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November 11, 2006 at 6:37 PM in reply to: I couldn’t convince my neighbor there’s a housing bubble #39782
sdrealtor
ParticipantI guess you are missing the point. The cases where this HAS BEEN done are homes about to be foreclosed upon where there is a motivated individual that wants to but cant afford to stay in their home. There is a loss that is about to be recognized. The bank DOES NOT have the option of recognizing the loss or not. It is imminent. What they are doing is mitigating their loss and taking the writedown without going through the expensive foreclosure process. I’m sure it is done on a case by case basis and not something that would be widely advertised. Certainly not a single solution for the bubble but simply another tool that could be used.
ParticipantHearsay it is! I heard it from someone that is very reliable but whom I likely wont run into for quite a while. It is just an example of one way lenders are trying to avoid even bigger losses.
ParticipantPS,
I just used completely arbitrary numbers to show an example. The prices were likely much lower but the point is the same. Foreclosure is timeconsuming, labor intensive and costly. Portfolio lenders can make out better by forgiving a portion of the loan and keeping the person in the home under the right circumstances.Participant2003 pricing in Escala?
That is too funny. Escala was built in 2004. There is no such thing as 2003 pricing for Escala.ParticipantI believe the banks were in Western PA and the loans were likely portfolio loans. The point is there will be lots of creative ways people get bailed out and there doesnt have to be one single solution. In these cases, the loss was going to happen and by re-writing the loan at a lower amount the bank came out ahead vs. foreclusre. The shareholders only care about returns and this increased the returns so I doubt they would crucify the bank for doing this.
With the democrats (or democratic party for those that prefer it stated that way) in power I’m starting to think we will probably inflate our way out of this mess.
ParticipantI would be surprised if it became widespread also but it is an out of the box example of banks doing something to limit their losses while decreasing foreclosure activity. I’m sure there will be other methods to bail out homeowners. Sorry but I dont subscribe to the armagedon theories postulated by many on this board. This is America and some way someone will figure a way out of this mess without a complete meltdown. And as it is America…they will probably exploit the hell out of it and get very rich in the process.
ParticipantPS we copuld get into a huge existentialistic discussion of whether we own anything. That would be a waste of time. Owning proeprty means you have control over it, you have the right to sell it, you have the right to convey it to your heirs etc. The bank has a lien on a property but not an ownership in my house. As I said, I can write a check and unilaterally make them go away. They cant make me go away inlaterally.
It seems you got my point about children. The fact that something can be taken away under a given set of circumstance doesnt necessarily convey ownership.
As for the “ignorance” comment, I didnt call you “ignorant” it was one of 3 possible explanations I put forth for explaining you behavior. Personally, I subscribe to option 3.
ParticipantIf you finance properly with a fixed mortgage over time it will get cheaper than renting.
ParticipantBR,
Here is your quote.“How many houses are in the San Diego area in the $150K range?”
I dont think I was mistaken in assuming that you were referencing a $40K HH income for SD 1st time buyers. Another trend that you failed to address is that people are having kids alot older now. Bright educated woman are graduating with great degrees and ambition. Many choose to put off having kids until 30ish to start a career. By that time their spouse has a much higher income and they often take a few years off only to return to work P/T or F/T once the kids are in school. My neighborhood is full of families living this exact life.
I don’t think there is anything wrong with not being able to or choosing not to go to college. While it certainly has been proven to give you a major leg up, I know plenty of successful people w/o college degrees. As for prices being too high, I agree and have absolutely no problem hearing it. I would love for prices to be more affordable. If they reach what I consider reasonable levels, I’ll buy another 2 or 3 properties.
ParticipantWow, time warp baby! Bikerider, the world is a very different place today than the one you remember. It is very common for two married 25 year olds a couple years out of college to have $50K+ jobs each with combined six figure HH incomes. These are the types of 1st time buyers we see in the market. The young couples with $40K combined incomes you are referencing is what we call renters in these parts of the country. Unfortunately, some were suckered into buying with no doc loans but they should have been renters not buyers.
I didnt bother to check your math but simply taking your $150K price and multiplying it by 2.5 (i.e. 100/40=2.5) we get to $375K. IMHO, when all is said and done there will be a healthy 1st time buyer market between $300K and $400K for nice places not dumps in SD.
ParticipantThe demise of the economy will come regardless of who is in power. The Democratic party will have the unfortunate position of standing watch while it does and shouldering the blame for damage set in progress over the last several years. In 2010, the Republicans will roar back into power after convincing Americans that the economic pain they have experienced is due to the Democrats resting control of the country in 2006. And….so…..it….goes………
ParticipantPS,
Sometimes I wonder whether you believe everything you write, are simply ignorant of the reality of things or are just simply trying to get a reaction from other Piggintons.I own my home. The bank has a lien against it not an ownership interest. I can make them go away by writing a check whether they want to or not, they cant do the same to me. Taxes are a cost of ownership not an ownership interest.
If you mistreat your children, child services could take them away. Do you think the government owns your children?
ParticipantWhen I die, someone else will own it and one of my kids will enjoy raising their family there as much as I have. I own my home, I own the memories, I own the sense of security and I own the joy it has brought me. In my eyes that makes me a very wealthy person.
An interesting aside: Yesterday was a very very low tide so I took my son out to the tidepools in Carlsbad near Terra Mar. We walked past the home that recently sold for a record price in Carlsbad ($8.2M). It is spectacular and the view is phenomenal. I asked him if he would like to live there and be able to walk onto the beach. He said it was nice but that he loved his house and wouldnt want to live there. Sorry, I’m not depressed.
ParticipantIf you say the bubble started 9/11 and that prices will return there you are ignoring that 6+ years will have passed since then. You need to factor in for normal inflationary appreciation (whatever that might be) over 6 to 8 years which is when we should get back on track.
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