[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=UCGal]Ok… I think most people would agree that housing was overpriced during the bubble.
Do people want it to “recover” to the overpriced values? Or find a natural market.

For decades housing appreciated VERY slowly… Often less than inflation. People might have to get used to that mindset again.[/quote]

I think you’ve missed his point about what a real housing recovery means. It’s not prices. It’s construction.

If you had housing starts from their current half-century low rally at unprecedented — let’s say 60 or 70 percent — they would merely hit the average low of the past six housing recessions since 1950. Did you get that? We dug ourselves that deep a hole, so theres very, very little comfort here.

New home construction is lower than any time in more than 60 years. We lost 2.5 million residential construction jobs and probably an additional million jobs in allied fields…finance, architecture (sound familiar?) , engineering, loan, title and RE agents, etc. Almost every single recession in the last century has been lead out of recession by new home construction. Not this time. The fact that the economy has recovered at all given those job losses is miraculous. (Anyone that thinks that politicians could have done anything to fix the economy in the last three years is nuts. It could have been better. It could have been tweaked. But there is virtually nothing that could have been done to replace those 3.5 million jobs.)

I’m not sure he’s right. It may not take a generation nationwide. Some areas will recover sooner. But in markets like Phoenix, Las Vegas and much of Florida? Twenty years sounds about right.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]Sk clearly your case was an exception. Also if the condo you were talking about was going to be purchased as an owner occupied unit but all of the sudden someone makes a bulk purchase to throw the ratios completely out of whack then of course a lender will not loan on it for owner occupants. No lender would. Was the property for owner occupancy or for an investment?

[/quote]

The buyer was intending to occupy the unit. But was willing to pay non-owner occupied rates. But there were a couple problems that made a loan a practical impossiblity. The GSE and FHA requirement for owner occupancy I believe is currently 51%, which kind of strangely includes REO as owner occupied. I believe the complex barely met that requirement. But there is (or at least one time was ) also a requirement that no single owner owns more than 10% of the units. Back in the old days this wouldn’t be a fatal flaw. There were always the private lenders. (I think private money MBS’s are still dead.) So the choices are conventional or warehouse lender. And apparently, for low owner occupancy condo projects and/or complexes with a single owner owning a high percentage of the units, there is no such thing as private money. The very few warehouse lenders won’t lend on those kinds of projects either. At least wouldn’t lend on this particular project, and it may be the same thing with the OP’s project.

But you’re right, it could also be ongoing CD litigation.

[SK in CV]

[quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

[SK in CV]

[quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

[SK in CV]

[quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

[SK in CV]

[quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

[SK in CV]

[quote=SD Realtor]You have not given any reason why the complex is cash only. Generally in situations like this the market conditions have nothing to do with the ability to finance. [/quote]

That’s not always true. My niece just had her loan foreclosed. She paid $230K w/ 20% down around 3 years ago. (this is in phoenix, not sd.) She had a lender approved short sale at $85K, and the buyer’s lender backed out after she had already signed docs. Turns out an investor had just bought 20 units for $60K each for all cash. The buyers appraisal was fine, but the lender refused to fund. My nieces lender gave an additional 30 days to find replacement financing but none was available, even with 50% down. No lender would loan on this project.

[SK in CV]

[quote=pri_dk]This is an oversimplification. True, trading shares that have already been issued do not directly provide additional capital. What it does provide is liquidity – something that is essential in capital markets.

If there were not an active market for a security, investors would be reluctant to buy it because they would be concerned that they may have trouble selling it later. IPOs and other offerings would be much more difficult, and happen far less often.

A big reason that publicly-traded companies can issue stock/bonds/whatever to raise capital is that the buyers of these securities are confident that they are purchasing a liquid investment. The existence of active markets is what gives them this confidence.

So the vast majority of trading does not directly raise capital, but it does very much “have an effect on whether Ford expands their workforce or opens a new plant.” The liquidity of Ford’s stock makes it possible for Ford to issue more.

Securities markets do not exist simply to provide a venue for gambling. This is a popular myth, but completely incorrect.

One of the biggest reasons that the US is the most prosperous economy in history is that we have the most established and, in fact, transparent markets that have ever existed. These markets give companies the ability to easily raise capital, expand their business, and (this one’s for you CAR!) hire more employees.[/quote]

Agree with all of this. And should not have ignored in my comment. But my point was (which I also confess, I totally ignored in my comment) that lowering taxes (or raising them) on those with the highest income has virtually no effect on expansion of capital or creation of jobs. There is no shortage of capital for those purposes. The relatively highly efficient markets ensure that.

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