[cabal]

I give on occasion, mostly on impulse. However, I will study their physical traits first and convince myself they are genuine before doing so. I pass no judgment and I don’t care if they buy a beer to extract 15 min of simple pleasure out of another miserable day. I’m ok with that because I know it is the hardest thing to pick yourself up when you’re at the bottom. If I saw a father begging with his kid, I would probably donate something. It takes courage to swallow your pride and to publicly humiliate yourself in front of your kid.

FLU – Your thoughts are not alone. It reminded me of this article I read a few weeks ago.
http://blogs.hbr.org/haque/2010/02/the_real_roots_of_the_crisis.html

Regarding rants, I find the complaints by those who sold at the peak the most humorous and hypocritical. The housing bubble facilitated the greatest transfer of wealth in recent times. Specifically, the so called fraudulent money flowed from wall street/banks to naïve buyer to bubble seller. The bubble seller is the ultimate beneficiary of this fraudulent money, yet there is never talk about its morality or legitimacy. Fine, just don’t complain about govt giveaways of our tax dollars. You hold the solution. Simply return the fraudulent money and problem solved.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.

[cabal]

[quote]
In other words, you can’t afford the $500,000 mortgage on the $625,000 house you bought in 2008 because the guy before you paid $550,000 for a house which sold for $140,000 in 1997.

These numbers are drawn from reality: our friends bought a small home in a desirable suburb in the San Francisco Bay Area for $140,000 in 1997. Yes, it was a fixer-upper and yes, our friends completely remodeled it. The fair value of the house after renovation was probably in the $175,000 to $190,000 range, tops.

They sold the house in 2005 for $550,000, and that buyer unloaded the house in 2008 for $625,000.

This represents approximately $235,000 of actual value (the $175,000 adjusted for inflation from 1997 to 2010 as per the BLS inflation calculator) and $390,000 of “credit-bubble” excess.
[/quote]

You need to consider two other factors in terms of sustainability. First, the 625K house is worth a lot less today, maybe 400K? Second, during normal times, home builders can create wealth above and beyond the cost of raw materials, land and labor. However, all subsequent transactions are governed by the “Zero Sum Game” rules. In other words, for every person who paid bubble prices, an equal number of persons sold at bubble prices and that so called “credit bubble” money is now sitting in their bank accounts. Here the number of qualified people does not really change, perhaps marginally due to changes in stricter lending standards, interest rates, etc. Only their identities have really changed and these people with their sideline money are tired of renting and salivating at the opportunities. You can call this shadow demand. Only potential buyers at the entry level were reduced with bubble pricing. But this has also changed since low end corrections from peak exceed 50% restoring prices to historical norms. Lastly, the people who sat out the bubble years were unaffected. In summary – has the number of potential qualified people really changed due to bubble prices? No, the reductions are primarily due to unemployment and consumer confidence.

[cabal]

I almost forgot about this thread. Anyways…

Mr. Bridges – Congratulations on your Oscar. You the Man.

[cabal]

I almost forgot about this thread. Anyways…

Mr. Bridges – Congratulations on your Oscar. You the Man.

[cabal]

I almost forgot about this thread. Anyways…

Mr. Bridges – Congratulations on your Oscar. You the Man.

[cabal]

I almost forgot about this thread. Anyways…

Mr. Bridges – Congratulations on your Oscar. You the Man.

[cabal]

I almost forgot about this thread. Anyways…

Mr. Bridges – Congratulations on your Oscar. You the Man.

[cabal]

Definitely a mistake to sell based on the limited info provided. You have 600K equity, a paltry 400K mortgage by CV standards and dual income. What’s the problem? Since neither of you were laid off in 08/09, chances are your employment is reasonably secure. If you still have legitimate job security concerns, consider selling and renting.

