US house prices in freefall -- redux

[DanS]

I suspect they received a tax deduction for it. But beyond that, perhaps the owners don't want their wilderness broken into small bits of city slicker heaven.

Just a guess, though. Not something I would do.

[Ben Kenobi]

Rent is up and vacancy rates are down. This equates to people becoming homeless.

True, but Oerdin was talking about the people owning houses. I doubt they would become homeless.

[Theben]

Did you not check my link, Ben?

[Dinner]

Originally posted by Ben Kenobi


True, but Oerdin was talking about the people owning houses. I doubt they would become homeless.

People who lose their house or who can't afford to buy a house end up increasing the size of the rental market. That's why rents are going up so fast even as the economy and the housing market suck.

[notyoueither]

Originally posted by Oerdin


Those are some terrible restrictions.

I'd buy land like that in a heart beat were I looking for a place to live or retire. Especially at the price they are charging and if Dan is correct about the value of the vibe.

Added bonus would be vastly reduced property tax IIUC.

[Ben Kenobi]

People who lose their house or who can't afford to buy a house end up increasing the size of the rental market. That's why rents are going up so fast even as the economy and the housing market suck.

And what will happen is that more units will get built as the supply increases to meet the demand.

There are many regulations which are responsible for these increases, restrictions on new construction, rent controls, etc.

Why does an increase in the demand mean that more people will go homeless, unless you prevent people from building more rental units to meet the demand.

[DanS]

Sometimes Bush is such a spineless *****. The bailout of the already heavily subsidized housing and mortgage industries makes me sick to the stomach. Apparently, everyone's a communist when it comes to their own parochial interest.

http://www.washingtonpost.com/wp-dyn/content/article/2008/07/23/AR2008072300317.html?hpid=topnews

By Lori Montgomery
Washington Post Staff Writer
Wednesday, July 23, 2008; 11:52 AM

The White House announced this morning that President Bush will sign a massive package of housing legislation expected to be approved this week by Congress, despite his opposition to $3.9 billion in aid to communities hit hard by a housing crisis that has spawned 1.5 million foreclosures.

White House press secretary Dana Perino said the president was persuaded that the parts are of the bill the administration favors -- including broad new authority for the Treasury Department to lend money to troubled mortgage finance giants Fannie Mae and Freddie Mac -- are too important and urgently needed to engage in "a prolonged veto fight."

"The positive aspects of the bill are needed now to increase confidence and stability in the housing and financial markets," Perino said. "While we have concerns with other aspects of the bill, it is important that the new authorities are put in place promptly, and so the president will accept [Treasury Secretary Henry M. Paulson Jr.'s] recommendation to sign the bill."

The announcement virtually assures enactment of the most sweeping federal overhaul of the mortgage finance system since the Great Depression, as well as dozens of provisions aimed at halting the worst slide in house prices in a generation. The House is expected to approve the measure this afternoon, and Senate leaders plan to follow suit within days.

The package includes a plan to rescue more than 400,000 homeowners at risk of foreclosure by helping them trade high-cost loans with rapidly rising payments for more affordable mortgages backed by the Federal Housing Administration. The FHA, as well as Fannie Mae and Freddie Mac, would be given permanent authority to assist borrowers with much larger home loans, as the bill would increase the cap on the size of those loans from $417,000 to $625,000.

First-time homebuyers who purchase a house by July 2009 would be eligible for a tax credit worth up to $7,500, though the credit would eventually have to be repaid to the Treasury. And homeowners who do not currently itemize would be able to claim a new property tax deduction of $500 for individuals and $1,000 for families.

The package contains aid to communities to purchase vacant and foreclosed properties, a provision Democrats say would help stabilize urban neighborhoods hit hard by the mortgage crisis but which the administration argues would primarily benefit lenders who foreclosed on the properties.

[Aeson]

The FHA, as well as Fannie Mae and Freddie Mac, would be given permanent authority to assist borrowers with much larger home loans, as the bill would increase the cap on the size of those loans from $417,000 to $625,000.

WTF?

[Ben Kenobi]

Wow, not good.

That's horrible.

[Dinner]

The Fannie and Freddie bailout is up to $25 billion and expected to go higher. $3.9 billion doesn't sound so bad.

[DirtyMartini]

Originally posted by Ben Kenobi
Wow, not good.

That's horrible.

Probably doing it because, right now, conforming(fannie/freddie) mortgages have decent rates but are capped at 417,000. But big lenders are in trouble and aren't doing jumbos at anywhere near those rates (even listed rates are a point higher in general). Even with the declining values, many vacant homes in the worst hit markets cost more than 417,000. There are likely buyers out there that are good credit risks and could afford those homes, an action that would help the housing economy. They aren't buying because they are unable to find financing at rates that are acceptable to them -- almost like there's some kind of a...credit crisis.
Letting fannie and freddie buy loans up to 625k would help boost the housing market.

[Arrian]

Originally posted by Aeson


WTF?

My reaction exactly.

Setting aside the precise figures... permanent authority?

-Arrian

[Patroklos]

So when do you guys thing things will bottom out. I would like to wait two years to purchase and thats my guess for the bottom.

[Arrian]

I hope it doesn't take that long.

-Arrian

[Ben Kenobi]

Letting fannie and freddie buy loans up to 625k would help boost the housing market.

It's mission creep. The only places where you can't get a decent home for 400k are on the coasts, and homes there are the most overpriced.

Putting the cap up to 625k, will put pressure on sellers to increase prices to 625k if they can get away with it. I seriously doubt that the difference will add a significant number of buyers to the market, more likely, people will overextend themselves for more house.