[Borat]

Doesn’t some blame need to fall on whoever de-regulated this silly business to allow loans to be packaged and re-sold? That just turned the whole housing market into a big game of hot potato/musical chairs with the last bank/pension fund holding the bag the loser. Also I would say that whoever was doing the ratings of those MBSes deserves some of the blame as there were clearly bad loans in many of them. And the appraisers that went along with the game. And the mortgage brokers. And of course the buyers themselves.

It’s sort of like that South Park episode about Wal-Mart where they find the secret that keeps the company growing and it’s just a mirror reflecting whoever looks into it. There is plenty of guilt to go around…

[Borat]

Doesn’t some blame need to fall on whoever de-regulated this silly business to allow loans to be packaged and re-sold? That just turned the whole housing market into a big game of hot potato/musical chairs with the last bank/pension fund holding the bag the loser. Also I would say that whoever was doing the ratings of those MBSes deserves some of the blame as there were clearly bad loans in many of them. And the appraisers that went along with the game. And the mortgage brokers. And of course the buyers themselves.

It’s sort of like that South Park episode about Wal-Mart where they find the secret that keeps the company growing and it’s just a mirror reflecting whoever looks into it. There is plenty of guilt to go around…

[Borat]

I read about the non-conforming loan issue last week, I’m trying to find the article and I’ll post the link when I get it. There is some talk of it over at Ben Jones’ blog (see “the end of an era”):

http://thehousingbubbleblog.com/

Basically the point is that mortgage brokers are going to have a much harder time selling non-conforming loans to be bundled into MBSes. Default rates on non-conforming loans are higher than those on conforming and MBS issues with non-conforming loans in them have become very unpopular.

And even IF you can get a non-conforming loan for that hypothetical 600K house, the numbers are just going to be that much worse. Instead of a $3800/mo outlay it’s gonna be even more.

2000 prices in inflation-adjusted dollars at the bottom, that’s where we’re headed.

[Borat]

I read about the non-conforming loan issue last week, I’m trying to find the article and I’ll post the link when I get it. There is some talk of it over at Ben Jones’ blog (see “the end of an era”):

http://thehousingbubbleblog.com/

Basically the point is that mortgage brokers are going to have a much harder time selling non-conforming loans to be bundled into MBSes. Default rates on non-conforming loans are higher than those on conforming and MBS issues with non-conforming loans in them have become very unpopular.

And even IF you can get a non-conforming loan for that hypothetical 600K house, the numbers are just going to be that much worse. Instead of a $3800/mo outlay it’s gonna be even more.

2000 prices in inflation-adjusted dollars at the bottom, that’s where we’re headed.

[Borat]

I read about the non-conforming loan issue last week, I’m trying to find the article and I’ll post the link when I get it. There is some talk of it over at Ben Jones’ blog (see “the end of an era”):

http://thehousingbubbleblog.com/

Basically the point is that mortgage brokers are going to have a much harder time selling non-conforming loans to be bundled into MBSes. Default rates on non-conforming loans are higher than those on conforming and MBS issues with non-conforming loans in them have become very unpopular.

And even IF you can get a non-conforming loan for that hypothetical 600K house, the numbers are just going to be that much worse. Instead of a $3800/mo outlay it’s gonna be even more.

2000 prices in inflation-adjusted dollars at the bottom, that’s where we’re headed.

[Borat]

Sub $400s in 4S? I doubt it, but I think $600-$700s are a real possibility, and I would be willing to pay that. If I can get a loan.

Let’s work this out. First of all, you’re going to have a hard time getting a non-conforming loan from here on out. That sets a maximum loan amount of $417K. Let’s say your dream 4S ranch house costs $600K. That means you’ll need to pony up $183K for a down payment. Okay, let’s run some numbers:

Interest rate 7.5% (they are going up and loans are becoming harder to get now)
30 year fixed

Payment (Principal/Interest): 2915.72/mo
Property Taxes @ 1.25%: 625mo
Insurance: 200/mo
Opportunity cost of $183K down payment in a 5% CD: 762/mo
Approx tax benefit of deducting interest: 750/mo

The opportunity cost of giving up your down payment basically cancels out any tax benefit, leaving you to spend $3740/mo for your $600K home.

