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November 9, 2009 at 5:16 PM in reply to: Wells Fargo has reduced mortgage balances on 43,500 option ARM’s and counting #479706November 9, 2009 at 5:16 PM in reply to: Wells Fargo has reduced mortgage balances on 43,500 option ARM’s and counting #480068
patientrenter
Participant[quote=Bugs]I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?[/quote]
Bugs, nice to hear from you. I think that, just as govt intervention in the US housing market back in the 1930’s and 1940’s (Fannie and Freddie and 30-year fixed rate mortgages) permanently moved home prices up, and home interest deductibility did the same thing, so what’s happening now marks a permanent increase in govt support for high home prices.
How much higher? Too hard to tell. We won’t even know for sure which of the new govt home price support programs will become permanent until maybe 5 or 10 years from now.
I would be very interested to hear your thoughts.
November 9, 2009 at 5:16 PM in reply to: Wells Fargo has reduced mortgage balances on 43,500 option ARM’s and counting #480149Participant[quote=Bugs]I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?[/quote]
Bugs, nice to hear from you. I think that, just as govt intervention in the US housing market back in the 1930’s and 1940’s (Fannie and Freddie and 30-year fixed rate mortgages) permanently moved home prices up, and home interest deductibility did the same thing, so what’s happening now marks a permanent increase in govt support for high home prices.
How much higher? Too hard to tell. We won’t even know for sure which of the new govt home price support programs will become permanent until maybe 5 or 10 years from now.
I would be very interested to hear your thoughts.
November 9, 2009 at 5:16 PM in reply to: Wells Fargo has reduced mortgage balances on 43,500 option ARM’s and counting #480369Participant[quote=Bugs]I haven’t been around for a while. Have you guys discussed the possibility of the incomplete return-to-trend yet? What happens if the current correction cycle stops short of returning to trend and starts into increase prematurely? Do we set ourselves up for another even more devastating round of losses or is the general concensus one of no blood – no foul?[/quote]
Bugs, nice to hear from you. I think that, just as govt intervention in the US housing market back in the 1930’s and 1940’s (Fannie and Freddie and 30-year fixed rate mortgages) permanently moved home prices up, and home interest deductibility did the same thing, so what’s happening now marks a permanent increase in govt support for high home prices.
How much higher? Too hard to tell. We won’t even know for sure which of the new govt home price support programs will become permanent until maybe 5 or 10 years from now.
I would be very interested to hear your thoughts.
ParticipantIt’s not really a secret, is it? Barney Frank himself has publicly said that keeping home prices inflated is “policy”. He is the most powerful single individual overseeing the financial structure in the US. What more evidence do you need or want?
ParticipantIt’s not really a secret, is it? Barney Frank himself has publicly said that keeping home prices inflated is “policy”. He is the most powerful single individual overseeing the financial structure in the US. What more evidence do you need or want?
ParticipantIt’s not really a secret, is it? Barney Frank himself has publicly said that keeping home prices inflated is “policy”. He is the most powerful single individual overseeing the financial structure in the US. What more evidence do you need or want?
ParticipantIt’s not really a secret, is it? Barney Frank himself has publicly said that keeping home prices inflated is “policy”. He is the most powerful single individual overseeing the financial structure in the US. What more evidence do you need or want?
ParticipantIt’s not really a secret, is it? Barney Frank himself has publicly said that keeping home prices inflated is “policy”. He is the most powerful single individual overseeing the financial structure in the US. What more evidence do you need or want?
Participant[quote=AN][quote=Arraya]I think prices will get cut in half again.[/quote]
I’d love to see that. I doubt it’ll ever happen though. If it does happen, at least 50% of us probably won’t have a job and the other 48% won’t be able to buy the house anyways since it’ll be cash only deal.[/quote]Home prices in So Cal have been half of what they are now most of the time. It’s only in the recent mega-bubble, and during the frothier peaks of the prior bubble in the late 1980’s that they reached their current level (which is down from the ridiculous all-time peak of 2007). During all those “normal” years in So Cal, people worked, slept, ate, laughed, bought homes, sold homes, etc.
