U.S. Mortgage Foreclosure Filings Rise 90% in May

[zimv20]

bloomberg (http://www.bloomberg.com/apps/news?pid=20601087&sid=aVVr0Jrm19OE&refer=home)


U.S. foreclosure filings surged 90 percent in May from a year earlier as more homeowners fell behind on their monthly mortgage payments, RealtyTrac Inc. said.

There were 176,137 notices of default, scheduled auctions and bank repossessions last month, led by California, Florida and Ohio, the Irvine, California-based seller of foreclosure data said in a report today. The median price for a U.S. home slid 1.8 percent the first three months of 2007 as the housing slump entered its second year, according to the National Association of Realtors. The filings rose 19 percent from April.

A jump in foreclosures at a time of year that traditionally is the busiest for home sales means the slide in prices probably isn't over, said James Saccacio, chief executive officer of RealtyTrac. Typically, more than half of all home sales occur in the April to June period, according to Freddie Mac, the No. 2 mortgage buyer.

``Such strong activity in the midst of the typical spring buying season could foreshadow even higher foreclosure levels later in the year,'' Saccacio said in the report. That will add ``to the downward pressure on home prices in many areas.''

Ranked by the number of foreclosure filings, California topped the list, with 39,659 in May, and Florida was No. 2, with 21,704. Ohio was No. 3 for the third consecutive month. It had 13,214 filings, said the report.

(more)

no great surprise here. all that's left to see is how bad the housing industry will get, and how much it'll affect the rest of the economy.

[solvs]

Living in the area of CA I do, I can see it. Housing costs skyrocketed, lenders were ripping people off, and now the bubble is bursting. Soon the market will be in the toilet.

Could barely find an apartment last year, now there's For Rent signs everywhere.

[hulugu]

Living in the area of CA I do, I can see it. Housing costs skyrocketed, lenders were ripping people off, and now the bubble is bursting. Soon the market will be in the toilet.

Could barely find an apartment last year, now there's For Rent signs everywhere.

Tucson went through a similar bubble, housing prices outpaced the average wage, which created a stagnation in housing prices and now all those who bought into balloon payments hoping their values would rise high enough to cover this gap are now totally screwed. Of course, real estate appraisers were expecting this to happen since 2003-2004.

Expect the economy to slow as people run out of credit to burn, especially on consumer goods like technology and autos, and be wary of banks who will certaintly want to find profits from other sectors.

[Queso]

Our own housing market in the UK is staring into a similar abyss. The Bank of England are also expected to continue raising interest rates until inflation goes back below 2%. I hope it's not as bad as the early 90s, but the signs aren't good.

[paddy]

Same for Ireland, our house prices are ridiculous, far greater than those in America. Up 200%+ since '97 and still climbing. When that bubble bursts we're screwed.

[FFTT]

We have a bunch of people in the Washington D.C. area who were granted
no doc loans who really were not capable of handling those payments.

Now with interest rates on the rise, more will fail to meet their obligation.

What bugs me is that predatory lending is still heavily advertized with
" The Lowest Monthy Payment" ads baiting even more people to buy what
they can't possibly afford.

[PlaceofDis]

things are seemingly starting to burst in Chicago too. not surprising. but the effects on the rest of the economy could be bad.

[Sdashiki]

Florida.

'Nuf said.

Housing market is grossly over-inflated.

When someone buys a house for $90,000 and 5 years later EVERYONE wants to live there, the house is now $250,000. BUt with it comes increased taxes, which the people who could afford $90k, cant afford. So, they sell or foreclose.

All over Florida housing prices are way higher than they should be. And in some places, its justified cuz people still pay for it. Mostly out of staters with no idea about land in Florida....

I see the bubble bursting very soon, there are so many places still for sale, for exorbitant prices, that by the end of the year they will realize, I can either pay another year of taxes, or sell for less. Gee let me think...


All I have to say is, HURRY THE HELL UP, im sick of renting but I cant afford your 3/1 for $190k just cuz you think its worth that much, honestly, sir, its not and thats why its still for sale almost a year later! (that was all in my head)

[Swarmlord]

These no doc loans just for the sake of granting people credit that haven't earned it has got to stop. I remember when you had to work hard to prove you could make payments and have plenty left over to spare. Now your pet could probably get a loan.

[Queso]

These no doc loans just for the sake of granting people credit that haven't earned it has got to stop. I remember when you had to work hard to prove you could make payments and have plenty left over to spare. Now your pet could probably get a loan.
It's a globalisation thing believe it or not. All the money the Asians are saving has to be invested somewhere. US and European banks are getting it at next to nothing rates from their Asian counterparts, so they can afford to literally throw it at people. Even with masses of defaults they still make a profit.

[Swarmlord]

It's a globalisation thing believe it or not. All the money the Asians are saving has to be invested somewhere. US and European banks are getting it at next to nothing rates from their Asian counterparts, so they can afford to literally throw it at people. Even with masses of defaults they still make a profit.

Sounds likely. This whole "get into real estate and make millions" has always irritated me. I can't even listen when those get rich on real estate commercials come on. Nothing wrong with a little inflation index based growth in an industry, but not one that's considered a necessity. Wonder if people would think it was as fair for a group of investors to do the same thing for say our food source.

[Sdashiki]

I think the real money making in real estate isnt the Donald Trump tried and true of buy low sell high. Thats far to risky these days.

But its not too risky to "flip" a house. But I dont mean like those shows where its some guy whos business it is to flip houses, he never swings a hammer once. They just throw money around and yell at contractors.

Im all for buying a fixer-upper, whether its my main residence or not, fixing it up with my own hands (and some pro help where need be) and selling it for more than I paid for it.

There is truth to spending $10,000 in home repairs/improvements, and getting $20,000+ more for the house when it sells.

[Turkish]

People have been using their homes as revolving ATMs for years.

Refinance, take cash out, refinance, take cash out, refinance, take cash out...

Now that home values have dropped, people are realizing that they have been living on borrowed money to finance their lifestyles, versus actually making (earning) enough money to live on.

[Swarmlord]

People have been using their homes as revolving ATMs for years.

Refinance, take cash out, refinance, take cash out, refinance, take cash out...

Now that home values have dropped, people are realizing that they have been living on borrowed money to finance their lifestyles, versus actually making (earning) enough money to live on.

It does seem like the whole notion of paying off your mortgage and having a little party to celebrate is obsolete. I think it would really help to get rid of the home mortgage deduction, but then the Fair Tax doesn't have deductions of any kind in the first place.

[Turkish]

It does seem like the whole notion of paying off your mortgage and having a little party to celebrate is obsolete. I think it would really help to get rid of the home mortgage deduction, but then the Fair Tax doesn't have deductions of any kind in the first place.

It's sad, really. My better half is a branch manager for one of the biggest lenders in the country.

They pay off these people's credit cards, and they are back within 2 years asking for more... Nowadays, there's no more equity to borrow against.

Credit cards will be the bane of this society in coming years. People think they're getting along fine until they're in too deep.

[FFTT]

I think each family should be allowed one primary home as their major
write off and one only major investment property free of capitol gains.
A vacation home, rental property, a piece of land what ever you choose, but only one.

In many cases a smart investment in real estate is the only way people
can earn enough money fast enough to put their kids through college or save for retirement.

Beyond that, the multi-investors would have to pay their fair share.

[Queso]

People would get round that too easily FFTT. They could just form a company, invest their money into it, then buy lots of properties, paying themselves dividends on the development/rental profits.

In a way that's a good thing. Why should only the extremely wealthy be able to own land and property?

[leekohler]

All my friends have been telling me to buy a condo for the last two years, saying "It's a great time to buy! Do it now!" I'm glad I didn't listen. Prices have leveled off here, and there are foreclosures all over the place. Color me predatory, but I'm waiting to see just how low it goes. I'll buy then.

[FFTT]

The regulations would have to be very tight on what qualifies as a "family"
investment property.

Once you go to a commercial investment situation all the rules would
have to treat those properties as multi-investor properties subject
to a higher tax rate on capitol gains.

[FFTT]

All my friends have been telling me to buy a condo for the last two years, saying "It's a great time to buy! Do it now!" I'm glad I didn't listen. Prices have leveled off here, and there are foreclosures all over the place. Color me predatory, but I'm waiting to see just how low it goes. I'll buy then.

Make sure you are pre-qualified with a good lender and try to set yourself up so you can jump when the getting's good.
Your lender should know that you are targeting undervalued property and
make sure they have a good idea of what the appraisals should be where you're looking. In other words you want to streamline the whole process.

Nothing can help you get a great deal more than being able to tell the seller
you can close fast. Like in two weeks.

Honestly condo's are ok if you can afford all the condo fees easily, but otherwise it's always better to buy fee simple properties.

Your best deal is still the fixer upper in a strong neighborhood or in buying
from a reputable builder at pre-construction prices.

[gkarris]

Also happens because many of our jobs are going overseas, hence people are loosing their jobs (like I did).

The few jobs here are also being given to people on work visas, hence the pay is much lower (I finally found a job for less than half my old pay - after looking for almost 3 years). So, you can't afford the house you have anymore.

Now, the skyrocketing energy costs.

Forclosure sometimes is not by choice...:(

[leekohler]

Make sure you are pre-qualified with a good lender and try to set yourself up so you can jump when the getting's good.
Your lender should know that you are targeting undervalued property and
make sure they have a good idea of what the appraisals should be where you're looking. In other words you want to streamline the whole process.

Nothing can help you get a great deal more than being able to tell the seller
you can close fast. Like in two weeks.

Honestly condo's are ok if you can afford all the condo fees easily, but otherwise it's always better to buy fee simple properties.

Your best deal is still the fixer upper in a strong neighborhood or in buying
from a reputable builder at pre-construction prices.

I live in Chicago- I can't afford a house here. :) Condo it is for me. Plus, I wouldn't have the time to take care of a house. Thanks for the tips, though! I will keep those in mind for sure.

