[patientlywaiting]

jwm and ex-sd, I give up too. Let others do what they will… I just hope they don’t go around crying wolf when they lose their jobs and can’t afford the house payments.

People don’t realize that, even if they can “afford” it, working to pay back a debt they don’t need to be paying is simply idiotic.

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mixxalot, Texas is also overvalued. It’s overvalued everywhere because the easy money permeated the whole country. RENT!!

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How about Suzanne Researched It?

http://youtube.com/watch?v=Ubsd-tWYmZw

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How about Oceanside? I think it should nicer in Oceanside than in Elsinore.

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Come on, young people need a place to hang out.

I don’t think that homes should ever have been allowed on the beaches. They are public spaces where people entertain themselves.

Every city needs a vibrant bar scene. It makes the city more cosmopolitan and fun. That’s why San Diego is so boring. You don’t have to go if you don’t like it.

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Good point. This topic ties into “those whoe made a lot of money.”

If people made a lot of money, it’s somewhere else, and not in their homes. The stats show that home equity is at an all time low.

The exotic loans have allowed people to tap their equity for consumption. The equity is long gone. Sure some people did well, but the general population does not have much equity to show for.

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AN, your job being recession proof does not mean everybody else’s jobs are. Other people loosing their jobs will cause your house to lose value. So what if you afford the payments? You’re still paying for an overpriced house.

I own my own business so I’m not too worried for my own financial well-being. I’m only talking in general about people considering buying.

Why would a wife nag for a house? So she can decorate. How much does home decoration costs? It’s not cheap.

My net-worth is higher than most individuals and I certainly don’t want to lose $300k, not even $100k. $100k equals about $665/mo for 30 years + property taxes. Wouldn’t you rather have the money to save or spend on what you want rather than sending it to the lender?

Anyway, if you guys want to buy, go ahead. I’m done discussing this topic.

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Great post bugs.

It was irrational on the way up… What’s to say that it’s going be rational on the way down. It’s simply supply and demand.

[patientlywaiting]

AN, I was referring to a brand new SFR at 4S.

Easily $100k for landscaping and home decoration + depreciation + difference between rent and buy = $300k very quickly. If the market crashes, the loss may be more.

Even if the OP can comfortably afford the house payments that’s $300k he’s have to work to pay-off. JWM put it very well. It’s future cash that he would otherwise have that’s going straight to the bank.

Now, a wife who nags and demands a house is useless. She needs to grow up. It’s not high school.

It’s much wiser to wait and buy a resale that is ready for move in. Like any major purchase you need to time it and wait for the big discounts.

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AN, in the coming recession you may not have a job to buy anything. I predict that the venture capital that fueled SD tech companies will dry up.

[patientlywaiting]

Didn’t we lecture Brazil, Argentina, Mexico even Japan to let the free markets work? Didn’t we claim that the reason the American economy is so great is that resources are automatically allocated to the best stewarts of capital?

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JWM, good posts. I’m with all the way. People are too SD centric because they are used to the prices and see a $50k drop as a deal. There will be a general recession hitting us soon and will cause people to snap back to reality.

AN, buying a house you can comfortably afford is one thing. But if that house drops $300k that means that you still have to pay the original loan whereas you could have spent $300k on something else to improve your family’s wellbeing. You’re giving up a lot of purchasing power for the benefit of owning now. So a paper loss is a REAL loss in opportunity.

TG, your post are right on. LOL 🙂

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I love costco photo center.

Want to be really stingy? You can make your passport pics yourself using a digital camera. Use a photo editing software to put 6 pictures together on a 4×6 (2×2 each) and upload to costco. They will mail to your house for free all for 17c (6 pictures). Plus you get to have the picture come out exactly the way you want. Great for obtaining all the visas to take the kids on summer travel.

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bsrsharma, regardless of the amount, why would you call that fraud if the law were to permit it?

We’re talking about bailing out the irresponsible here. And there will be grave unintended consequences.

What do you think would be a legitimate reason for defaulting on a mortgage and getting relief? Would having crushing medical expenses apply? What about blowing all your salary in Vegas, drugs, or a boob job for your wife? What if you simply don’t feel like paying anymore? What if you quit your job and no longer don’t want to work?

More importantly, how would Congress write all of that into law?

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bsrsharma, you make it more complicated than it needs to be.

For simplicity, think of it this way… You own a house free and clear and want to borrow $10 million pledging your house as collateral. I agree and give you the money. I’m the lender (but not a regulated financial institution) and I’m free to lend you any amount I want.

You default. What can I do? The most I can do is take your house and sue you for the money. But as the lender I don’t even have to do that. I can just write-off the bad debt and call it water under the bridge (if I’m a corporation with enough income, I could write off the full amount as bad debt. Even individuals can carry mortgages and write off bad-debt on their tax returns).

If debt forgiveness were not taxable, you’d see a lot more of these kinds of non-taxable transactions. The law firms and estate planners are already sharpening their pencils.

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bsrsharma, I think you need a little bit of tax education. (just kidding you :)).

The problem with this country is few people understand that the rich have many ways of legally avoiding taxes.

I work for the corporation. I need to pay payroll and income taxes on my salary (although I’m the largest shareholder).

I need to find a way to get the corporation’s money into my own pocket while minimizing taxes. Under the mortgage debt forgivess plan, the corporation gives me $1 million home equity loan. I default. I still have $1 million and pay zero in income or payroll taxes. The corporation gets to deduct $1 million as an expense. Uncle Sam is the loser.

This would work great for estate planning purposes as well to transfer wealth the next generation.

Say I have $10 million I want to transfer to my heir free of estate taxes. I give him a $10 million mortgage on his POS house. He defaults, still has the $10 million but neither he nor I paid any estate tax.

Sure they can limit the amount to $10,000. But smart people will find a way to profit.

I have a maid who makes $25k per year. Instead, I can just pay her $15k in salaray and give her $10k home equity loan. She defaults, keeps the $10k. The $10k in “effective compensation” is tax free. She pays no income taxes and I pay no payroll taxes. What a great deal!!!

I’m working on it right now, just in case they pass such a scheme for mortgages up to a certain date.

I’m Democrat because I believe in fairness. But the law is the law, and I see nothing wrong with following the letter of the law.

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Tax break on debt forgiveness = big loophole for the filthy rich who “owe” millions to their corporation.

I own my own company. I can just have the corporation give me a HUGE mortgage on my house. I “default” and that is a huge tax free transfer of wealth. Hell, for that kind of deal, I’ll be happy to work for $1/year salary.

Plus the corporation gets a nice write off. Double dip. 🙂

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