More Idiocy From the Government - "Lend to Minorities With Bad Credit"

• Con_Alma

  gut;832225 wrote:... The most flexibility and security here, in the long-run (even if you buy/sell several times) is from a mortgage and buying. ....

  I have more flexibility than my neighbor who has a mortgage. I have no liability I must pay on. He does. I think he even told me once he has a 2nd mortgage or line of credit against the house. He used it to put a $100,000 plus break-wall in the lake protecting his property. Wonder if that increased his property value so his taxes will go up! I'll have to check sometime.
• Footwedge

  Buying a home used to be a sound investment. But not today. The value of American goods continue to deflate....and will never again inflate. The money and capital is flowing overseas....as are many jobs. Adding to the dillemma, the never-ending monetizing and spending cheapens the American dollars.
  
  If one buta a home for 150K in 1995....and the market's appraisal remains at 150K today, then one has lost about 35% of their equity.
  
  When the people's government is in the hole 14.3 trillion, then everyone is a lot poorer than what they think they are.
• believer

  

  Footwedge;832601 wrote:Buying a home used to be a sound investment. But not today. The value of American goods continue to deflate....and will never again inflate. The money and capital is flowing overseas....as are many jobs. Adding to the dillemma, the never-ending monetizing and spending cheapens the American dollars.
  
  If one buta a home for 150K in 1995....and the market's appraisal remains at 150K today, then one has lost about 35% of their equity.
  
  When the people's government is in the hole 14.3 trillion, then everyone is a lot poorer than what they think they are.

  Footwedge, we agree.
• jhay78

  

  believer;832633 wrote:Footwedge, we agree.

  
• Con_Alma

  Footwedge;832601 wrote:Buying a home used to be a sound investment. But not today. ...

  ...because there's risk involved when it's value is of concern and it's viewed as an investment. Market forces fluctuate the investment's value.
  
  When you don't use it as an investment does it really matter what it's value is?
• Manhattan Buckeye

  It matters if you have to divest of it. The days of living 40 years or so in the same community are over for most "younger" people. Even if you believe that it isn't an investment and a residence, if work forces make you leave the community the value matters - it is far easier to break a 12 month lease than it is to default on a 30 year mortgage in a broken market.
  
  We've witnessed an unprecedented destruction in our housing economy - and there are ripple effects throughout the greater economy, people without jobs, or are fearful of losing their jobs aren't buying houses. Without the demand, the prices will continue to fall even below "book" value. If it costs a builder $150,000 in materials and labor to build a house, but there are no buyers at that pricepoint, well, there are going to be ramifications in the entire market.
• believer

  

  Manhattan Buckeye;832939 wrote:It matters if you have to divest of it. The days of living 40 years or so in the same community are over for most "younger" people. Even if you believe that it isn't an investment and a residence, if work forces make you leave the community the value matters - it is far easier to break a 12 month lease than it is to default on a 30 year mortgage in a broken market.
  
  We've witnessed an unprecedented destruction in our housing economy - and there are ripple effects throughout the greater economy, people without jobs, or are fearful of losing their jobs aren't buying houses. Without the demand, the prices will continue to fall even below "book" value. If it costs a builder $150,000 in materials and labor to build a house, but there are no buyers at that pricepoint, well, there are going to be ramifications in the entire market.

  No question about it. For example, I'm now faced with having to move to our plant in Tennessee because slumping sales in a sour economy has forced our chief execs to close our Pennsylvania plant. We simply cannot find a buyer for our house right now particularly at the price we'd need to sell it to break even.
  
  So my wife and kids will remain behind, I will find a shack of an apartment in Tennessee and continue to pay our Pennsylvania mortgage.
  
  Not only does that majorly SUCK with regard to my family life, but eventually we're going to have to make some even tougher decisions. Do I say "screw it" and accept the financial damage of a strategic foreclosure or will the market rebound enough that my house will appreciate enough to look attractive to a prospective buyer?
  
  Based on what I'm seeing, I sincerely doubt the housing market will ever bounce back to where it once was.
• Con_Alma

  No doubt Manhattan. Having no interest in divesting from this shelter I've built means it's "value" is irrelevant to me. "Whence I die I hope they burn my dwelling to the ground so as there's nothing more to my life than dust."
  
  I would love the County appraisal of my home to drop. It would lessen my expense.
• Con_Alma

  No doubt Manhattan. Having no interest in divesting from this shelter I've built means it's "value" is irrelevant to me...with the exception that it determines how much RE taxes I pay. . "Whence I die I hope they burn my dwelling to the ground so as there's nothing more to my life than dust."
  
  I would love the County appraisal of my home to drop. It would lessen my expense.
• believer

  

  Con_Alma;832945 wrote:No doubt Manhattan. Having no interest in divesting from this shelter I've built means it's "value" is irrelevant to me...with the exception that it determines how much RE taxes I pay. . "Whence I die I hope they burn my dwelling to the ground so as there's nothing more to my life than dust."
  
  I would love the County appraisal of my home to drop. It would lessen my expense.

  +1000 lol
• gut

  Con_Alma;832936 wrote:...because there's risk involved when it's value is of concern and it's viewed as an investment. Market forces fluctuate the investment's value.
  