[IJ Reilly]

The sub-prime lenders are behind most of this. Too many risky loans can start the market tumbling when the economy turns down or the housing market flattens. We can only hope that the housing markets deflate only by about as much as the sub-prime lenders have contributed to its inflation. If not, a recession at the same time could add up to repeat of the early '90s.

[gkarris]

I live in Chicago- I can't afford a house here. :) Condo it is for me. Plus, I wouldn't have the time to take care of a house. Thanks for the tips, though! I will keep those in mind for sure.

I do too (well, right outside of the city). But, make sure you understand all the numbers.

My friend has a nice studio+ (a studio with a separate kitchen/dining area) and only pays $650/month with heat and water. He has to pay for parking up the street.

He's looking for a condo. The ones where we live are $200,000+. Add the 2% taxes (yes, $4,000 a year for a condo). I computed that after he puts down 20% ($40,000), then, taxes, and some utilities (he now gets parking though), that's still about $2,000/month.

Is "ownership" around here affordable??? He doesn't have the greatest paying job...

[leekohler]

I do too (well, right outside of the city). But, make sure you understand all the numbers.

My friend has a nice studio+ (a studio with a separate kitchen/dining area) and only pays $650/month with heat and water. He has to pay for parking up the street.

He's looking for a condo. The ones where we live are $200,000+. Add the 2% taxes (yes, $4,000 a year for a condo). I computed that after he puts down 20% ($40,000), then, taxes, and some utilities (he now gets parking though), that's still about $2,000/month.

Is "ownership" around here affordable??? He doesn't have the greatest paying job...

NO- ownership isn't affordable. That's why I'm waiting for prices to come down.

[jng]

NO- ownership isn't affordable. That's why I'm waiting for prices to come down.

If it's like Boston, ownership won't become affordable. It's up to the people to rise into a different income bracket. The sad truth.

From Wired Magazine this month:


Expired - McMansion
Tired - Condo
Wired - Apartment


I totally agree. Houses, esp. large ones are having trouble finding buyers not just because of the market. The baby boomer generation is going to potentially face problems when they try to cash out on their suburban lots. Even now there's a noticeably larger number of larger nicer (luxury) suburban homes around the metro Boston area for sale. But they'll stay on the market longer because most people can't afford them and those who can prefer condos or apartments.


I prefer apartments. There have been lots of new luxury condo developments in Boston and that's where I'd want to live. Condos are cool. But they're for people who've settled down. Not me.

[FFTT]

The people getting hurt the worst right now are those who MUST sell.

Many bought too late thinking they could still easily flip the properties they purchased in a year or two, but now they have to hold out for the next high
cycle if they can.

The cycle averages roughly 7 years, so if you get in now as low as possible on a fixed note, you'll be fine as long as you're secure enough to stay.

The prices are going to stay stagnant from what I can see until at least
spring 2009 after the next administration is settled in.

As rediculous as these prices my seem now, eventually they will
go up again, so it's still a safe investment as long as you consider it
for the long haul.

The quick money that was fueling the last buying frenzy won't be back
for years, but it will come back eventually.

[gkarris]

NO- ownership isn't affordable. That's why I'm waiting for prices to come down.

I visited realtytrac and saw the stagering amount of properties being foreclosed on in my "nice" city. It's because our property taxes are outrageous.

Other's misfortune can be your fortune. Just visit the website and see if you can get a property at auction for cheap...

[leekohler]

I visited realtytrac and saw the stagering amount of properties being foreclosed on in my "nice" city. It's because our property taxes are outrageous.

Other's misfortune can be your fortune. Just visit the website and see if you can get a property at auction for cheap...

Thanks! I will definitely do that.

[zimv20]

lee -- when you're ready, and if you need it, i've got a mortgage broker i can recommend. a real south-side, no BS kind of guy.

[leekohler]

lee -- when you're ready, and if you need it, i've got a mortgage broker i can recommend. a real south-side, no BS kind of guy.

That's super cool zim! I will for sure. Thanks a lot.

[PlaceofDis]

awesome advice in this thread. i'm learning a good deal about buying a place in chicago myself, and its good to know these things. thanks guys.

[Sdashiki]

I visited realtytrac and saw the stagering amount of properties being foreclosed on in my "nice" city. It's because our property taxes are outrageous.

Other's misfortune can be your fortune. Just visit the website and see if you can get a property at auction for cheap...

too bad that site, like everything in housing, costs money to even use.

id venture to say that some, if not most, properties are "vapor"....then again, i just dont like paying for information.

[gkarris]

too bad that site, like everything in housing, costs money to even use.

id venture to say that some, if not most, properties are "vapor"....then again, i just dont like paying for information.

They're all real. But of course, like anything in real estate - they nickel and dime ya...

[pseudobrit]

People will never stop falling for Ponzi schemes.

It's just awful that it was allowed to bugger up the market for unsuckerable people who really could have used a house (fitting within their real-world budget) in which to live.

Instead, many will be trapped for years, perhaps decades, upside-down in loans that will force them to sacrifice an obscene percentage of their income until the market readjusts to a reality- and wage-based inflation schedule that matches the value of their property with what they still owe.

[IJ Reilly]

Other's misfortune can be your fortune. Just visit the website and see if you can get a property at auction for cheap...

More easily said than done. For one, you need to understand values going into the auction. For another, you must have your financing already lined up. For a third, foreclosure prices aren't necessarily lower (see caution one). Finally, foreclosed properties are often wrecked and then patched up superficially by the lender to improve curb appeal. Caveat emptor applies even more than usual here.

[FFTT]

When you're looking at condos, keep in mind that many were purchased by investors at pre-construction prices, so while they may be listing at current
retail, your agent should be able to tell you pretty close to what they have in it.

One very nice local condo building sold pre-construction with 1 BR units
starting at $179,000.00 Current market is $280,000.00 on those same units, so don't be afraid to bid lower than the current asking price.

In many cases those investors have several units in the same building, empty and are paying, mortgage, taxes, utilities, insurance and condo fees just to sit on them.
This also holds for people who were transferred or lost their jobs, or
bit off more than they can chew.

Your lender should be able to tell you how much you can REALLY afford and be honest with yourself about ALL your expenses.

Also watch the age of stuff like heat pumps, furnaces, hot water heaters and take note of the type and quality of windows. Frame construction or masonry and take a hard look at how the place in maintained overall.

They are numerous bad condo associations out there, so find out all you can about them from other owners.

You're trying to live within your means, so you don't want any surprises.

I still think you are better off buying a single family home, especially the fixer upper that's sitting in this nice old neighborhood. Or better yet, the one in that nice neighborhood that looks like someone should bulldoze it.
Even better, that shack less than a block away from commercial property that looks like someone should bulldoze it.

Those are the one's that make you ooodles of money if you're patient and have a keen eye for
development properties.

My hindsight is painfully clear.

I could have purchased a one room shack on 11 acres right off I-66 in Oakton for $90,000.00, but
my idiot wife didn't want to rough it for a few years.

The property was rezoned for a midrise office park and went for millions.
Like $11,000,000. Grrrrrrrr!

[Jschultz]

things are seemingly starting to burst in Chicago too. not surprising. but the effects on the rest of the economy could be bad.

Because you know it's gotten bad when a nice little place in Bridgeport is $400K.

My girlfriend and I are anxiously waiting for something to happen. :cool:

[FFTT]

Because you know it's gotten bad when a nice little place in Bridgeport is $400K.

My girlfriend and I are anxiously waiting for something to happen. :cool:

Buy with your head, not your heart.

Everything you look at should be viewed strictly as an investment property.

It will not be your last home, it's just a stepping stone.

[nbs2]

I'm all for falling housing prices and foreclosures.

I was good and I waited - I didn't buy a house that was more than I could afford. I didn't take out massive loans to have the lifestyle I desired. I saved and scrimped as much as I could.

Now I have a baby and I'd like to buy a house. I can't afford what I'd like, so I'm scaling appropriately. If the government starts "protecting" the irresponsible, continuing to make it difficult for me to buy a home, I will be one very, very, unhappy camper. Essentially punishing the responsible to help out the irresponsible is not my cup of tea.

Anyway, I haven't really read much of the thread (and this may be way off topic, or may not), I just had a discussion about this the other day and wanted to vent some frustration. Back you your regularly scheduled programming.

[FFTT]

Timing is critical right now with interest rates looking like they are going up.

If you wait too long, the prices may lower a bit more, but a 1% increase on the interest rate of a typical starter home loan can end up costing you hundreds of extra dollars per month.

So even if the interest rates force the housing prices down further, you end up paying about the same. The mortgage companies just get a bigger cut.

[Rower_CPU]

As someone who bought a condo in SoCal a year and a half ago when prices were more or less at a peak, let me speak for my peers and say "*gulp*".

[IJ Reilly]

As someone who bought a condo in SoCal a year and a half ago when prices were more or less at a peak, let me speak for my peers and say "*gulp*".

I'm with you. I'm not worried about exposure, and as much as I'd love to pick up an investment property at a fire sale price, wishing for a big drop in the housing market is like wishing for a magnitude 8.4 earthquake. Somebody might benefit, but a whole lot more people will get hurt.

Welcome back, btw. Haven't seen you around in a dog's age.

[solvs]

Because you know it's gotten bad when a nice little place in Bridgeport is $400K.

$400,000 wouldn't buy you a 2 bedroom 1 bathroom hovel here. Most of the decent houses around where I work are in the million dollar area. For a regular sized family home. I kid you not. Wages aren't even that much better. This is why I commute.

Granted I'm only about 10 miles away, but it's still a commute if it takes me ~40 minutes to go that 10 miles. :rolleyes:

[FFTT]

The same thing happened back in '91

I was one of those people who had to sell, I was struggling to pay 3 mortgages, thanks to someone who skipped out on rent.
The other two notes were for my land and construction loan.

So in a serious financial pinch, my 1st home which appraised at $265,000 back then sold for $191,000.

Last year that same home re-sold for $569,000. :(

I still did OK because selling that house made it possible for me to buy the
one I have now on 20 acres, an hour from Washington D.C. :D

So the key in this market now is either to cut your losses or batten down the hatches and ride out the storm.

