Large housing slump! Let the good times roll!

[chequita guevara]

We can grow bananas in Florida. Not 48" pizzas though.

[Lancer]

Originally posted by Oerdin
There is actually a guy in Imperial beach with a banana farm. Supposedly it is the only one in the continental US. Not that I could afford several acres right on the ocean like he has.

You could easily afford, but it would be a different ocean.

[Vanguard]

At this time, home purchase should not be based on an expectation of future appreciation. You should realize that it is entirely possible that home prices will never reach their current level again (adjusting for inflation)----- let alone their prices during the bubble.

The US is creating its bubbles by unsustainable borrowing. The collapse of the housing bubble doesn't just reduce the price of housing---- it also greatly increases the US debt as the amount of mortgages secured by the Federal government increases dramatically. US debt just went up by a couple of trillion dollars.

That money went to pay the financiers who created this mess over the past ten years. And they have already paid their income tax on it (at a 15% or so, thanks to 'W'). So now it is theirs to keep. We can't get that back.

So who gets to pay for it? Why, your average Polytubby of course, over the next twenty years or more. This is not an opportunity for younger Americans. It is yet another fiscal disaster, brought to you courtesy of the Republican party.

[pchang]

Oerdin

is not necessarily down $120K. He is down min(downpayment, $120K). Even though his loan is non-recourse, he will still have to deal with the bank to get a short sale. His transaction costs will include sales commissions, moving costs, and any rental deposits. In addition, his credit rating will take a hit which may affect his ability to rent, but will certainly raise the cost of borrowing money for a little while. This will include the costs of the next mortgage, any car financing, and any credit card financing.

[DinoDoc]

Why is Oerdin trashing his credit if he was current on his loan as he claimed?

[DinoDoc]

Originally posted by Vanguard
It is yet another fiscal disaster, brought to you courtesy of the Republican party.

Did Bush put a gun to Oerdin's head and force him to take out a loan he couldn't afford?

[Dinner]

Originally posted by chegitz guevara
We can grow bananas in Florida. Not 48" pizzas though.

I sense a business opportunity.

[Patroklos]

So who gets to pay for it? Why, your average Polytubby of course, over the next twenty years or more. This is not an opportunity for younger Americans.

You are right, only fiscally responsible young Americans. I am an almost debt free young American with a fat savings account and am looking at the best prices for homes since 1995 and with the best interest rates (fixed) since I started thinking about purchasing. Where is the downside for me?

[notyoueither]

Originally posted by Patroklos


You are right, only fiscally responsible young Americans. I am an almost debt free young American with a fat savings account and am looking at the best prices for homes since 1995 and with the best interest rates (fixed) since I started thinking about purchasing. Where is the downside for me?

Likely won't know that til we see the bottom, but stacking up cash shouldn't be a bad thing.

[Vanguard]

Originally posted by DinoDoc
Did Bush put a gun to Oerdin's head and force him to take out a loan he couldn't afford?

No. Bush allowed the financial sector to steal hundreds of billions of dollars of taxpayer money.

Here's how the Republican eco-scam works:

1. Cut the income tax on the rich.
2. Increase the size of the economy by increasing the federal debt.
3. The rich collect 90% of the benefit from the increased economy and pay 15% tax on it.
4. The government eventually has to raise taxes to pay for the greatly increased debt (or the economy has to contract in size).
5. Everyone else gets to pay much higher taxes in the future to pay for the money the rich earned in the past and paid little tax on.

In the housing crash, this takes the form of increasing credit throughout the economy and then saddling the large Federally guaranteed mortgage banks of last resort with most of the resulting bad debt.

[PLATO]

Originally posted by Vanguard


No. Bush allowed the financial sector to steal hundreds of billions of dollars of taxpayer money.

Here's how the Republican eco-scam works:

1. Cut the income tax on the rich.
2. Increase the size of the economy by increasing the federal debt.
3. The rich collect 90% of the benefit from the increased economy and pay 15% tax on it.
4. The government eventually has to raise taxes to pay for the greatly increased debt (or the economy has to contract in size).
5. Everyone else gets to pay much higher taxes in the future to pay for the money the rich earned in the past and paid little tax on.

In the housing crash, this takes the form of increasing credit throughout the economy and then saddling the large Federally guaranteed mortgage banks of last resort with most of the resulting bad debt.

1) The bottom 40% of all taxpayers had ZERO federal tax liability last year due to the tax cuts as well. I would say, however, that the increased disposable money for the rich went into investments and may have marginally helped fuel the easy credit that was available...but only marginally.
2.) Most (but not all) of the debt is war related. This incredibly helps a limited sector of the economy, but does little else across the broader economy. The North Virginia boom can certainly be attributed to this, but not the general run up in housing prices across the country.
3.) Generally accepted economic theory will tell you that goverment dollars injected into the econmy will produce $2 of activity fo every $1 the government spends. This is a general impact and not specific to the rich...that is a fallacy of propoganda. Increased economic activity may well mean increased profit fo the wealthy...it also means risk for them. In addition, it generally creates jobs for the middle and lower income brackets.
4.) Inflation is what will take care of the debt. The fed is already facing the dilema of inflation vs recession and they are going to opt for inflation if they can.
5.) See # 4. If the debt is now worth less in current dollars (or future dollars in this case), then the future tax rates could actually be the same or less depending on how much inflation has taken place. Besides the obvious dangers of inflation, the real culprit here could be that real wages could lose ground again.

Far from seeing any increase in credit, the response of the federally insured banks has been to hit their stockholders with huge losses and a general tightening of credit across the board.

[snoopy369]

I would note that the tax cuts mostly criticized are not INCOME tax cuts, they are CAPITAL GAINS tax cuts. Very different...

[Dinner]

I love how DinoDoc continues to claim I can't afford my house. Numb skull doesn't know what he's talking about but insists on running his mouth anyway.

[DinoDoc]

You're the one wanting to shred your credit rating to continue on with a scheme of real estate investing you clearly are no good at.

[PLATO]

Originally posted by Oerdin
I love how DinoDoc continues to claim I can't afford my house. Numb skull doesn't know what he's talking about but insists on running his mouth anyway.

Hey Oerdin...Just so you know, a short sale is considered by most lenders the same as a foreclosure. It would be several years before you would likely qualify for a conforming loan after that. You would have to figure into the amount of equity you might gain, the higher cost of not only mortgage credit but all types of credit.