What is truly nutty is that people think that reverting to normal will lead to the world falling apart. Nonsense.
Participant[quote=AN][quote=Arraya]I think prices will get cut in half again.[/quote]
I’d love to see that. I doubt it’ll ever happen though. If it does happen, at least 50% of us probably won’t have a job and the other 48% won’t be able to buy the house anyways since it’ll be cash only deal.[/quote]Home prices in So Cal have been half of what they are now most of the time. It’s only in the recent mega-bubble, and during the frothier peaks of the prior bubble in the late 1980’s that they reached their current level (which is down from the ridiculous all-time peak of 2007). During all those “normal” years in So Cal, people worked, slept, ate, laughed, bought homes, sold homes, etc.
What is truly nutty is that people think that reverting to normal will lead to the world falling apart. Nonsense.
Participant[quote=AN][quote=Arraya]I think prices will get cut in half again.[/quote]
I’d love to see that. I doubt it’ll ever happen though. If it does happen, at least 50% of us probably won’t have a job and the other 48% won’t be able to buy the house anyways since it’ll be cash only deal.[/quote]Home prices in So Cal have been half of what they are now most of the time. It’s only in the recent mega-bubble, and during the frothier peaks of the prior bubble in the late 1980’s that they reached their current level (which is down from the ridiculous all-time peak of 2007). During all those “normal” years in So Cal, people worked, slept, ate, laughed, bought homes, sold homes, etc.
What is truly nutty is that people think that reverting to normal will lead to the world falling apart. Nonsense.
Participant[quote=AN][quote=Arraya]I think prices will get cut in half again.[/quote]
I’d love to see that. I doubt it’ll ever happen though. If it does happen, at least 50% of us probably won’t have a job and the other 48% won’t be able to buy the house anyways since it’ll be cash only deal.[/quote]Home prices in So Cal have been half of what they are now most of the time. It’s only in the recent mega-bubble, and during the frothier peaks of the prior bubble in the late 1980’s that they reached their current level (which is down from the ridiculous all-time peak of 2007). During all those “normal” years in So Cal, people worked, slept, ate, laughed, bought homes, sold homes, etc.
What is truly nutty is that people think that reverting to normal will lead to the world falling apart. Nonsense.
Participant[quote=AN][quote=Arraya]I think prices will get cut in half again.[/quote]
I’d love to see that. I doubt it’ll ever happen though. If it does happen, at least 50% of us probably won’t have a job and the other 48% won’t be able to buy the house anyways since it’ll be cash only deal.[/quote]Home prices in So Cal have been half of what they are now most of the time. It’s only in the recent mega-bubble, and during the frothier peaks of the prior bubble in the late 1980’s that they reached their current level (which is down from the ridiculous all-time peak of 2007). During all those “normal” years in So Cal, people worked, slept, ate, laughed, bought homes, sold homes, etc.
What is truly nutty is that people think that reverting to normal will lead to the world falling apart. Nonsense.
ParticipantScarlett,
I was saying that your situation is an example of why our system is nuts. Why? For one, because you say that you won’t be able to increase your downpayment much over the next few years, so that means you have little future savings available to pay for housing. Since you also don’t have the current price of what you want to buy in cash, my conclusion is that you cannot afford to buy a house for that price. You don’t have the money now, nor do you have the saving power necessary to pay for it in the near future. Yet you consider it normal and rational to buy it anyway. You probably are not unusual. That this kind of behavior is normal in our society is, to me, nuts.
Now, there is a second reason why your situation shows that our system is nuts. You earn a good income, and hopefully have some (small) saving power, so you can afford a modestly priced home. That a modestly priced home is one that few middle class professionals would want to live in is also nuts. It’s the radical overpricing of housing problem. The causes are many, but the vast river of govt money going into measures designed to support sky-high home prices certainly doesn’t help. Without that river, you could actually afford a decent home at a decent price. Yet we all pretend that the complicated and expensive system we’ve constructed to keep home prices sky-high is rational. That too is nuts.
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