Let us **** over Imran and Apocalypse in the housing market thread number two

[Dinner]

Naw, the market has been trending down for 18 months. That's about average for the 1991 and 1982 recessions. Provided the government intervenes and cuts the hang over from the speculative bubble, other wise we might end up in a long term liquidity crunch a la Japan 1992, then we ought to see the market start to level off with recovery in 5 years. This could very well be the bottom if it is enough to end the liquidity crisis.

[Dinner]

Mind you my idea of the proper action isn't the republican call to let up to 20% of American home owners go bust (that's the people with ARMs). but instead the proper action is to deflate the bubble, restore market confidence, and then actually enact new regulation to prevent another round of speculative lending. That's what a proper government would do but Republicans are allergic to regulations even when it is manifestly what is needed.

[Apocalypse]

Originally posted by Oerdin


Then you are retarded to think Bush's move is bad for you. A sudden drop is far better then a plateu or minor drop if you plan to buy in a few years or want to flip it a couple years after buying it.

Except housing prices are still way overvalued since there are people with arms allowed to stay in their homes for rates that are lower than your fixed rate. Until they are unable to pay in five years and default then. The problem is that housing prices will go up for a while and then go down again in five years unless there is another bailout to people who suck at credit like this one.

[Dinner]

I don't have a fixed rate. As a first time buyer looking to borrow half a million quid I had to settle for limited term fixed (two years) followed by a limited action arm (meaning the rate could only adjust every three months instead of monthly like those Bush's order is effecting). Anyway, Bush's order doesn't effect people currently behind in their mortgages so the people who are most likely to default already will and are not protected.

The rate freeze punishes speculators and prevents mass foreclosures, and thus mass property price devaluations, protecting the banking sector and preventing millions of Americans from becoming homeless. After all what do you think will happen to banks if their "secured" home loans fall 20%-30% in value and it turns out many of those houses a worth less then the loan? For once Bush is doing something right by not being a Herbert Hoover who doesn't act until a crisis is to big to respond to. We are in a liquidity crisis just like 1929 or Japan 1990 or USA 1987 after the SNL crisis. We need to take expeditious action to prevent the liquidity crisis from deepening.

[Patroklos]

As a first time buyer looking to borrow half a million quid I had to settle for limited term fixed (two years) followed by a limited action arm (meaning the rate could only adjust every three months instead of monthly like those Bush's order is effecting)

Why on earth would you do this Oerdin? How many times your income is that loan? Unless you are pulling down 150K a year that loan is unsustainable and it is that overextenion that has so many non speculators in trouble. Well not so much you since you are willing to ride it out.

I realize San Diego is expensive, but damn man 500K?

[Dinner]

Actually I exaggerated. It was just under $400k and I put $70k down. That bought a small town house instead of a house.

$500k is what I would have had to have borrowed to if I wanted a smallish actual house house. Unfortunately I couldn't really pay for that loan so I settled for the town house.

[Patroklos]

Okay, that makes more sense. 400K is still a lot though. I just got a loan for 250K fixed which is around 3x my salary and that is pretty much the limit of what I can get (I could get more if I mesed with the interest but I refuse to get a variable rate). Which is fine, because for 200K I can build whatever house I want with a pool/yard/deck. Of course housing is far cheaper here. I am only putting down 30K though. That should make a mortgage less than rent for me though

[Dinner]

You'd have to go back to around 1991-1992 for prices around here to be that low. Even with the price declines there is no hope of getting anything other then perhaps an apartment in a really bad neighborhood for 200k.

[Patroklos]

California

[Arrian]

Speaking of kids that are just !Surprise!...

You are aware that we live in the 21st century, right? There is no need for kids to be a surprise.

-Arrian

[MRT144]

Originally posted by Oerdin
Naw, the market has been trending down for 18 months. That's about average for the 1991 and 1982 recessions. Provided the government intervenes and cuts the hang over from the speculative bubble, other wise we might end up in a long term liquidity crunch a la Japan 1992, then we ought to see the market start to level off with recovery in 5 years. This could very well be the bottom if it is enough to end the liquidity crisis.

this settles it. no hard feelings oerdin but i definitely don't think you need bailout help. you need a reality check. this housing bubble bursting isn't similar to recessions from 91 or 82. I don't know if you're telling yourself these things to feel better but there is still a long way to fall.

[Dinner]

When did I ask for a bail out? I don't qualify for Bush's rate freeze.

The average correction is around 20% and even if it falls another 10% most prices rebound with in 5 years. I like my house and am in it for the long haul so 5 years doesn't bother me to much. That's not wishful thinking just past performance.

[DanS]

This proposal would give a large subsidy (locking in teaser rates) to people who thought incorrectly that it was impossible for real estate prices to go down. Basically, these folks are being bought off so that they don't send the house back to the market when they are underwater.

I recognize why Bush is making this proposal (he's no Hoover), but it just doesn't sit right with me. The sooner the underlying assets are repriced to reflect reality, the better off we'll be.

But if this proposal is the way it's going to be, then the least that they can do is push the frozen interest rate up to what a person would pay for a 30-year fixed mortgage.

[MRT144]

Originally posted by Oerdin
When did I ask for a bail out? I don't qualify for Bush's rate freeze.

The average correction is around 20% and even if it falls another 10% most prices rebound with in 5 years. I like my house and am in it for the long haul so 5 years doesn't bother me to much. That's not wishful thinking just past performance.

past performance isnt indicative of future results, and when a huge asset bubble like this one popped, things arent just business as usual 5 years later. are you getting your forecasts from NAR?

[Dinner]

That's the thing. Expedicious action prevents a pop and instead allows a slow controlled deflation of the bubble. The sudden shock can really put a strain on lenders (remember the SNL crisis?) and possibly even start a downward spiral a la 1929 as housing prices crash and so force more people into upside down and banks are left with a bunch of houses worthless then the money owed. The bank sells those houses, the increase in supply drives house prices down further, this makes still more people underwater...

It's better to avoid such a spiral by controlling the deflation of this bubble then regulating the market to prevent another such bubble from occurring in the future.