If you're in the position to buy, you have a lot working in your favor right now, but plan on staying put for a while.

One other thing...

If you own now or if you are buying, take advantage of your lender's equity acceleration program.

You pay up one month in advance and then the rest of your payments are taken out in bi-weekly installments.
You schedule those installments to come out the day after your paycheck posts to your account, so it's painless and you are never late. This gives you 26 half payments a year and cuts
your interest dramatically.

A once a month payment is their game, so you are paying 30 days interest each month based on your
principle balance.

The equity acceleration program cuts that down to roughly 15 days between payments, so
you pay less interest and pay more towards your principle.

Using this program, my 15 year note should be paid off in about 12 1/2 years.

I will also save about $60,000 in interest.

[Music_Producer]

I feel for those who are going through the foreclosure process.. but it's really their fault. Yes, everyone tends to blame the lenders, the banks and so on.. but ultimately, it's the home owner's responsibility to figure out expenses, how much savings they have in the event of an emergency such as job loss, medical bills, etc.

Although I can easily afford to buy a house right now and pay the monthly bills, I have made it clear to myself that I won't do so until I have cash for the entire amount (or at least a 60% down payment.. worst case scenario) I hate borrowing, I hate paying interest on anything - so I rarely buy anything unless I can afford it.

The temptation to buy something with zero down, and a low interest rate is everywhere. That doesn't mean that you shouldn't do your homework and just fall for it. It surprises me that in this country.. most people don't even know what an interest rate actually means. My wife is 25, and until I explained to her how a credit card really works, she thought the banks were being kind enough to lend her credit and not take anything back - "But i pay the minimum every month!" she explains.. yeah.. ok :rolleyes:

Another sector of professionals I can't stand is the realtors, or the real estate analysts. They always paint a rosy picture, all the time. I mean.. geez.. give it a rest. All I hear is 'This is the bottom, prices won't fall anymore, so now's a good time to buy' I understand when you want to sell something but just blatantly ignoring the present situation is almost insulting to the poor people getting evicted out of their houses.

Anyway, looks like inflation is on the way up as today's PPI numbers showed. If the Feds raise the rates.. the real estate market is going to need a miracle to recover. I remember when every person at Barnes and Noble was rushing to buy books on "How to Flip Houses - Fast!" 2-3 years ago. :rolleyes:

[Swarmlord]

$400,000 wouldn't buy you a 2 bedroom 1 bathroom hovel here. Most of the decent houses around where I work are in the million dollar area. For a regular sized family home. I kid you not. Wages aren't even that much better. This is why I commute.

Granted I'm only about 10 miles away, but it's still a commute if it takes me ~40 minutes to go that 10 miles. :rolleyes:

That was the case when I lived in San Diego. You couldn't get a decent stand alone house in a good neighborhood for less than $600k. My two houses were above average and I couldn't believe what our agent wanted to list them for. Then they both sold within a week. Go figure.

[jessica.]

Living in the area of CA I do, I can see it. Housing costs skyrocketed, lenders were ripping people off, and now the bubble is bursting. Soon the market will be in the toilet.
It is statements like this that make people who are actually in the industry sick. As a person dealing with the day to day financial aspect of mortgage lending I can tell you that saying "lenders were ripping people off" is a very general statement that does not apply to the majority of lenders. Moreover, lenders and brokers are often mistaken as being one in the same. I can say that many lenders who were supposedly ripping people off are dealing with wholesale loans. Loans originated through a wholesale channel are broker submitted so if you're going to make a rather general statement like that then it'd be prudent to understand the market, the industry, and the loan origination process.

No doubt some lenders went bad (New Century, Freemont, Ameriquest) and many have been forced to settle with the State Attorney General for unlawful practices, but the bigger picture is what is being missed.

Foreclosures are on the rise, however, this is due in part to the interest only negative amortization loans being pilfered to the public. Customers see the bottom line and FAIL to see the big picture. They see they have a low payment due to only having to pay interest and they think they'll just refinance into some other program. That is a bad way to do business even if it's just loan on their personal residence. No doubt they are hand held by brokers and lenders alike, but the problem is not just with lenders and brokers, customers by nature only care about their cash out (many of the foreclosures are from refinance transactions).

In the long run this so-called shift (which by the way happens about every 10 years) will result in lesser losses than the analysts who are very much removed from the day to day aspects of mortgage lending (they analyze public data but there is more data than what is released to the SEC). In the long run if you're a strong lender with strong financial backing you will see losses will equate to less than 15%...not the numbers being seen today. It just needs time and in the end some of those so-called bad lenders will soon be gone and the industry can start over making way for lenders that will do the right thing.

[IJ Reilly]

I feel for those who are going through the foreclosure process.. but it's really their fault. Yes, everyone tends to blame the lenders, the banks and so on.. but ultimately, it's the home owner's responsibility to figure out expenses, how much savings they have in the event of an emergency such as job loss, medical bills, etc.

Plan for job loss? Really? Yes, many people get in over their heads (which lenders now actually encourage), but in a down housing market a lot of foreclosures don't have much if anything to do with poor financial planning. They have to do with negative equity. Homes can become walk-aways when the owner owes more than the property is worth, sometimes a lot more.

[Rower_CPU]

I'm with you. I'm not worried about exposure, and as much as I'd love to pick up an investment property at a fire sale price, wishing for a big drop in the housing market is like wishing for a magnitude 8.4 earthquake. Somebody might benefit, but a whole lot more people will get hurt.

Welcome back, btw. Haven't seen you around in a dog's age.

I've been around, just not posting as much. :)

We really debated whether it was the right time to buy or not when we did, and in hindsight it would have been better to wait for a while, but we took our chances and have enjoyed owning instead of renting. We'll see what the next few years bring as things correct...

[IJ Reilly]

I've been around, just not posting as much. :)

Difficult to know then, isn't it. ;)

We really debated whether it was the right time to buy or not when we did, and in hindsight it would have been better to wait for a while, but we took our chances and have enjoyed owning instead of renting. We'll see what the next few years bring as things correct...

For your sake and the sake of others like you, I hope for not too much correction. Very well I remember the 1989-92 period when homeowners lost 30-40% of their equity and didn't get it back for another five years or more. A lot of people couldn't hang on that long.

[Desertrat]

Hey, nobody twisted arms to persuade people to buy more house than they could afford. Nobody forced idiotic loans on people--balloon notes, interest-only notes, whatever. But you just can't persuade people that "TANSTAAFL" is not negotiable. :)

I hate to interject poltics into what's essentially an economic thread, but it was the more liberal Democrats who provided the impetus to promote home ownership among the poorer parts of our society--and now the to-them unforeseen consequences are doing the usual butt-biting.

The housing bubble has been just like the dot-com bubble was: Those who got in early have made out like bandits. Those who bought in 2004 or later are sucking hind tit.

Housing costs peaked in mid-2005. The long-term average is four years from peak to bottom, which means further declines in appraised values in many places for another two if not more years. When you couple this with higher costs of everything, I am of the opinion that it's gonna be more than just another two years.

If rent's cheaper than house payments, rent, don't buy. Buying in those circumstances is a poor use of capital.

Oh, well. The only difference between what I'm saying now and what I posted some two or three years ago is that I then said housing prices would begin to fall in some areas...

'Rat

[leekohler]

Hey, nobody twisted arms to persuade people to buy more house than they could afford. Nobody forced idiotic loans on people--balloon notes, interest-only notes, whatever. But you just can't persuade people that "TANSTAAFL" is not negotiable. :)

I hate to interject poltics into what's essentially an economic thread, but it was the more liberal Democrats who provided the impetus to promote home ownership among the poorer parts of our society--and now the to-them unforeseen consequences are doing the usual butt-biting.

The housing bubble has been just like the dot-com bubble was: Those who got in early have made out like bandits. Those who bought in 2004 or later are sucking hind tit.

Housing costs peaked in mid-2005. The long-term average is four years from peak to bottom, which means further declines in appraised values in many places for another two if not more years. When you couple this with higher costs of everything, I am of the opinion that it's gonna be more than just another two years.

If rent's cheaper than house payments, rent, don't buy. Buying in those circumstances is a poor use of capital.

Oh, well. The only difference between what I'm saying now and what I posted some two or three years ago is that I then said housing prices would begin to fall in some areas...

'Rat

Thanks for the input. Rent is FAR cheaper here than buying, my friends who did buy say they're spending twice what they previously spent on rent. :eek:

And I hate to tell you but, this issue is bipartisan my friend. I don't know a ton of liberal bankers. ;) They just found a way to make money out of it despite the bad loans.

[gkarris]

Hey, nobody twisted arms to persuade people to buy more house than they could afford. Nobody forced idiotic loans on people--balloon notes, interest-only notes, whatever. But you just can't persuade people that "TANSTAAFL" is not negotiable. :)

I hate to interject poltics into what's essentially an economic thread, but it was the more liberal Democrats who provided the impetus to promote home ownership among the poorer parts of our society--and now the to-them unforeseen consequences are doing the usual butt-biting.

'Rat

If your job is in an area where housing costs are sky high (like in Chicagoland) - you don't really have a choice.

and it's the conservative Republicans that have shipped tons of our jobs overseas...

[IJ Reilly]

Let's see... which politician was most recently sloganeering on the "ownership society"... might that have been one of the nation's more liberal political elements known as George W. Bush?

I just happens that the FHA, which was created in the Depression to build public housing, morphed after the war into a single family home loan program, which was augmented by the GI Bill. It wasn't about liberal vs. conservative policies. If anything, the change in government focus from public housing to encouraging home ownership was a conservative (if not libertarian) principle at work.

[Desertrat]

IJ, Dubya wasn't El Prez when all this got going, remember? This housing bubble didn't start just in the last few years.

And the "help the poor become homeowners" program has been around a long, long time, comparatively, and it was indeed a liberal program.