  When you don't use it as an investment does it really matter what it's value is?

  Buying and selling. What is so complicated to understand that if when housing in general dips 50%, your "loss" on selling is offset by your "gain" on buying a cheaper home? I mean, you can plan for and fear every contigency, but putting money under your mattress still is not sound financial management.
  
  And here's the real kick in the nuts of what you're saying - if I don't have 100% equity in my house but have saved that money otherwise (because it makes more sense to finance than buy), I can just as easily walk away from non-recourse financing and pay cash for a new house if I can't get a decent loan or sell my other place.. So, again, buying and mortgage is superior for any relatively extended period of time.
• gut

  Footwedge;832601 wrote: The value of American goods continue to deflate....and will never again inflate...Adding to the dillemma, the never-ending monetizing and spending cheapens the American dollars.

  Those two statements are inherently contradictory.
• gut

  Con_Alma;832493 wrote:I have more flexibility than my neighbor who has a mortgage. I have no liability I must pay on. He does. I think he even told me once he has a 2nd mortgage or line of credit against the house. He used it to put a $100,000 plus break-wall in the lake protecting his property. Wonder if that increased his property value so his taxes will go up! I'll have to check sometime.

  
  He has just as much flexibility. He can walk away at any time. Plus, I thought the discussion was buying vs. renting....If his alternative is to rent, he still has a liability to deal with. Also, as opposed to paying cash, he has just as much flexibility if not more than you with that money sitting in a savings account vs. your money tied-up in your house, doing absolutely nothing other than saving you 3.5%.
  
  You both have an unrealized loss in the value of your home. Difference is, he can cut his losses by walking away. You're unrealized gain has actually evaporated and you will be forced to take it if you sell.
  
  And of course this is all abnormal events stemming from the bubble. Historically what I'm saying has always been the more prudent course. Leverage is not inherently bad, misuing leverage is a different issue.
• Cleveland Buck

  

  Houses are a shelter. They do not create wealth and should never have been seen as a money-making investment. Ever since the federal government created the secondary mortgage market, first with FDR creating Fannie Mae, then LBJ creating Freddie Mac, then various home ownership mandates, the federal government artficially drove up the price of property to a point where it is no longer sustainable. Federal intervention is the only thing now keeping prices from falling even more. If there never was a federally owned entity to buy mortgages from banks, then banks would have been much more strict about their lending standards, which would have kept home prices from ever getting out of hand. Homes would be worth half of what they are now and no one would be upset about it or hurt by it. People would by a house to live in, not to make a profit.
• Con_Alma

  gut;833014 wrote:... Plus, I thought the discussion was buying vs. renting.......

  Uhhh, why would you think that?
  
  I have never, not in one post compared renting vs. buying other than to say this was not about renting vs buying. Are you just teasing me now?
• Con_Alma

  Cleveland Buck;833160 wrote:Houses are a shelter. They do not create wealth and should never have been seen as a money-making investment. Ever since the federal government created the secondary mortgage market, first with FDR creating Fannie Mae, then LBJ creating Freddie Mac, then various home ownership mandates, the federal government artficially drove up the price of property to a point where it is no longer sustainable. Federal intervention is the only thing now keeping prices from falling even more. If there never was a federally owned entity to buy mortgages from banks, then banks would have been much more strict about their lending standards, which would have kept home prices from ever getting out of hand. Homes would be worth half of what they are now and no one would be upset about it or hurt by it. People would by a house to live in, not to make a profit.

  +1
• Footwedge

  gut;833012 wrote:Those two statements are inherently contradictory.

  How so? They are complimentary...not contradictory.
• jhay78

  

  Cleveland Buck;833160 wrote:Houses are a shelter. They do not create wealth and should never have been seen as a money-making investment. Ever since the federal government created the secondary mortgage market, first with FDR creating Fannie Mae, then LBJ creating Freddie Mac, then various home ownership mandates, the federal government artficially drove up the price of property to a point where it is no longer sustainable. Federal intervention is the only thing now keeping prices from falling even more. If there never was a federally owned entity to buy mortgages from banks, then banks would have been much more strict about their lending standards, which would have kept home prices from ever getting out of hand. Homes would be worth half of what they are now and no one would be upset about it or hurt by it. People would by a house to live in, not to make a profit.

  
  You nailed it- the effects of government intrusion in the housing market are felt by everyone in some shape or form.
• Writerbuckeye

  

  Look how government intrusion has skewed the higher education system. It's to the point of absurdity as far as costs go. Talk about a system that's due for a high colonic of some kind...
• gut

  Con_Alma;828722 wrote:That's sad. Very sad. It's not a source of savings nor should it be.

  
  Gee, I guess that's where you lost me. It IS about buying vs. renting hence why it IS a source of savings, because buying is a savings over renting after just a few years. Yes, there are risk of "paper losses", but those losses are not actually realized until you downsize in which case you're realizing the loss/gain on that portion of shelter you no longer pay for. If you lose $100k on the sale of your home and buy an equivalent home, that equivalent home is $100k less so it's a wash.
  
  Then you went off on this irrelevant tangent about how people shouldn't buy a home as an investment, insisting that shelter and cost avoidance/savings are somehow mutually exclusive, where I've never said such thing and corrected you repeatedly.