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  • February 10, 2008 at 7:36 PM #151535
    patientrenter
    Participant

    Concho, you seem to think that the system is rigged so that investors (who lend money to borrowers so they can buy homes) do well out of housing. But investors:

    a. Put up almost all the money to buy the house
    b. Take on almost all the losses if the price declines
    c. Get a return just a tiny amount above the rate on risk-free Treasuries. (Tiny compared to the possible losses.)
    d. Take on all the losses if the loan repayments are devalued by inflation

    Meanwhile borrowers:

    1. Put down very little of the money
    2. Can walk away if prices go down
    3. Keep all the increases if home prices go up
    4. Pay a lower rate than on any other loan they could get from any other fre-market source
    5. Make out like bandits if inflation is high, because the loan repayments they have to make shrink in real terms

    Help me understand how the system is rigged to help investors, and not the borrowers. As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    Patient renter in OC

    February 10, 2008 at 7:56 PM #151210
    TheBreeze
    Participant

    As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    I totally agree with you PC. Most of the investors are so far removed from what they are actually investing in that they have no idea what is about to hit them. The mortgage on this Solana Beach condo is probably packaged into some AAA-rated CDO that was purchased by a bond fund. The bond fund manager is using money from some private investor who is probably close to retirement and has been told that bonds are ‘safer’ than stocks. The private investor has no idea that he has really bought a mortgage backed up by an asset that is probably as risky as Internet stocks were during the bubble.

    Over the next 10 years, I think we’re going to see a lot of would-be retirees who are shocked at how much their retirement funds have shrunk. Some of them won’t ever be able to retire because of this. Meanwhile, the condo speculator on the front-end will get off with just a minor hit to their credit score.

    At least the Internet-stock buyers knew they were taking some risks. The bond investors have no idea what they are in for.

    February 10, 2008 at 7:56 PM #151472
    TheBreeze
    Participant

    As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    I totally agree with you PC. Most of the investors are so far removed from what they are actually investing in that they have no idea what is about to hit them. The mortgage on this Solana Beach condo is probably packaged into some AAA-rated CDO that was purchased by a bond fund. The bond fund manager is using money from some private investor who is probably close to retirement and has been told that bonds are ‘safer’ than stocks. The private investor has no idea that he has really bought a mortgage backed up by an asset that is probably as risky as Internet stocks were during the bubble.

    Over the next 10 years, I think we’re going to see a lot of would-be retirees who are shocked at how much their retirement funds have shrunk. Some of them won’t ever be able to retire because of this. Meanwhile, the condo speculator on the front-end will get off with just a minor hit to their credit score.

    At least the Internet-stock buyers knew they were taking some risks. The bond investors have no idea what they are in for.

    February 10, 2008 at 7:56 PM #151478
    TheBreeze
    Participant

    As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    I totally agree with you PC. Most of the investors are so far removed from what they are actually investing in that they have no idea what is about to hit them. The mortgage on this Solana Beach condo is probably packaged into some AAA-rated CDO that was purchased by a bond fund. The bond fund manager is using money from some private investor who is probably close to retirement and has been told that bonds are ‘safer’ than stocks. The private investor has no idea that he has really bought a mortgage backed up by an asset that is probably as risky as Internet stocks were during the bubble.

    Over the next 10 years, I think we’re going to see a lot of would-be retirees who are shocked at how much their retirement funds have shrunk. Some of them won’t ever be able to retire because of this. Meanwhile, the condo speculator on the front-end will get off with just a minor hit to their credit score.

    At least the Internet-stock buyers knew they were taking some risks. The bond investors have no idea what they are in for.

    February 10, 2008 at 7:56 PM #151496
    TheBreeze
    Participant

    As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    I totally agree with you PC. Most of the investors are so far removed from what they are actually investing in that they have no idea what is about to hit them. The mortgage on this Solana Beach condo is probably packaged into some AAA-rated CDO that was purchased by a bond fund. The bond fund manager is using money from some private investor who is probably close to retirement and has been told that bonds are ‘safer’ than stocks. The private investor has no idea that he has really bought a mortgage backed up by an asset that is probably as risky as Internet stocks were during the bubble.

    Over the next 10 years, I think we’re going to see a lot of would-be retirees who are shocked at how much their retirement funds have shrunk. Some of them won’t ever be able to retire because of this. Meanwhile, the condo speculator on the front-end will get off with just a minor hit to their credit score.

    At least the Internet-stock buyers knew they were taking some risks. The bond investors have no idea what they are in for.

    February 10, 2008 at 7:56 PM #151570
    TheBreeze
    Participant

    As far as I can tell, our system of home financing is the biggest govt wealth redistribution system in the world, taking wealth from savers and giving it to people who borrow to buy homes, in truly mind-boggling amounts.

    I totally agree with you PC. Most of the investors are so far removed from what they are actually investing in that they have no idea what is about to hit them. The mortgage on this Solana Beach condo is probably packaged into some AAA-rated CDO that was purchased by a bond fund. The bond fund manager is using money from some private investor who is probably close to retirement and has been told that bonds are ‘safer’ than stocks. The private investor has no idea that he has really bought a mortgage backed up by an asset that is probably as risky as Internet stocks were during the bubble.

    Over the next 10 years, I think we’re going to see a lot of would-be retirees who are shocked at how much their retirement funds have shrunk. Some of them won’t ever be able to retire because of this. Meanwhile, the condo speculator on the front-end will get off with just a minor hit to their credit score.

    At least the Internet-stock buyers knew they were taking some risks. The bond investors have no idea what they are in for.

    April 25, 2008 at 1:50 AM #194212
    Happs
    Participant

    I found out that the condo sold for $928,000. It was an oceanview unit (not oceanfront). I still think the buyer overpaid.

    April 25, 2008 at 1:50 AM #194243
    Happs
    Participant

    I found out that the condo sold for $928,000. It was an oceanview unit (not oceanfront). I still think the buyer overpaid.

    April 25, 2008 at 1:50 AM #194269
    Happs
    Participant

    I found out that the condo sold for $928,000. It was an oceanview unit (not oceanfront). I still think the buyer overpaid.

    April 25, 2008 at 1:50 AM #194285
    Happs
    Participant

    I found out that the condo sold for $928,000. It was an oceanview unit (not oceanfront). I still think the buyer overpaid.

    April 25, 2008 at 1:50 AM #194330
    Happs
    Participant

    I found out that the condo sold for $928,000. It was an oceanview unit (not oceanfront). I still think the buyer overpaid.

    April 25, 2008 at 10:49 AM #194422
    PadreBrian
    Participant

    To the rich Russian or European that bought it as a vacation home, it was only 500k Euros. Cheap really.

    April 25, 2008 at 10:49 AM #194453
    PadreBrian
    Participant

    To the rich Russian or European that bought it as a vacation home, it was only 500k Euros. Cheap really.

    April 25, 2008 at 10:49 AM #194480
    PadreBrian
    Participant

    To the rich Russian or European that bought it as a vacation home, it was only 500k Euros. Cheap really.

    April 25, 2008 at 10:49 AM #194496
    PadreBrian
    Participant

    To the rich Russian or European that bought it as a vacation home, it was only 500k Euros. Cheap really.

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