Remember, the Repubs ain't gonna go for low- or no-interest loans for others. Maybe for themselves though they don't need them, but certainly not for others.

Look: It's been national policy for folks to own their homes since income tax was instituted: The interest on a home loan has always been deductible. But just because there's a mythos about it, or just because Yore Guvmint says it's a good deal, just doesn't make it so.

(Lotsa farmers followed government advice in the 1970s, and the next thing you know, Willie's doing Farm-Aid concerts.)

There's a word for folks who mix money and emotion, quite often: Broke.

Regardless, nobody went out and said, "Hey, boy, if you don't borrow on this interest-only note, I'm gonna do bad things to your wife and kids." Every story about how sad it is to get repoed skates around the notion that the buyer had an attack of the greedies or the stupids--but most of the time it's quite obvious.

'Rat

[leekohler]

IJ, Dubya wasn't El Prez when all this got going, remember? This housing bubble didn't start just in the last few years.

And the "help the poor become homeowners" program has been around a long, long time, comparatively, and it was indeed a liberal program.

Remember, the Repubs ain't gonna go for low- or no-interest loans for others. Maybe for themselves though they don't need them, but certainly not for others.

Look: It's been national policy for folks to own their homes since income tax was instituted: The interest on a home loan has always been deductible. But just because there's a mythos about it, or just because Yore Guvmint says it's a good deal, just doesn't make it so.

(Lotsa farmers followed government advice in the 1970s, and the next thing you know, Willie's doing Farm-Aid concerts.)

There's a word for folks who mix money and emotion, quite often: Broke.

Regardless, nobody went out and said, "Hey, boy, if you don't borrow on this interest-only note, I'm gonna do bad things to your wife and kids." Every story about how sad it is to get repoed skates around the notion that the buyer had an attack of the greedies or the stupids--but most of the time it's quite obvious.

'Rat

Excuse me 'rat, but are you seriously trying to tell me that predatory lending is a liberal plot? I'm sorry, but I certainly DON'T buy that.

[IJ Reilly]

Excuse me 'rat, but are you seriously trying to tell me that predatory lending is a liberal plot? I'm sorry, but I certainly DON'T buy that.

Exactly. This is the point I was attempting to make. If promoting an "ownership society" belongs to any ideology it's conservative, not liberal. I've heard George Bush promote it. I remember Margaret Thatcher pushing it. In fact when the government got involved in the home ownership business after the war, it was a much a product of the suburban land development industry as anything else.

[hulugu]

And the "help the poor become homeowners" program has been around a long, long time, comparatively, and it was indeed a liberal program.

And this "program" has had positive results, however the collapse of the housing boom, and indeed the most dangerous part of this collapse, is a direct result of a series of deregulations starting in the 1970s. Trying to tie this to liberal policies is just rediculous, I would say both parties should take responsibility, but it's been the Republican line that deregulation will always have positive results.

Remember, the Repubs ain't gonna go for low- or no-interest loans for others. Maybe for themselves though they don't need them, but certainly not for others.

And, there you go.

Regardless, nobody went out and said, "Hey, boy, if you don't borrow on this interest-only note, I'm gonna do bad things to your wife and kids." Every story about how sad it is to get repoed skates around the notion that the buyer had an attack of the greedies or the stupids--but most of the time it's quite obvious.

Predatory lending plays on people's ignorance of finances and trust in institutions and a few well-placed regulations could have softened their fall.

[leekohler]

Exactly. This is the point I was attempting to make. If promoting an "ownership society" belongs to any ideology it's conservative, not liberal. I've heard George Bush promote it. I remember Margaret Thatcher pushing it. In fact when the government got involved in the home ownership business after the war, it was a much a product of the suburban land development industry as anything else.

Oh and let's not forget Reagan's policy of "go use your credit!" The Republicans love this. It's almost like indentured servitude. I would love to own a place here in Chicago. But I'll be damned if I'm going to become a slave to my property (mortgage lender). I'm sorry, no way.

[solvs]

It is statements like this that make people who are actually in the industry sick.

I didn't say all ;) but as you pointed out, there were some major lenders (and brokers) who went predatory, especially in this area, and far too many fell for it.

Not the main problem, but it shouldn't be as common as it still is.

[Queso]

It's almost like indentured servitude.
That's it in a nutshell. The easiest way to keep a mass of people in their place is get them to spend a fortune on credit. There's no uprisings or riots about the method of control, and most people get so scared of losing what they have they'll kill themselves working for whatever pay you choose to give them, no questions asked.

Serfdom and the feudal system reinvented.

[FFTT]

I understand your point about people being so up to their neck in debt that
they dare not do anything to risk their job, stand up to the IRS or damage their almighty credit report.

Even so, working to pay rent and a car payment and using credit cards for
things that satisfy instant gratification is also not a very good plan.
You're working and have nothing to show for it.

The difference is learning how to use the system to your benefit and controlling the urge to splurge on things that you can live without.

[Music_Producer]

I have no idea about the political portion of all this home bubble business.. but in 2000-2001, interest rates were very low. That obviously might have been a factor for housing to pick up.

[Queso]

The difference is learning how to use the system to your benefit and controlling the urge to splurge on things that you can live without.
Controlling the urge is the key thing. Too many of us want everything now. Unless you can afford it, you shouldn't buy it.

[i.Feature]

Although I can easily afford to buy a house right now and pay the monthly bills, I have made it clear to myself that I won't do so until I have cash for the entire amount (or at least a 60% down payment.. worst case scenario) I hate borrowing, I hate paying interest on anything - so I rarely buy anything unless I can afford it.

I'm sorry but this senerio just doesn't make any sense to me. What you'd be paying in interest you're likely more than throwing away in rent.

Say for example $1000/month rent (easy number to calculate). In three years you've trown away $36,000. It's gone. Vanished. Nothing gained. Pay that $1000 into a mortgage. And even with interest you've created equity/saved money.

Borrowing, can be a good thing. It just needs to be done responsibly.

[FFTT]

If you know for sure that you are re-selling the home you buy, stretching out the payments can make your life easier, but you're counting on the value to go up and that may take several years at this point.
The mortage company wins because most of your payments are interest.

If you can't afford a 15 year note, try a 20 or 24 year, you don't have to
go 30 years.

Now some of the lenders are pushing 40 year mortgages and while that
may help you get into that McMansion, you're pushing your luck.

Young couples can really put themselves in a bind buying a home that
must be supported by both incomes.

Suddenly you're in family mode and mom needs to keep working and the kids go to day care. Been there, done that, wouldn't do it again.

People are buying homes based on 60%+ of their combined income and this is where they set themselves up for trouble if either one loses their job.

I used credit to help me buy a home and to buy a practical commuter vehicle. Everything else, EVERYTHING is cash or wait until you have it.

Every day I see examples of grand foolishness.

A $40,000.00 car sitting in the parking lot of an apartment complex where rents are $1,500-$2000.00 per month. I'm pretty sure all their furniture and clothing was bought on credit too. These people have nothing but lifestyle and debt.

I drove a patched together $800.00 car until I bought my first home
at the age of 23. I rented out a room to help me afford food and utilities.
I bought one nice piece of furniture at antique auctions once a year.

If everything goes right, I'll be able to retire debt free in a few more years.

[Music_Producer]

I'm sorry but this senerio just doesn't make any sense to me. What you'd be paying in interest you're likely more than throwing away in rent.

Say for example $1000/month rent (easy number to calculate). In three years you've trown away $36,000. It's gone. Vanished. Nothing gained. Pay that $1000 into a mortgage. And even with interest you've created equity/saved money.

Borrowing, can be a good thing. It just needs to be done responsibly.

I pay $750 rent currently.. and I have my savings in a 5.04% money market account.. the interest I get from that is approximately $937.

So my rent is practically free, and I make an extra $187. Plus my home rent also goes towards small business taxes (home office) Believe me, I am responsible. :)

[FFTT]

At least you are trying to live within your means and saving which most people can't seem to manage at all.

There is a point however when you need to take advantage of prices.

If you wait too long, you'll never save fast enough to keep up with the increases in interest rates or housing prices.

If you buy smart, your investment in a home will be your hedge against
inflation and as time goes on, you'll build equity much faster than you could ever hope to sock away in savings.

[i.Feature]

I pay $750 rent currently.. and I have my savings in a 5.04% money market account.. the interest I get from that is approximately $937.

So my rent is practically free, and I make an extra $187. Plus my home rent also goes towards small business taxes (home office) Believe me, I am responsible. :)

Not claiming you're not responsible. Far from it. Just suggesting that there are better ways to get to your ends. While you're saying you're rent is practically free. You're doing yourself a diservice. You're in a good position to build equity now. And alot of it by the sounds of your situation. I'm not saying to jump into a property willy/nilly.

If you buy smart, your investment in a home will be your hedge against inflation and as time goes on, you'll build equity much faster than you could ever hope to sock away in savings.

What he said.

[Swarmlord]

Controlling the urge is the key thing. Too many of us want everything now. Unless you can afford it, you shouldn't buy it.

Unless it's a new MPB! I just configured a brand new one for my neighbor and now I have the need for speed!

Hello? Juniper credit?....

I might have to change my footer to read MPB purchase pending.:)

[Music_Producer]

You two are obviously correct.. and I am aware of what you say.. but when I spend money on anything, I like to know that I am getting my money's worth. If you saw the properties in my area.. crappy run down homes are selling for $350 k ( no one's buying of course ) Do I really want to spend that much on a home that looks like it's worth 60 k? Not really. During 2003-2004 there was nothing but speculators in this area.. rushing to buy houses.

Housing will fall.. the Fed's caught in a sticky situation right now. Cut the rates, and they risk a dollar slide.. raise the rates.. and housing will pull the rest of the economy down. For the time being though, I am content on waiting, making money from interest.. and watching housing get more reasonable.

I also invest a lot (my forex thread for example) so I am in no rush at all. I am in no hurry to build equity, etc.. I'll be ready in a year's time to buy a house - full cash.. and I know I'll be able to buy something for 350 k that looks like it is worth that money.