If your original loan was large saddling you with high payments, consider refinancing to a 30 yr loan taking advantage of the historical low rates. You can still target paying the loan off in 15-20 yrs by making extra payments, while reserving the option to make the lower 30 yr amortized payment. However, if your current PITI can be covered by rent, I probably wouldn’t do anything. Worst case scenario you both lose your jobs, rent your house out and move the family to a small apt.

Regarding the 1300 sf house, it’s definitely too small for a growing family of four. Maybe ok if you’re a few yrs removed from dorm life and use to a minimalist lifestyle with milk crates for furniture. Realistically, it’s just a glorified apt with small 10’x10’ bedrooms, combo lr/dr/fr and a tiny kitchen. If your children are young, you will become increasingly miserable as your entire house morphs into a mold injection junkyard.

[cabal]

Definitely a mistake to sell based on the limited info provided. You have 600K equity, a paltry 400K mortgage by CV standards and dual income. What’s the problem? Since neither of you were laid off in 08/09, chances are your employment is reasonably secure. If you still have legitimate job security concerns, consider selling and renting.

If your original loan was large saddling you with high payments, consider refinancing to a 30 yr loan taking advantage of the historical low rates. You can still target paying the loan off in 15-20 yrs by making extra payments, while reserving the option to make the lower 30 yr amortized payment. However, if your current PITI can be covered by rent, I probably wouldn’t do anything. Worst case scenario you both lose your jobs, rent your house out and move the family to a small apt.

Regarding the 1300 sf house, it’s definitely too small for a growing family of four. Maybe ok if you’re a few yrs removed from dorm life and use to a minimalist lifestyle with milk crates for furniture. Realistically, it’s just a glorified apt with small 10’x10’ bedrooms, combo lr/dr/fr and a tiny kitchen. If your children are young, you will become increasingly miserable as your entire house morphs into a mold injection junkyard.

[cabal]

Definitely a mistake to sell based on the limited info provided. You have 600K equity, a paltry 400K mortgage by CV standards and dual income. What’s the problem? Since neither of you were laid off in 08/09, chances are your employment is reasonably secure. If you still have legitimate job security concerns, consider selling and renting.

If your original loan was large saddling you with high payments, consider refinancing to a 30 yr loan taking advantage of the historical low rates. You can still target paying the loan off in 15-20 yrs by making extra payments, while reserving the option to make the lower 30 yr amortized payment. However, if your current PITI can be covered by rent, I probably wouldn’t do anything. Worst case scenario you both lose your jobs, rent your house out and move the family to a small apt.

Regarding the 1300 sf house, it’s definitely too small for a growing family of four. Maybe ok if you’re a few yrs removed from dorm life and use to a minimalist lifestyle with milk crates for furniture. Realistically, it’s just a glorified apt with small 10’x10’ bedrooms, combo lr/dr/fr and a tiny kitchen. If your children are young, you will become increasingly miserable as your entire house morphs into a mold injection junkyard.

[cabal]

Definitely a mistake to sell based on the limited info provided. You have 600K equity, a paltry 400K mortgage by CV standards and dual income. What’s the problem? Since neither of you were laid off in 08/09, chances are your employment is reasonably secure. If you still have legitimate job security concerns, consider selling and renting.

If your original loan was large saddling you with high payments, consider refinancing to a 30 yr loan taking advantage of the historical low rates. You can still target paying the loan off in 15-20 yrs by making extra payments, while reserving the option to make the lower 30 yr amortized payment. However, if your current PITI can be covered by rent, I probably wouldn’t do anything. Worst case scenario you both lose your jobs, rent your house out and move the family to a small apt.

Regarding the 1300 sf house, it’s definitely too small for a growing family of four. Maybe ok if you’re a few yrs removed from dorm life and use to a minimalist lifestyle with milk crates for furniture. Realistically, it’s just a glorified apt with small 10’x10’ bedrooms, combo lr/dr/fr and a tiny kitchen. If your children are young, you will become increasingly miserable as your entire house morphs into a mold injection junkyard.

[Author]

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