See my post above.
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Another Housing Bubble?
- Thread starter albatros43
- Start date
See my post above.
I have to say, and this is my opinion, that after watching all types of markets and services and fads that America is no longer a "supply and demand" economy. It has become a "what the market can bear" economy.
Cell phones and especially cell phone plans in a lot of other countries are not half of what they are here. Bottled water, which you can buy in 24 packs for $4/pack will also sell at $1.25 near a check out counter. Coke in a 2 liter bottle can be had for less than a 16 oz bottle in a machine.
Houses have become "wants" and dreams and not needs at all. The status of living in a gated / prestigious community is driving up the cost (yes, this sounds like supply and demand, but it's artificial). It is a perceived "supply" and an artificial demand.
Your opinion may differ.
Ugh. "Liar loans" is a meaningless phrase that paints a whole variety of loans with a wide and inappropriate brush. But I realize the 15-second newsbytes can't adequately explain anything more complicated than a cup of coffee. Sad part is that people think they are educated by the mass media drivel, but I digress. There were no-doc loans that were abused because of lying underwriters and appraisers. There were low-doc loans, that were abused the same way. But I had several of them BECAUSE IT DISPENSED WITH 100+ PAGES OF PAPERWORK. No lying involved. If you wanted to close in a week, you paid the extra 0.25% and went low-doc.
It was never the LOAN that was the problem-- it was the crooks misrepresenting and selling them. Hell, there's nothing in the world wrong with a neg-am loan-- if you are one of the very few people with erratic cash flow for which it makes sense. Salespeople that have erratic cashflow, and giant year-end bonus for example.
The bankers all got bailed out with our money, but the crooked "investors", appraisers, and brokers walk free. Way more lucrative than selling crack, and almost zero risk. The real chumps were the taxpayers, burned coming and going. And seemingly no one cares.
The availability of low-doc and no-doc loans was not and is not a problem.
As the saying goes: Make hay while the sun shines.
But last time, the problem was credit given to people who had no chance of keeping up with the payments, on the presumption that values would continue to rise and refinancing would alleviate the issue, and banks passing the buck through packaged mortgage sales to Wall Street. A lit fuse on an Acme-branded stack of coyote-killing dynamite, if ever there was one.
Hilariously explained by Bird and Fortune:
If somebody is qualified and can service the mortgage long term (you know, the way things used to be, "back in the day"), it doesn't matter if the market comes and goes several times in 30 years. I've been living in the same house since I bought it in 1992. Plenty of hikes and crashes since then.
I know we've looked at $400k homes in the area and I haven't been impressed. We own our home now and I have a hard time knowing who can afford these homes. This is the same thought I had when we purchased a sub $200k house 12 years ago while everyone was buying houses much more expensive. The answer back then was that they really couldn't afford it. That might again be the answer.
But people DID lie. And the bank loan officers went, "whatever" even though it was obvious what was going on. Due Dilligence went out the window. That was what should have killed a whole bunch of banks.... but... yeah we know the rest of the story.
I think the banks' memories, while normally short, are not that short. And the banking regulators have even less of a sense of humor this time around. Lots of politicians still trying to wipe the stink of Fannie Mae off their lapels.
I think this is a legit boom cycle based on a burst of economic activity, rather than an artificially created market. Could be wrong. If we're stupid enough to go down that road again, after only eight years, we deserve whatever happens.
We don't want to deal with selling our house before buying and only plan to put 5% down initially. That's a pretty typical product. I'm not sure why but in my case I'm glad.
And that's why there's mortgage insurance, usually a requirement and an extra cost with a 5 or 10% downpayment.
It's when they start smoothing over those kinds of wrinkles that people get in trouble.
Generally speaking. We are not in a bubble. There are a few hot spots that are in extreme demand but overall housing prices are as close to real as possible. Still way below the bubble pricing of 2007. Appraisals are done completely different now than 10 years ago and are not enfluenced by the banks and builders creating a more consistent value. Plenty of deals in most places.