[FFTT]

The smartest home purchase you can make is to buy a lot in a strong location
and build your own new home that fits well in the neighborhood.

If you are looking at a year from now, start looking into the costs of your land and construction costs.

If you do your homework, you can buy your lot from someone who really
needs to sell or an absentee owner that has no idea what they have.

If you see a vacant parcel unlisted and it looks like the perfect location,
you can find out who owns it using the LUSK directory available at your
local courthouse, libraries or your local realtor's office.

I built the home I'm in now and saved a fortune.

One of my two lots was not listed.

I used the LUSK directory to find out who was paying taxes on it and
it gave me their name and address.

I simply called and asked if they might consider selling to a young couple looking to build their first home.

Contract ratified in two days, no realtor involved.

The home was modular completed for $130,000.
Total invested $230,000.00

I owe $165,000.00 on the whole shooting match and it's worth about $800,000.00


Loction is important and many older neighborhoods with under built homes can still be a great investment IF they begin to convert to knock down subdivisions.

There are numerous examples here where smaller homes from the 50's and 60's
are now bulldozer bait and builders are snatching up every one they can get their hands on.

Why, becasue they are less than 10 minutes from metro.

[IJ Reilly]

Oh and let's not forget Reagan's policy of "go use your credit!" The Republicans love this. It's almost like indentured servitude. I would love to own a place here in Chicago. But I'll be damned if I'm going to become a slave to my property (mortgage lender). I'm sorry, no way.

It also needs to be mentioned that many of the sub-prime lenders misrepresent the terms and conditions of the loans. They don't care what happens next; they collect their origination fees and move on. You can't really fault people for getting stuck with loans that blow up in their faces when they didn't know what they were signing in the first place.

[Turkish]

It also needs to be mentioned that many of the sub-prime lenders misrepresent the terms and conditions of the loans. They don't care what happens next; they collect their origination fees and move on. You can't really fault people for getting stuck with loans that blow up in their faces when they didn't know what they were signing in the first place.

Sure you can - why would you sign something you don't understand?

[IJ Reilly]

Sure you can - why would you sign something you don't understand?

Perhaps one shouldn't, but then, I'd venture to guess that most do sign agreements that contain provisions which they don't fully understand (including you, I'd wager). I get pieces of paper thrust in front of me for signature all the time. Almost universally, I get quizzical looks when I insist on actually reading them first, which tells me that probably 99% of people just sign on the line. Still, these papers often contain legalese the implications of which I can only guess at.

In the sub-prime market, the problem is also misrepresentation of terms by the loan officers, who are really just commissioned salespeople. Check it out. I think you'll find that there's a lot of fraud about. There's no excuse for fraud, and there's also no reason to expect everybody who signs a contact to have passed the bar.

[Turkish]

Perhaps one shouldn't, but then, I'd venture to guess that most do sign agreements that contain provisions which they don't fully understand (including you, I'd wager).

This is why there is a three-day right to recision on refinances. It allows the borrower three full days to review the contents of the loan package and if they are uncomfortable with any aspect of it, they can simply cancel by calling their lender by midnight on the third day.

Unless its a purchase (which anyone in their right mind would hire an attorney for), you've got plenty of time to look over the contents of the loan package.

The loan can always be cancelled.

I get pieces of paper thrust in front of me for signature all the time. Almost universally, I get quizzical looks when I insist on actually reading them first, which tells me that probably 99% of people just sign on the line. Still, these papers often contain legalese the implications of which I can only guess at.

Yes, most people just sign, but that's not the lender's fault.

In the sub-prime market, the problem is also misrepresentation of terms by the loan officers, who are really just commissioned salespeople. Check it out. I think you'll find that there's a lot of fraud about. There's no excuse for fraud, and there's also no reason to expect everybody who signs a contact to have passed the bar.

This is one of the most heavily and strictly regulated industries in this country. This doesn't mean that loan officers are immune to be misleading (and yes, they are nothing more than commissioned salespeople), but I'd wager the fraud rate is very, very low.

The loan officer may misrepresent terms, but it's all spelled out in paper when the loan is closed. If the terms on the Truth in Lending, HUD-1 and the deed don't match what you were told, then don't sign.

It really is up to the borrower to protect themselves...

[IJ Reilly]

This is why there is a three-day right to recision on refinances. It allows the borrower three full days to review the contents of the loan package and if they are uncomfortable with any aspect of it, they can simply cancel by calling their lender by midnight on the third day.

Great. So that give the borrower three days to get their law degree.

Yes, most people just sign, but that's not the lender's fault.

I can be if the terms and conditions haven't been properly disclosed.

This is one of the most heavily and strictly regulated industries in this country. This doesn't mean that loan officers are immune to be misleading (and yes, they are nothing more than commissioned salespeople), but I'd wager the fraud rate is very, very low.

The loan officer may misrepresent terms, but it's all spelled out in paper when the loan is closed. If the terms on the Truth in Lending, HUD-1 and the deed don't match what you were told, then don't sign.

It really is up to the borrower to protect themselves...

I guess you haven't been keeping up with the scandals in the sub-prime lending markets. Regulation is generally after the fact. Yes, the regulators my eventually catch and sanction lenders like New Century, that's going to come too late for thousands.

[Turkish]

Great. So that give the borrower three days to get their law degree.

Why would you need a law degree?

Look I understand that sometimes you/we have to bite the bullet and sign something that looks like it's written in Greek, but that's not what we're talking about. We're talking about four easy to read docuemnts that spell out the loan terms.

It can be if the terms and conditions haven't been properly disclosed.

How? Every loan package has a HUD-1, Truth in Lending Disclosure, a deed and a note with everything spelled out. If those aren't in the package, the borrower has bigger problems than terms with the lender.

If someone doesn't know about these before they borrow a half-million dollars, they probably should learn, or hire an attorney. They have every right to ask about anything they don't understand at the signing.

I guess you haven't been keeping up with the scandals in the sub-prime lending markets. Regulation is generally after the fact. Yes, the regulators my eventually catch and sanction lenders like New Century, that's going to come too late for thousands.

No, I had no idea about the subprime market. :rolleyes:

Catch and sanction them for what? Most of New Century's difficulties came from borrowers who defaulted within months of signing their papers.

I'm not saying there's no problem with the industry, but a lot of the blame falls on the borrowers.

There are bad loan officers and lenders out there, but it's not what has caused this problem. People need to stop using their homes as revolving lines of credit.

[IJ Reilly]

I'm not excusing imprudent borrowers, but I'm also not excusing predatory lenders, which really is an issue here, and the sub-prime lenders are responsible for most of it. Just google the subject, if you don't believe me.

[pseudobrit]

Say for example $1000/month rent (easy number to calculate). In three years you've trown away $36,000. It's gone. Vanished. Nothing gained. Pay that $1000 into a mortgage. And even with interest you've created equity/saved money.

And what about upkeep? New water heater. Furnace. Roof. Driveway repaved. Improvements or additions don't usually add the same value they cost.

Taxes. Insurance.

That's money you've "thrown away" too.

[furcalchick]

i feel out of place in this thread a little bit...but here are some questions to think about.

1. currently, there's a perception that homeowners are more mature and responsible than renters. why is that? is this the same emotional push that is making others buy houses they don't want/afford? are we living in a "rent bad, own good" era?

2. i heard that soon, equity will be a thing of the past, and that it's partly because of the housing market. is equity becoming another emotional trigger? i hear this alot since there's the "rent is throwing your money away" myth going around.

3. is credit ruining our society? i heard that it's impossible to get anything now without credit, even if you have cash.

i'm not close to this yet, but when i buy a house, i'll be buying it in cash. and i think that rent isn't a waste of cash, you pay your rent and you don't have to do all of the dirty work, so renting is not evil.

[IJ Reilly]

1. currently, there's a perception that homeowners are more mature and responsible than renters. why is that? is this the same emotional push that is making others buy houses they don't want/afford? are we living in a "rent bad, own good" era?

2. i heard that soon, equity will be a thing of the past, and that it's partly because of the housing market. is equity becoming another emotional trigger? i hear this alot since there's the "rent is throwing your money away" myth going around.

3. is credit ruining our society? i heard that it's impossible to get anything now without credit, even if you have cash.

1. More stable, almost by definition, but I don't know about "mature." (I've had neighbors who behave like children.)

2. Equity will only become a thing of the past if people persist in milking their equity to buy other things.

3. Anybody who doesn't accept legal tender is breaking the law. Credit isn't a bad thing if used with discretion. Don't overlook the value of a mortgage, even if you can buy for cash. The mortgage interest deduction is one of the two biggest tax subsidies available to people of average means.

[zimv20]

i heard that soon, equity will be a thing of the past
you'll have to explain that one to me.

when i buy a house, i'll be buying it in cash.
well, that's a pretty terrible idea, for two reasons:

1. you're ignoring the time value of money
2. you're not taking advantage of the mortgage interest deduction

last one first: as you're probably aware, when you first start paying your mortgage, most of what you pay is interest (as opposed to principal). so for your first year, assuming your monthly P+I is $1500, figure that you're paying about $16k in interest. that's a hefty amount that *would* come straight off your taxes, if you're borrowing.

but #1 is even better. annual returns for the stock market, with long term, intelligent, diversified investments, gets you about 8-10%. 30 year fixed mortgages are still several points below that. if you buy your house in cash, then instead of paying (say) 7% to borrow it and getting (say) 10% return on investments, you're choosing to dump a huge chunk of savings into a single investment: not diversified, not liquid, and not in the stock market. (side note: long term, the market provides the best returns with the lowest risk. no, property isn't safer, and the long term returns are lower).

for some reason, some people think that mortgages equals being in debt and being in debt equals bad. well, it's not always the case, and home ownership is one of those great things where you not only get (relatively) cheap loans, but the game is rigged in your favor.

as long as one isn't stupid and buys more house than they can afford, it'll likely work out well. once was a time when you couldn't get a mortgage for more than 2.5x your salary. one friend, in chicago, got a condo for 5x her salary. another friend, in O.C., is looking to get a house at > 10x her salary.

that's crazy talk, imo. stick with the 2.5x amount and you'll be fine. but paying cash, instead of borrowing and investing your cash, is just a horrible idea. if you don't believe me, get a financial advisor to explain it.

