House rejects Bailout; DOW drops 650

[Kidlicious]

Originally posted by Aeson


It will be much easier to own a home in 2-3 years if we don't bail out homeowners... Start bailing out bad mortgages and you artificially prop up housing prices at unaffordable levels.

There are several reasons why that's not true. First, population is still expanding. Second, these homes are being bought up by speculators right now who aren't going to sell them cheap. Three, isn't a whole lot of home building going on. Finally, it's only going to get worse, and we don't know what 2-3 years will look like.

edit: Also, a lot of work will have to be done on these houses that have been vacant for a long time.

[Kuciwalker]

Originally posted by Elok
But mostly it's just the Hindenburg reflex. You know, when you watch the old footage of the Hindenburg crashing and burning, and you're dimly aware that a LOT of people just died, but all the same you catch yourself thinking, "HOLY FVCK that's a big fire! Wheeeee!"

Actually only ~30 people died.

[Aeson]

Originally posted by Kidicious
There is several reasons why that's not true. First, population is still expanding. Second, these homes are being bought up by speculators right now who aren't going to sell them cheap. Three, isn't a whole lot of home building going on. Finally, it's only going to get worse, and we don't know what 2-3 years will look like.

House prices are already falling. You do know that right?

Credit is increasingly more difficult to get. Foreclosures are still rising. Notices of default are still rising. % of notices of default that reach foreclosure are still at around all-time highs. (So foreclosures in 6-9 months will still be rising, even if this is the "bottom"). A lot of ARMs out there with introductory rates that will expire '09 and '10. Banks are continuing to take on more and more inventory. (Most of the forclosed houses "sold" at auction are being sold back to the bank.)

I think it's safe to say that housing will continue to fall for quite some time, at least without the US Gov stepping in to prop prices up.

[Kidlicious]

Originally posted by Aeson


House prices are already falling. You do know that right?

Credit is increasingly more difficult to get. Foreclosures are still rising. Notices of default are still rising. % of notices of default that reach foreclosure are still at around all-time highs. (So foreclosures in 6-9 months will still be rising, even if this is the "bottom"). A lot of ARMs out there with introductory rates that will expire '09 and '10. Banks are continuing to take on more and more inventory. (Most of the forclosed houses "sold" at auction are being sold back to the bank.)

I think it's safe to say that housing will continue to fall for quite some time, at least without the US Gov stepping in to prop prices up.

Future prices are going to end up being closer to what people are paying in rent in the future, which is probably going to be very high. Why would you sell a house to people for cheap when they are paying high rent? You charge them what they will pay unless there is a lot of excess supply. I don't think there will be excess supply because of speculation and demand.

[Jon Miller]

Is Wall Street still dropping?

JM

[Lorizael]

Originally posted by Kuciwalker
Actually only ~30 people died.

Don't shatter dreams, Kuci.

[chequita guevara]

Originally posted by Jon Miller
Is Wall Street still dropping?

JM

No, it's rallying at the moment, on the expectation that the bailout will be passed later in the week. Time to put the screws to Congress and stop this turd from passing.

[Kidlicious]

Here's a graph depicting historical home prices dating back to 1890. I didn't know this before but according to this home prices started increasing during the Great Depression. You can see that it's normal for prices to spike back up after a downturn.

http://www.investingintelligently.co...ome_values.png

[Jon Miller]

So they haven't significantly changed the bill?

I have noticed that the media seems to be in favor of the bill.

JM

[Zkribbler]

Originally posted by Comrade Snuggles


No, it's rallying at the moment, on the expectation that the bailout will be passed later in the week. Time to put the screws to Congress and stop this turd from passing.

Ah!. Investors losing over a trillion dollars yesterday isn't enough for you, eh?

[Jon Miller]

How does investors losing a trillion dollars yesterday have anything to do with the ****ty bailout plan?

Put a good one up to vote and I would be in favor of it passing.

JM

[chequita guevara]

Originally posted by Zkribbler
Ah!. Investors losing over a trillion dollars yesterday isn't enough for you, eh?

Dude, I'm a communist. Seriously. I don't give a flying rat's ass about the ruling class' property vanishing.

[snoopy369]

Originally posted by Colonâ„¢


Maybe you meant a 50% loss over a 100% loss?

Still not accurate, though. It's actually a complex equation, not a simple truth.

$800/month rent = $800/month loss
$200,000 home, depreciates to $180,000, sold after 2 years = $10,000 a year loss, or around $800/month, assuming all costs to buying and selling house are included in above figure (they're generally not).

So if you lost more than $10k/year on your house, you'd have been financially better off renting it for $800/month, equity or no equity ...

[Aeson]

Originally posted by Kidicious
Here's a graph depicting historical home prices dating back to 1890. I didn't know this before but according to this home prices started increasing during the Great Depression. You can see that it's normal for prices to spike back up after a downturn.

http://www.investingintelligently.co...ome_values.png

Your graph suggests we have some ways to go till we get back to historically "high" house prices even. We'd be at ~150-170 right now... doesn't look sustainable to me.

[Kidlicious]

Originally posted by Comrade Snuggles

Originally posted by Zkribbler
Ah!. Investors losing over a trillion dollars yesterday isn't enough for you, eh?

Dude, I'm a communist. Seriously. I don't give a flying rat's ass about the ruling class' property vanishing.

I'd care a lot more if they'd start jumping out of buildings already.