA coast. And without the residual radioactive fallout over a wide area, that change may only prove to be temporary.

Yes, many micro-areas of CA coastal counties are “immune” or “nearly immune” from the vagaries of mortgage interest rates and availability of nearby high-paying jobs. This will never change, folks.

[The-Shoveler]

I don’t think you can get to a sell worthy bubble/crash without No-down No-Nothing NINJA Loans.

You may want to sell a home for different reasons, but I don’t think I will see another housing crash like the last.

Maybe when they rope off an area for shanty towns (could happen in 25-50 or so years).

[HLS]

Flu,
You are touching on part of the concern of the report which is that many people cannot qualify to buy (even with almost nothing down) because of lending guidelines…
SO… should it be easier for people to qualify to buy ??

There will ALWAYS tenants, in all parts of the country.
The macro housing market is not like San Diego/ So Cal though.

I have a friend in FL who was told he could get $340K for his house last year. It’s been listed for sale and is still for sale. I think it is down to $249,000 and hardly anybody looks.
Nothing wrong with condition. He’s even willing to carry with a down payment.

Many parts of the country have properties sitting. It’s not always easy to find tenants in many areas,
even when rent is $300-$500 a month.

[Author]

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