[furcalchick]

for some reason, some people think that mortgages equals being in debt and being in debt equals bad. well, it's not always the case, and home ownership is one of those great things where you not only get (relatively) cheap loans, but the game is rigged in your favor.

i know some people are completely opposed to borrowing money for any reason, due to religious or other convictions. and a mortgage is technically a loan, so that's why they have to pay in cash, no matter how much extra money they can get later by borrowing.

[zimv20]

i know some people are completely opposed to borrowing money for any reason, due to religious or other convictions.
so which category do you fall into?

[FFTT]

If you can afford to put 20-30% down on a home loan, you're in better shape than most people. If you build your own home, you also gain 10-30% equity almost instantly.

You don't have to build your dream house in the beginning, just design
your home so that you can expand when the time is right.

Go for a full basement if at all possible and then consider building
your attic area with future expansion in mind with beams not trusses.

An average 2 bedroom condo is roughly 1000 sq ft. of living space, generally with a small cage for storage somewhere and lots extra if you want secure parking.
To find a nice 2 bedroom condo in a good safe neighborhood, you're looking at $250-$350,000. PLUS a few hundred EVERY MONTH for condo fees, as well as taxes, insurance and utilities.

If you really hunker down and do your homework, you should be able to
find a building lot for $60-$100,000. Then spend $90-$150.000 for your home.

For what you would spend on condo fees, you could certainly have someone
drop by every 2 weeks to take care of your lawn and probably be able to afford a maid service.

A single family home, even a modest one, will always be easier to sell
than a condo or a townhouse.

[Desertrat]

IJ, harking back to the previous page: Keep things separated: The concept of home ownership may indeed be a "consrvative" idea, although the idea of owning one's own home turf is a very old one. What I was talking about was the push for home ownership for poor people via loans that the credit ratings of the borrowwers just didn't justify. Why loan to people who can't or won't make the payments, just becuase "they have a right to own their homes"?

Anyhow, it oughta be obvious that too many people got into the present deal just as in the dot-com thing. No different from the tulip mania in Holland, way, way back. Too many folks fell into the whole mob psychology thing. Overall, it's no different from any Ponzi thing; those who got in early have done well, or could have. Those coming late to the party get burned.

Debt, properly used, is a valid tool. But it should have a purpose, as with any tool. A wise investor can readily make better than 10%, given enough homework and patience. So, if you can get a home loan at 6% fixed rate, don't pay cash! That's what capitalism is all about: Using money to make money. Ya ain't ever gonna get Really Well Off just working for a salary.

My view of today's world is that too many people are going into debt because of a lust for instant gratification, buying frou-frou. Bling-bling. Shame on 'em for believing all that TV-ad BS about "You deserve..."

'Rat

[IJ Reilly]

IJ, harking back to the previous page: Keep things separated: The concept of home ownership may indeed be a "consrvative" idea, although the idea of owning one's own home turf is a very old one. What I was talking about was the push for home ownership for poor people via loans that the credit ratings of the borrowwers just didn't justify. Why loan to people who can't or won't make the payments, just becuase "they have a right to own their homes"?

Well then, that must be a conservative idea too, since I never met a liberal banker.

[zimv20]

Overall, it's no different from any Ponzi thing; those who got in early have done well, or could have. Those coming late to the party get burned.

what? i don't think it's like that at all. when one buys property, they are buying a real thing, and it's not like they're paying out to all propertly owners everywhere.

plus, at the end of 30 years (for example), that person owns their property free and clear. the ebbs and flows of the market don't bother the person who doesn't sell, so long as they can afford to make payments on the place they bought, and so long as they got a fixed rate.

the problem here is a combination of unrealistic buyers and lenders only too happy to make a quick buck and dump the transaction on someone else. but in no way does that resemble a ponzi scheme to me. just a bad deal.

[FFTT]

There's nothing wrong with someone wanting to own their own home.

Unfortunately, some buyers didn't much care how they got financed as long
as they got financed. "How much is the payment?" "Where do I sign?"

The closing agent or attorney should have explained everything clearly, but
even then hopes and dreams an overconfidence in the market and the buyers ability to meet their obligations seemed to be overlooked.

The market was so strong and the rates were so low, that many thought
How can we lose?

In many cases, far too many cases, the average family is 2 paychecks away from financial disaster.

The assessment goes up, the taxes go up, that McMansion kills them on utilities and then their adjustable rate hikes the payment up several hundred dollars a month.
Not to mention other nightmares like a heat pump failing, the car breaks down or someone loses their job. Or the self employed simply can't keep up with their obligations.

Some homes were also seriously over valued, but bidding wars in the frenzy of trying to buy a house had people paying way more than the house
is worth after things have settled down.

If you can still meet your payments, there's really no reason to panic, but if you are facing an adjustable rate increase wishing to re-finance now with
money getting tight, you could be in trouble.

[Turkish]

The closing agent or attorney should have explained everything clearly, but even then hopes and dreams an overconfidence in the market and the buyers ability to meet their obligations seemed to be overlooked.

Not the closing agent's job--especially in my state. It's the loan officer's job to make sure that all the terms are understood. A closing agent's job is to make sure the papers are signed correctly, briefly explain what it is they are sigining, collect any moneys and notarize the sigs.

Not their job to explain everything. In fact, they shouldn't (again, at least here).

[Desertrat]

IJ, WRT poor-folkws home loans, I'm referring to the government-subsidized, low-interest loans of which many went into foreclosure. Good intentions, lousy results. The USG wound up owning homes that were mistreated to the point they weren't worth the original purchase price, among other costs in tax dollars.

Ownership of a home can indeed be a good thing--but trying to own when you can't afford it is another matter entirely. The modern attitude of, "I don't care what it costs; what are the monthly payments?" is bankrupting a bunch of people.

zimv20, people who buy at the peak of any market commonly get burned. Markets fall. Again, think "dot-com". Sure, houses are real property, but if the appraised value drops, you've lost money. And, if that drop reduces the value of your collateral to less than what you owe, your banker can call the entire note--although they commonly settle for enough cash to make the remaining balance less than the new collateral value.

With that in mind, here's an update:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/06/15/BUGL6QFGPO1.DTL

'Rat

[sushi]

last one first: as you're probably aware, when you first start paying your mortgage, most of what you pay is interest (as opposed to principal). so for your first year, assuming your monthly P+I is $1500, figure that you're paying about $16k in interest. that's a hefty amount that *would* come straight off your taxes, if you're borrowing.
Here's a different take on this.

While I agree that you can save the amount of taxes that you pay, you are still paying out more than you are receiving back with this concept.

Your numbers are very close, but let's put some actual numbers down.

Let's say I decide to purchase a $300,000 home, with a DP of 20%

That means I would need a loan of $240,000.

Let's say I can get a 30 year note at 6.5 percent (flat rate).

My monthly P&I would be $1,516

In one year, I would pay out $18,203 of which $2,683 would be applied towards the principle and $15,520 would be interest paid on the note.

At the end of 1 year, I owe 237,317 on the home.

Let's say that I make $74,000 per year. Rough estimate is that I would pay 20% in taxes on that $74,000 which is $14,800.

Now I take my mortgage deduction, which is $15,520. This would adjust my 74,000 in income to 58,480.

Again using the 20% in taxes, I would now pay $11,696 in taxes for the year. Or $3,104 less. Note, if I took the normal deductions off the top, and then did the mortgage deduction, the difference would be even less.

This means that to pay $3,104 less in taxes, I must pay $15,520 in interest payments.

If I paid for the home in cash, I would have saved $12,416.

Now granted, I have kept this example simple in that I have not taken other factors into account such as appreciation, the exact tax rate, rate of return on the $240,000 investment, etc.

Anyhow, IMHO, it doesn't make sense to justify your primary home interest payments because you save on your taxes. Saving on taxes is a nice bonus, but should not be the primary reason to take out a mortgage.

Just something to think about.

[furcalchick]

Here's a different take on this.

While I agree that you can save the amount of taxes that you pay, you are still paying out more than you are receiving back with this concept.

Your numbers are very close, but let's put some actual numbers down.

Let's say I decide to purchase a $300,000 home, with a DP of 20%

That means I would need a loan of $240,000.

Let's say I can get a 30 year note at 6.5 percent (flat rate).

My monthly P&I would be $1,516

In one year, I would pay out $18,203 of which $2,683 would be applied towards the principle and $15,520 would be interest paid on the note.

At the end of 1 year, I owe 237,317 on the home.

Let's say that I make $74,000 per year. Rough estimate is that I would pay 20% in taxes on that $74,000 which is $14,800.

Now I take my mortgage deduction, which is $15,520. This would adjust my 74,000 in income to 58,480.

Again using the 20% in taxes, I would now pay $11,696 in taxes for the year. Or $3,104 less. Note, if I took the normal deductions off the top, and then did the mortgage deduction, the difference would be even less.

This means that to pay $3,104 less in taxes, I must pay $15,520 in interest payments.

If I paid for the home in cash, I would have saved $12,416.

Now granted, I have kept this example simple in that I have not taken other factors into account such as appreciation, the exact tax rate, rate of return on the $240,000 investment, etc.

Anyhow, IMHO, it doesn't make sense to justify your primary home interest payments because you save on your taxes. Saving on taxes is a nice bonus, but should not be the primary reason to take out a mortgage.

Just something to think about.

that's what i figured. the tax savings doesn't outweigh the interest costs. why should i look forward to getting 3k tax refunds if i'm paying 15k that i don't have to in bank interest?

and i know some that don't like to play the stock market game, just something else to think about. if you have the cash, why not just buy the property outright?

[IJ Reilly]

IJ, WRT poor-folkws home loans, I'm referring to the government-subsidized, low-interest loans of which many went into foreclosure. Good intentions, lousy results. The USG wound up owning homes that were mistreated to the point they weren't worth the original purchase price, among other costs in tax dollars.

