Interesting study on American bankruptcy

[Evil Knevil]

Ha! You think you have a problem. Come to congested old England my friends! The Government is in the pocket of the morgaged classes. For 50 years we've had morgage tax relief and prices have continued to sky-rocket.

Many first-time buyers cannot get onto the property ladder, since they can't afford the morgage.

Example, my parents house was bought for 40,000 in 1983. It's now worth 120,000. Even in the relatively deprived wildes of Scotland!

[chequita guevara]

Originally posted by Dissident
again you are wrong Che

Did you even read the article?

[el freako]

Evil, our house prices are as out-of-whack as they were in 1989 - there is likely to be another fall in the real price of housing by around 20% to 30% over the next few years (like there was in 1973-77 and 1989-93)

[pchang]

Timing

So, have you/are you selling your property now?

You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

[DanS]

I've said many times personal bankruptcy is at an all-time high.

It might be. But as a percentage of the population (the thing you should be looking at), it is not.

[Japher]

I think you all have given good reasons why home/land prices have gone up so fast.

1) More families less space
2) Larger homes
3) Less down for note
4) additional regulations and rollover fees

I would also like to add that there are more people owning multiple homes. This is great as far as those who want to rent a house go, but for those who want to buy it only pushes those costs up.

The neighborhood I rent in is very pricey, I could not afford a home there. The only reason I am in the area is because when I moved here I had no idea of the area. All around me I see real estate going on sale for about 600-800k, gobbled up by developers who replace the house there with a new one and then charge 1.6-2 million! Who the heck is buying these places?! Most of them stay on the market for over 6 months, and recently I saw one of the houses that was recently bought put back on the market. What? Obviously people are buying more house then they can afford.

As long as people continue try and push their wallet and buy homes that are too big, cars that are too expensive, take vacations that are too big there will continue to b bankruptcy. I am not to sure if it is the "competitive" nature of the real estate market that is driving up land costs, but more so people idea of what that property is worth. Not the same thing, as people are not being as competitive when it comes to a home as the use to be, instead they will pay out the arse to get something they can't afford. Both my sisters have done it, and half of my friends... I wouldn't be suprized if they ended up in bankruptcy soon too.

[DanS]

Still US ppos got it good, in many other countries owning a house is unrealistic for most of the population.

Hah! Let them eat cake!

[pchang]

Stop, Wait

Cake and Ice Cream! I said, "Let them eat Cake and Ice Cream!"

[el freako]

Re: Timing

Originally posted by pchang
So, have you/are you selling your property now?

You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

Nope, I really like where I live - and I don't really need the money.

[Timexwatch]

I thought that people were pouring cash into their homes because it's now considered a better investment that stocks right now. People pour money in leading to higher prices and the expectation of selling that home for profit or leveraging the value of the home for better loans in the future. Am I crazy or right?

[Japher]

Timex, I think that's just another reason...

1) More families less space
2) Larger homes
3) Less down for note
4) additional regulations and rollover fees
5) multiple home owners
6) down market economy

Though I am with Buffet and invest when people are scared of the market and am scared when people are happy with the market... I am waiting for the market to go up before buying a house as I think prices will come down, though cost to buyer will remain the same as the banks will raise interests to compensate.

Yet, those who are buying the homes as an investment right now will be disappointed when the market goes up, and the housing market corrects. Yet, those who want a "home" and not an investment will be happy they got in now with the low interest rates.

[Dinner]

Originally posted by chegitz guevara
The problem is the cost of housing in general, and the cost of housing in districts with good school's specifically.

Amen! The cost of a new four bedroom detached home here in San Diego is between $500,000-$800,000 depending upon how fashionable the area is. If you want to buy a 25 year old home the average price is still $425,000. Even a townhouse (an attached home) will set you back $350,000.

A California Highway Patrolman with three years experience makes $65,000 per year which isn't bad but it would be next to impossible to buy a house unless his wife is also working. If she works then who takes care of the kids?

[chequita guevara]

Originally posted by Japher
As long as people continue try and push their wallet and buy homes that are too big, cars that are too expensive, take vacations that are too big there will continue to be bankruptcy.

Well, if you'd read the article, you'd have learned that this is not the case. It's not out of control spending that is causing bankruptcy. It is dependency on two-wage earners that is causing it. Most American families are one layoff or one extended illness from bankruptcy.

[Japher]

Well, if you'd read the article, you'd have learned that this is not the case. It's not out of control spending that is causing bankruptcy. It is dependency on two-wage earners that is causing it. Most American families are one layoff or one extended illness from bankruptcy.

Yes, I realize that. Yet, I think you, or at least the study, is too narrowminded.

Overspending is the cause of bankruptcy, hands down, no question about it. Since bankruptcy means that you have spent more than you have earned for far too long. Dependency on two wage earners has to do with the requirements of the family; a home, good education, etc... which in turn leads to bankruptcy because they spent too much to get this.

Reasons they are spending too much? Homes in "good" school districts are too expensive... Why? Demand.

The real question, though, is why are the good school districts in places with high demand for homes?

or

Why are the school districts that are better have more expensive homes in that area?

IMO, schools are a reflection of the students that attend. Bad students lead to a bad school while good students lead to a good school. What makes a good student? Family values. The type of family that will spend too much to ensure their kid has a good education.

If more people spent within their means, paid attention to their kids (instead of requiring the government to do it why mom and dad work), taught their kids responsibilty by doing so, and lived in the areas where they could afford the quality of education in that area would increase.

How to fix this? I think HUD/FHA are already trying by offering lower interest loans, grants, improvement loans, etc. for homes in transition areas to encourage families to live there. Yet people are to willing to pay the higher price to give their kids what they want them to have without spending any time with them.

Thus, over spending coupled with lack of family values are the cause for bankruptcy not a dependency on a two family income and high home prices. But then I am not a [snide]Harvard[/snide] law professor, a consultant of any type of firm, nor have I ran any type of study...

[Dinner]

Re: Timing

Originally posted by pchang
So, have you/are you selling your property now?

You could make quite a bit by selling now, renting for a bit, and then buying again in a few years.

Hell ****ing NO! I don't own any property but my parents own five houses in San Diego and rent four of them out to other families. Over all the total appriciation has averaged 12%-15% per year every year for the last decade. That means something like a $120,000 average yearly capital gain. Only a fool would sell.

Heck, even if home values half (a virtual impossibilty without a total depression and even in 1990 the values only went down like 15%) we'd still have a positive cash flow since the housing vacancy rate is around 0.5%. That means we can rent out the houses for much more then what the morgage costs are.