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Thread: Housing Market

  1. #11
    Senior Member Leslie B's Avatar
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    I don't believe that anyone is asking you to feel sorry for anyone - individual or corporation.

    However, I think that your belief that being frugal is a guarantee for all to be well. I hate to burst your bubble but the average family has lost 40% of their net worth since 2007 and the vast majority of that is due to the drop in home values (70% of the drop in net worth). It is finding yourself with the pay check you had in 1992 - but with the bills and debt that you have today. No matter how frugal you have been or how well you have saved, you might have a little difficulty in making payments on your home.

    As for people buying too much home, the American approach to real estate has been to use a Real Estate Agent (paid by commission so the more he/she gets you to buy the more he/she makes) who then goes to a Mortgage Banker (paid by commission so the more he/she gets you approved for the more he/she makes) and subordinated by a Real Estate Appraiser who is paid directly by the mortgage banker. I think that we can all see that the process is not designed with the consumers best interest at heart - it has dollar signs all over it and none of them are for the buyer!!!. This process has a significant contributing factor to the real estate bubble. However, for all the new rules in Dodd Frank (500 of them in this bill alone) there is nothing to change this process of mortgage lending. Shame on both Dodd and Frank for failing to address this basic flaw in the system.

    That being said, if you are frugal and bring 20% down plus the closing costs, on the purchase of your $200,000 home in early 2007, that house dropped in value by 35% by 2010. So you end up with a $160,000 (less payments to date) mortgage on a house that is worth $130,00. Oops, you too, are underwater.

    As for work and savings being what made this country, it did not. If you look at the history of our economy it was built by growing our businesses, expanding our markets, and making new and better products. The vast majority of our wealth was generated by companies appreciating in value - not putting money into savings accounts.
    I do agree that the suppression of interest rates is a short term fix and is to the detriment of the long term recovery of our economy. Think about it from the stand point of the 15% of our population that is retired. Their income is derived from interest income. As interest rates increase their spending power and their ability to reinvest in our economy goes up.

    I also agree that both Republicans and Democrats are equally to blame for the current financial fiasco and neither party has the ability or the backbone to make the changes necessary to head our economy in the right direction.

  2. #12
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    I saw Mr. Schiller of the Case Shiller index interviewed a couple of months ago. He believes that if the housing crisis is a baseball game, we are in the fourth inning.

  3. #13
    Senior Member Franco's Avatar
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    Quote Originally Posted by cpj View Post
    I saw Mr. Schiller of the Case Shiller index interviewed a couple of months ago. He believes that if the housing crisis is a baseball game, we are in the fourth inning.
    Yup! And, the Fed and current administration is only making it worse.
    It's time we abandon our party affiliations and rather than being good Dems or good Repubs we all become good Americans. MJH345

  4. #14
    Senior Member HPL's Avatar
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    Quote Originally Posted by menmon View Post
    You are right...things are better in Texas. Obama did not cause this so using him as an escapegoat is chicken crap.

    The word is SCAPEGOAT, not EScapegoat.
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  5. #15
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    It makes me mad when I hear people taking up for individuals that got those bad loans. When I was house shopping the last time I moved (2001) I received numerous offers for those crazy loans. I was encouraged to buy more house than I can afford. I resisted and got a 15 yr loan with a freckle higher interest rate which will be paid off in a little over 2 years. My interest rate is higher than I would like it to be but I'll own my house outright shortly.

  6. #16
    Senior Member huntinman's Avatar
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    Quote Originally Posted by HPL View Post
    The word is SCAPEGOAT, not EScapegoat.
    HPL, he is a big smart banker... it might just be a new word found in Obamacare after they passed it...
    Bill Davis

  7. #17
    Senior Member Jim Danis's Avatar
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    Quote Originally Posted by v ricci View Post
    don't forget the "obamacare" tax when you sell your home...
    just sayin
    The tax is only for those that make at least a $500,000 profit on the sale of their homes. It's an increase in the capital gains tax affecting the profits from the sale of homes. There aren't many people who will end up paying that tax.
    "Blastem Daddy!" My Son's advice to me as a big ole Tom turkey came strutting within range. My son was 6 at the time.

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  8. #18
    Senior Member menmon's Avatar
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    The policy of this country both republican and democrat at the collasp was to spend and get the country growing and then address the fiscal responsibility. Makes you mad to bailout someone for their mistakes but it was and still is the best option or not learn from the mistakes of our great depression that took the path that Europe has and so Europe is experiencing what we did in the 30s.

    The party not in power has taken the position now that this was all wrong and they have the answers. The answers have not changed....stimulate the economy with monetary and fiscal policy and then when the country is growing rein in the spending and reduce the fiscal burden.

    Furthermore, when demand increase given the money supply you will have notable inflation, so the debt burden will be reduced with cheap dollars, all the time things will be growing fast and the country will be prosperous until it catches up with us. Dr Becker a Nobel Prize winner and a former proffesor of mine won his nobel prize for something call "Rational Expectation Theory" This is the only way out, the part of this equation is can we rein it in when the time comes. Having said this, there is no other way out of this and this is what is going to occur who ever is the whitehouse or congress.

    Now this is the time to have a large mortgage and the wrong time to have your wealth in cash. Real assets will rise in value as will the stockmarket, but you want no part of the bond market until the 30 year rate is 8% and them buy buy buy!

  9. #19
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    Quote Originally Posted by menmon View Post
    collasp

    but you want no part of the bond market until the 30 year rate is 8% and them buy buy buy!
    What's a collasp?

    Folks, the advice on the bond market is from someone who said bonds never went above 10% . Wasn't that your cutoff?
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  10. #20
    Senior Member menmon's Avatar
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    Quote Originally Posted by Marvin S View Post
    What's a collasp?

    Folks, the advice on the bond market is from someone who said bonds never went above 10% . Wasn't that your cutoff?
    Opinions are like a<<holes...everyone has one.

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