Now ask yourself a few questions:

1) How many people have a $183K down payment?
2) Of those, how many will be willing to give up their guaranteed safe 5% return to invest in a home?
3) How many families can afford to spend almost $3800/mo for their housing? This of course doesn’t factor in maintenance.

Of course if you don’t have a $183K down payment, you *might* still be able to get an 80/10/10 where you’d only have to cough up ~91K but then you’d be paying principal and interest on that second which would increase the monthly nut even more…

I’m guessing that you’re a physician from your handle, so you’re probably going to be allright no matter what you do. But I wouldn’t be so quick to discount the possibility of homes returning to the $400K range in 4S ranch…

Best of luck to you whatever you decide!

[Borat]

Sub $400s in 4S? I doubt it, but I think $600-$700s are a real possibility, and I would be willing to pay that. If I can get a loan.

Let’s work this out. First of all, you’re going to have a hard time getting a non-conforming loan from here on out. That sets a maximum loan amount of $417K. Let’s say your dream 4S ranch house costs $600K. That means you’ll need to pony up $183K for a down payment. Okay, let’s run some numbers:

Interest rate 7.5% (they are going up and loans are becoming harder to get now)
30 year fixed

Payment (Principal/Interest): 2915.72/mo
Property Taxes @ 1.25%: 625mo
Insurance: 200/mo
Opportunity cost of $183K down payment in a 5% CD: 762/mo
Approx tax benefit of deducting interest: 750/mo

The opportunity cost of giving up your down payment basically cancels out any tax benefit, leaving you to spend $3740/mo for your $600K home.

Now ask yourself a few questions:

1) How many people have a $183K down payment?
2) Of those, how many will be willing to give up their guaranteed safe 5% return to invest in a home?
3) How many families can afford to spend almost $3800/mo for their housing? This of course doesn’t factor in maintenance.

Of course if you don’t have a $183K down payment, you *might* still be able to get an 80/10/10 where you’d only have to cough up ~91K but then you’d be paying principal and interest on that second which would increase the monthly nut even more…

I’m guessing that you’re a physician from your handle, so you’re probably going to be allright no matter what you do. But I wouldn’t be so quick to discount the possibility of homes returning to the $400K range in 4S ranch…

Best of luck to you whatever you decide!

[Borat]

Sub $400s in 4S? I doubt it, but I think $600-$700s are a real possibility, and I would be willing to pay that. If I can get a loan.

Let’s work this out. First of all, you’re going to have a hard time getting a non-conforming loan from here on out. That sets a maximum loan amount of $417K. Let’s say your dream 4S ranch house costs $600K. That means you’ll need to pony up $183K for a down payment. Okay, let’s run some numbers:

Interest rate 7.5% (they are going up and loans are becoming harder to get now)
30 year fixed

Payment (Principal/Interest): 2915.72/mo
Property Taxes @ 1.25%: 625mo
Insurance: 200/mo
Opportunity cost of $183K down payment in a 5% CD: 762/mo
Approx tax benefit of deducting interest: 750/mo

The opportunity cost of giving up your down payment basically cancels out any tax benefit, leaving you to spend $3740/mo for your $600K home.

Now ask yourself a few questions:

1) How many people have a $183K down payment?
2) Of those, how many will be willing to give up their guaranteed safe 5% return to invest in a home?
3) How many families can afford to spend almost $3800/mo for their housing? This of course doesn’t factor in maintenance.

Of course if you don’t have a $183K down payment, you *might* still be able to get an 80/10/10 where you’d only have to cough up ~91K but then you’d be paying principal and interest on that second which would increase the monthly nut even more…

I’m guessing that you’re a physician from your handle, so you’re probably going to be allright no matter what you do. But I wouldn’t be so quick to discount the possibility of homes returning to the $400K range in 4S ranch…

Best of luck to you whatever you decide!