Now you're referring to the FHA and HUD, mainly during the late '60s. They're not really in that business anymore. The last couple rounds of foreclosures were the result of private (sub-prime) lending practices.

[zimv20]

it doesn't make sense to justify your primary home interest payments because you save on your taxes. Saving on taxes is a nice bonus, but should not be the primary reason to take out a mortgage.

thanks for running the numbers.

you're right, of course. the primary reason to take out a mortgage is to have someplace to live, and someplace that will eventually be yours (multiple moves aside, of course). and to further support your point, it is the case that people try to get as low a rate as possible, because of course you want to pay the least interest as you can.

i agree with all that. the deduction is icing on the cake. but when you say:

I have not taken other factors into account such as appreciation, the exact tax rate, rate of return on the $240,000 investment, etc.
you're leaving out some of the really important factors. RoR on $240k is HUGE. properly invested, that will grow to $4 million over the 30 years of the mortgage. that greatly eclipses what one will have paid in interest on the mortgage, and THAT is the reason to take out a mortgage and not pay in cash.

the appreciation is a non-factor, because it should be the same regardless of how the home was paid for.

[zimv20]

and i know some that don't like to play the stock market game, just something else to think about. if you have the cash, why not just buy the property outright?

because that cash, properly invested, doubles roughly every seven years if you reinvest interest payments and dividends. get yourself to a financial advisor to have him explain it to you. this is how people retire, by taking advantage of the time value of money, and NOT by doing something so financially irresponsible as paying for a house in cash. it's truly a bad idea, unless you have SO much money that buying a house for you is like buying a sandwich for me.

when you call the stock market a "game", that tells me you don't understand how it works.

[furcalchick]

because that cash, properly invested, doubles roughly every seven years if you reinvest interest payments and dividends. get yourself to a financial advisor to have him explain it to you. this is how people retire, by taking advantage of the time value of money, and NOT by doing something so financially irresponsible as paying for a house in cash. it's truly a bad idea, unless you have SO much money that buying a house for you is like buying a sandwich for me.

when you call the stock market a "game", that tells me you don't understand how it works.

what i mean is that i'm not really into the stock market, it's pretty risky and i just don't like it.

and another thing, i'm not really a fan of owing a bank for 30 years, it's just not my thing. this may have partly to do with my frequent moving as well, don't want to be stuck in a house i may not want 10 years from now, the house for me will probably be something i get in semi-retiriment, and it's not like that's going to be my only investment. i would rather spend an extra 3-5 years renting and buying the house outright, then spending a good chunk of my life paying the bank.

and what's this rate of return business about?

[zimv20]

what i mean is that i'm not really into the stock market, it's pretty risky and i just don't like it.


and you also don't understand it. over the long term (such as 30 years, a common life of a mortgage), the market provides the best returns with the least amount of risk. done properly, it's not a game, it's not a risk, it's not las vegas.

so i recommend that you ditch your incorrect biases *today* and start investing. because if you wait 7 years to do so, you'll have only half as much at 64 as you would have. or -- never learn it at all, and see if you ever get to retire.

[Peterkro]

and you also don't understand it. over the long term (such as 30 years, a common life of a mortgage), the market provides the best returns with the least amount of risk. done properly, it's not a game, it's not a risk, it's not las vegas.

so i recommend that you ditch your incorrect biases *today* and start investing. because if you wait 7 years to do so, you'll have only half as much at 64 as you would have. or -- never learn it at all, and see if you ever get to retire.

So far,see South Sea Bubble,Great Depression etc.

[skunk]

So far,see South Sea Bubble,Great Depression etc.Steer clear of tulips.

[zimv20]

So far,see South Sea Bubble,Great Depression etc.

i never said there aren't peaks and valleys. but those are short term. here (http://bigpicture.typepad.com/comments/2005/12/100_year_bull_b.html) is the chart for the last 100 years of the DJIA:
http://bigpicture.typepad.com/comments/images/100_year_dow_bull_bear_periods.jpg

big dip at the great depression, yes, but historically the market goes up and up and up. remember the crash of '87? take a look here (http://stockcharts.com/charts/historical/djia1960.html) to see how "big" it was. now compare that to the graph above -- you can barely even see it.

play day to day, or month to month and, yes, it's akin to gambling. but long term -- and this is such basic investing i'm finding it hard to believe that so many people don't understand it -- it's rewarding and safe.

[furcalchick]

okay, i think i was uneducated earlier, i looked at some investment stuff and it's not the big risk game i thought it was...doesn't mean it's risk free though. i would like to invest some cash in the stock market though after realizing that.

i'll probably invest in some retirement funds, i'm still very young and have lots of cash when i get old.

[Peterkro]

Well I guess if you look it as a long term investment and are prepared to wait out the near twenty year low growth periods fine,I'd rather not bother.

[zimv20]

doesn't mean it's risk free though.
there is risk, yes, commonly expressed with a term called beta.


i'll probably invest in some retirement funds, i'm still very young and have lots of cash when i get old.
excellent choice. i recommend a financial advisor. but to dip your feet, the vanguard funds, especially the S&P 500 index fund, is a good place to start. that fund tracks the S&P 500 index (duh) instead of trying to beat the market. and the vanguard fees are low.

i don't work there, but that is one of the many funds i own.

i've had my financial advisor for, what, 12 years now? each year, he beats the market while giving me a beta lower than the market (i.e. less risk). that's the service a good one can provide. oh, he's pretty good at keeping my fees low, too.

[zimv20]

Well I guess if you look it as a long term investment and are prepared to wait out the near twenty year low growth periods fine,I'd rather not bother.

the point being to save for retirement, and starting in your 20's. as retirement gets closer, you move more and more of your funds from stocks to something with lower beta (less risk), like certain bonds, trusts, et. al.

retirement must be planned, and it really should be planned starting in your 20's.

[FFTT]

It's hard to beat a company matched 401K if your employer offers once.

I'm fortunate that the company I work for matches $.50 in company stock for each dollar I put into the savings plan up to 6% of my income.
So if I put away a conservative $1000.00 after tax over one year,
I end up with $1,500.00 in my account an usually much better.
Some company's don't offer a match at all and some match even or better.

You should be doing this or stashing away money in a Roth IRA on top of investing in a home.

If you don't plan for the future it's going to be rough going when you're too old or too sick to work any longer.

[mactastic]

With that in mind, here's an update:

http://sfgate.com/cgi-bin/article.cgi?f=/c/a/2007/06/15/BUGL6QFGPO1.DTL

'Rat
'Rat, with all due respect, you're talking about something you can't possibly understand. I mean, you're all the way over there in Texas trying to tell me something about my own state. You couldn't possibly have any valid input on that since you don't live here.

Right? I know you've told me that's how it works when I talk about Texas politics, so perhaps you should just cork it right about now, huh? Or apologize for your previous ridiculous comment.

[FFTT]

Sub-prime loans are targeted at people who are generally struggling to
get by or trying all they can to dig themselves out of a previous bad debt situation.

In almost every case they are paying higher interest to the point of usery
rather than being given a break to help them get back on their feet.

The worst example of this usery goes to the credit card companies who jack up the rates immediately when people start to fall behind.

Now obviously some people have no business borrowing as nuch as they have and even more are terrible at managing their finances, but rising costs for fuel, food, medical costs, taxes, insurance and utilities all have contributed strongly to putting some otherwise responsible people over the edge.

So then when someone tries to regroup, they jam it to them from every angle.

As an example, here in VA, you can have a perfect driving record and the insurance companies are allowed to charge you high risk rates based on your credit score. Now that my friends is usery.

You could regroup and make ends meet with a re-finance at normal rates, but the only loan you can get is several points above the norm essentially
punishing you for what may not be your fault at all.

Of course in a country quite literally owned by private banks, we stand little chance of having usery laws enforced.

[Desertrat]

'Scuse me, mac? Did I write the article? Or did a Californian write an article in a California paper about what's happening in California?

I'm not at all averse to your explaining how it's not factual.

FFTT, to begin with, "usury" applies to interest rates, not to insurance premiums. I agree with your implied view that the premium should not be tied to one's credit rating.

So: What interest rate do you consider to be usurious? Do you have data about comparative home-loan interest rates?

"...some people have no business borrowing as nuch as they have and even more are terrible at managing their finances, but rising costs for fuel, food, medical costs, taxes, insurance and utilities all have contributed strongly to putting some otherwise responsible people over the edge.

So then when someone tries to regroup, they jam it to them from every angle."

How is it "jamming" for a lender to want to be repaid? And to take steps to protect his investment?

I probably wouldn't have such a snotty attittude toward these foolish buyers but for the amount of ridicule I and others have endured from having given warnings against living beyond one's means. I don't run around hollering, "I told ya so," but I don't have a lot of sympathy for folks who should have danged well known better.

'Rat

[FFTT]

'Scuse me, mac? Did I write the article? Or did a Californian write an article in a California paper about what's happening in California?

I'm not at all averse to your explaining how it's not factual.

FFTT, to begin with, "usury" applies to interest rates, not to insurance premiums. I agree with your implied view that the premium should not be tied to one's credit rating.

So: What interest rate do you consider to be usurious? Do you have data about comparative home-loan interest rates?

"...some people have no business borrowing as much as they have and even more are terrible at managing their finances, but rising costs for fuel, food, medical costs, taxes, insurance and utilities all have contributed strongly to putting some otherwise responsible people over the edge.

So then when someone tries to regroup, they jam it to them from every angle."

How is it "jamming" for a lender to want to be repaid? And to take steps to protect his investment?

I probably wouldn't have such a snotty attitude toward these foolish buyers but for the amount of ridicule I and others have endured from having given warnings against living beyond one's means. I don't run around hollering, "I told ya so," but I don't have a lot of sympathy for folks who should have danged well known better.