[Borat]

Finally large companies care much more about their own bottom line; not the welfare of the US government.

Exactly, SD Realtor. Here’s a good example of that.

[Borat]

Finally large companies care much more about their own bottom line; not the welfare of the US government.

Exactly, SD Realtor. Here’s a good example of that.

[Borat]

Finally large companies care much more about their own bottom line; not the welfare of the US government.

Exactly, SD Realtor. Here’s a good example of that.

[Borat]

USA could take the factories from China and relocate them to Vietnam, India, Pakistan, Bangladesh, Indonesia, Mexico, Egypt, Turkey and Brazil. These countries are not as low cost as China. But they could supply us with $10 shirts if not $5 shirts. It would take a concerted effort by US policymakers to accomplish that.

Huh? If China dumps its $ holdings, our money becomes worth less EVERYWHERE. Chinese shirts won’t be $5 anymore, they’ll be $10. So your hypothetical Vietnamese shirt won’t be $10 it will be $20. BTW, the US doesn’t own those Chinese factories anyway, they are owned by Chinese firms or government cooperatives. Wal-Mart et al just buy finished goods from them.

It is nice to think that China “needs” the US, and they certainly like selling us stuff at this moment in time. However there are lots of other markets in the world and they are growing every day. They might not buy as much as we do today, but someday they will. We need China to buy our IOUs a lot more than they need us to buy their Hello Kitty backpacks and LCD TVs now. We need to start producing goods for export again here at home so that we can even the playing field a bit.

[Borat]

USA could take the factories from China and relocate them to Vietnam, India, Pakistan, Bangladesh, Indonesia, Mexico, Egypt, Turkey and Brazil. These countries are not as low cost as China. But they could supply us with $10 shirts if not $5 shirts. It would take a concerted effort by US policymakers to accomplish that.

Huh? If China dumps its $ holdings, our money becomes worth less EVERYWHERE. Chinese shirts won’t be $5 anymore, they’ll be $10. So your hypothetical Vietnamese shirt won’t be $10 it will be $20. BTW, the US doesn’t own those Chinese factories anyway, they are owned by Chinese firms or government cooperatives. Wal-Mart et al just buy finished goods from them.

It is nice to think that China “needs” the US, and they certainly like selling us stuff at this moment in time. However there are lots of other markets in the world and they are growing every day. They might not buy as much as we do today, but someday they will. We need China to buy our IOUs a lot more than they need us to buy their Hello Kitty backpacks and LCD TVs now. We need to start producing goods for export again here at home so that we can even the playing field a bit.

[Borat]

USA could take the factories from China and relocate them to Vietnam, India, Pakistan, Bangladesh, Indonesia, Mexico, Egypt, Turkey and Brazil. These countries are not as low cost as China. But they could supply us with $10 shirts if not $5 shirts. It would take a concerted effort by US policymakers to accomplish that.

Huh? If China dumps its $ holdings, our money becomes worth less EVERYWHERE. Chinese shirts won’t be $5 anymore, they’ll be $10. So your hypothetical Vietnamese shirt won’t be $10 it will be $20. BTW, the US doesn’t own those Chinese factories anyway, they are owned by Chinese firms or government cooperatives. Wal-Mart et al just buy finished goods from them.

It is nice to think that China “needs” the US, and they certainly like selling us stuff at this moment in time. However there are lots of other markets in the world and they are growing every day. They might not buy as much as we do today, but someday they will. We need China to buy our IOUs a lot more than they need us to buy their Hello Kitty backpacks and LCD TVs now. We need to start producing goods for export again here at home so that we can even the playing field a bit.

[Borat]

Hahahahaha — Santa Claus! He does look like St. Nick! But when even Santa can’t afford a condo to relax in during the off-season, you know prices are too high…

[Author]

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