'Rat

Personally, I think a home loan should be capped at no more than 6% fixed. Car loans at prime plus a point or two and credit cards at no more than 4% above prime.
18%-24% is flat out usury plain and simple.


I attempted to qualify my view in a reasonable manner and my bad for the spelling error.

Considering your compassion for the struggling family and sympathy for the poor bankers, I hope you are never faced with a major financial burden
where you have to choose between your family and those poor creditors.

There are hard working people going under because the laws favor the almighty bankers and other respectable institutions like, oil companies, hospitals and drug companies.

Lest all pray that no one in your family is ever left owing a few 100K
after trying to beat Cancer or some other major illness.

[Desertrat]

FFTT, all my family has been of the saving sort, since the Great Depression. I and my wife are third-generation savers. And my co-pay part of my cancer treatment and surgery was $10K of the roughly $40K total. (My surgeon's nurse had a serious case of ROFL after he'd removed the staples from my new twelve-inch "zipper" and was admiring his handiwork: I sez, "Doc, I've made cleaner cuts than that, field-dressing Bambi.")

Lenders gotta make a profit on the money they lend. That money comes from their own borrowing, so their interest income has to be greater than their interest payment rate. Since money is a commodity just like iron or corn, the cost (interest rate) varies with demand and supply. If a lender's interest income rate is capped, there comes a point where no loan money is available to anybody, since nobody lends at no profit, much less lends at a loss. In today's world, the availability of capital for investment is controlled by both governments (In the U.S., the "Fed".) and the marketplace.

For such things as car loans, there is more of a risk factor. Interest rates must be higher in order to offset such things as repossessions of trashed-out cars which won't re-sell at the collateral value. Go to a dealer's wholesale auction, sometime.

Prime plus one or two points is only available to those with excellent credit ratings who can borrow Very Large Sums. Car prices are trivial, there.

Again: Interest rates are a function of risk. Tax-free municipal bonds pay around 4%, since they're very safe and there's no IRS tax on the interest. Corporate bonds pay more, due to more risk and the tax issue. Then there are "junk bonds" which have much higher interest rates because of high risk.

Same for categories of people and their own creditworthiness, and the categories of purchases. Houses are safer than cars are safer than furniture.

As I said before, I'm in accord with you about the credit-card companies, although there is a much higher risk factor at work there than in the housing market. Their rates, however, are why I pay my card off every month--which means they don't really like me and folks like me; I forget the derogatory name for folks like us, but it exists. :)

Question: If people are foolish enough to believe TV advertising, why am I supposed to be "all eat up with compassion" :D for them? I guess my problem is that I don't think I "deserve" anything beyond what I can earn or pay for. I don't "deserve" the Good Life, just because I'm upright and breathing. I believe I have the right to TRY for the Good Life, but nowhere have I ever seen any guarantees I'd get it. And so for me, debt has always been a tool for my economic betterment, not a means of buying bling-bling.

Anyhow, back to housing:

http://www.csmonitor.com/2007/0618/p01s05-usec.html?page=1

IMO it could easily be another two years or more until the bottom...

'Rat

[mactastic]

'Scuse me, mac? Did I write the article? Or did a Californian write an article in a California paper about what's happening in California?

I'm not at all averse to your explaining how it's not factual.
Perhaps you would like to first explain how it's not factual that Tom DeLay is a dirty politician, currently under indictment? Did I write the indictment against DeLay? Or did a Texas writer write an article in a Texas paper about what's happening in Texas?

I remind you of your own words:
Ronnie Earle has a track record of political vendettas. So sitting in California, you should hold your water about DeLay. You don't know the situation and are talking about things for which you don't have adequate knowledge of the players. You're judging from an emotional political position, not from knowledge.
I see no reason why you should know any more about the California housing market than I should about Texas politics.

Once again you've shown yourself tough enough to dish it out, but not tough enough to take it... It's sad really. I know you're a better person than this, but for some reason you just can't stop attacking me from the gutter.

[shu82]

Back to housing,

I don't believe things are as bad as they seem. Personally, I love the new "predatory" rules about buying a house. In the past you used to have a big down payment, years of stable work history and excellent credit to buy a house. I bought my house a month ago. They gave me, a 24 year old with 3 months working out of grad school and 3% down, a 100k mortgage. They let my payment be almost 1/3 of my net monthly income. Even though I was given a great interest rate, some might still call that predatory, because that is the absolute limits of what the current standards allow. This has freed me from being a rent-slave. I don't live in as nice of a neighborhood now, but its mine:D

It is really hard right now, but I know I will make more money in the future and the payment will stay the same. You have to let people bet on themselves. Some will screw up and loose it all. But, there will be some who uses this opportunity to make their lives better. I knew what commitments I was making. I wouldn't want a similar opportunity to be taken away from someone else who could use it to move up in life, just because someone thinks the situation is "predatory".

[Peterkro]

Stopping being a "rent slave" and becoming a mortgage slave differs how?

[shu82]

Stopping being a "rent slave" and becoming a mortgage slave differs how?

The difference between a life-sentence and 30 years in prison.:)

[Desertrat]

mac, the law that DeLay is supposed to have broken is subject to a lot of legal interpretation. The argument has raged for months over it, among lawyers. The law and "dirty politician" are separate things. I never claimed DeLay wasn't power-hungry. And Ronnie Earle has long played politics in his interpretations. If you don't know the ins and outs, it's easy to be mistaken about what happened or what was done. Ronnie Earle's track record is of trying for indictments of Republicans where he hasn't made an effort to go after Democrats who've done the same sorts of deals. Track record. Fact.

The housing thing is strictly nuimbers. The numbers are commonly available, and are quite clear cut. No gray areas. It's not a matter of interpretation as to whether or not there is an increase in the rate of repos, delinquencies in payments, etc. That sort of info is all over the financial news.

You're comparing steamships and bicycles on this, seems to me.

shu82, if the payments are long-term affordable and the interest rate is in line for fixed rate mortgages, it sounds like you're set up okay. The only way I see that you could have any sort of problem would be if you had a better job offer elsewhere, and selling might be a problem. But, that's a function of local markets. Otherwise, if you anticipate being there for a good number of years, you have the tax-break advantage. And doing your own maintenance keeps you out of the beer joints at night, which is a double advantage. :D

'Rat

[mactastic]

mac, the law that DeLay is supposed to have broken is subject to a lot of legal interpretation. The argument has raged for months over it, among lawyers. The law and "dirty politician" are separate things. I never claimed DeLay wasn't power-hungry. And Ronnie Earle has long played politics in his interpretations. If you don't know the ins and outs, it's easy to be mistaken about what happened or what was done. Ronnie Earle's track record is of trying for indictments of Republicans where he hasn't made an effort to go after Democrats who've done the same sorts of deals. Track record. Fact.

The housing thing is strictly nuimbers. The numbers are commonly available, and are quite clear cut. No gray areas. It's not a matter of interpretation as to whether or not there is an increase in the rate of repos, delinquencies in payments, etc. That sort of info is all over the financial news.

You're comparing steamships and bicycles on this, seems to me.
'Rat, DeLay's indictment IS a fact. Track record, fact, undeniable. Yet that didn't stop you from slamming me as unfit to comment on Texas politics.

Housing numbers are also subject to lots of interpretation. Grey areas as to the meaning of certain items. I'm sure there are analysts out there who would argue (perhaps just as unconvincingly as DeLay's lawyers arguing his innocence) that the market is just fine. However, I'm not interested in that right now. I want you to recognize the sheer stupidity of your previous comment. At the least I'd think an honorable person would, upon reflection, apologize for saying something like that, but I'm neither expecting one, nor care a bit one way or the other. My point is that it is entirely untenable to tell someone to "hold their water" about an issue unless they personally live in the state under discussion, then to spout off about other states yourself.

Make up your mind. Either hold your bilious retorts, or hold yourself to the same standard.

[Desertrat]

6/20/07, EVerbank's "Daily Pfennig":

"Good day...The data came in right where we expected concerning the US housing market and the dollar slid. Housing starts declined in May for the first time in four months. Building permits were up slightly, but this one piece of good news was more than offset with ABC Consumer Confidence which was a -14 after last month's -13. There will be no help for the dollar today as the MBA mortgage application index has already been reported to have dropped 3.4% after last weeks 6.6% increase.
>
> The markets seem to be waking up to the fact that the housing market is no where near the bottom. Borrowers are being squeezed by the treasury markets recent sell off which has increased 30-year mortgage rates the most since 2004. The National Median Home price is poised for its first annual decline since the Great Depression. An executive at the giant bond fund PIMCO said it best: "It's a blood bath. We're talking about a two to three year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock markets and corporate profit." The US housing market has provided the economy with support through the creation of wealth and the seemingly endless ATM of price increases. The recent increase in yields, along with the sub prime mortgage meltdown is going to kick this support right out from under the economy, and the dollar is going to be drug down along with it."

[leekohler]

6/20/07, EVerbank's "Daily Pfennig":

"Good day...The data came in right where we expected concerning the US housing market and the dollar slid. Housing starts declined in May for the first time in four months. Building permits were up slightly, but this one piece of good news was more than offset with ABC Consumer Confidence which was a -14 after last month's -13. There will be no help for the dollar today as the MBA mortgage application index has already been reported to have dropped 3.4% after last weeks 6.6% increase.
>
> The markets seem to be waking up to the fact that the housing market is no where near the bottom. Borrowers are being squeezed by the treasury markets recent sell off which has increased 30-year mortgage rates the most since 2004. The National Median Home price is poised for its first annual decline since the Great Depression. An executive at the giant bond fund PIMCO said it best: "It's a blood bath. We're talking about a two to three year downturn that will take a whole host of characters with it, from job creation to consumer confidence. Eventually it will take the stock markets and corporate profit." The US housing market has provided the economy with support through the creation of wealth and the seemingly endless ATM of price increases. The recent increase in yields, along with the sub prime mortgage meltdown is going to kick this support right out from under the economy, and the dollar is going to be drug down along with it."

Hey- can I have a link to that? If this is true, it'll be what I've suspected would happen all along.