Some RARE truth from the MSM - Housing DOOM!!!

PIN THIS!

There will be more until we learn not to lay our treasures on earth

All of the easy home loans several years ago drove up the price of homes to an artificial level through demand. It was criminal what the banks did to people. Sure, the people fell for it, but the banks should NOT have given loans to many of those who are now trapped in mortgages they can't afford and are losing their homes to foreclosure.

Since the bank money has dried up and they're no longer giving home loans to anyone coming through their doors, the housing prices have taken a huge hit because there isn't the "demand" anymore (people who can qualify and acquire and afford it).

Unfortunately, I believe what we are seeing now is a return to a more normal and natural level. If we got a housing price recovery, it would signal a new problem. Our depressed housing values are here to stay and I doubt there will be a "housing recovery."

Housing prices should equal 3 to 3 1/2 times their annual income, with a 20% down payment.

That is how much house any one individual can afford.

They disregarded (intentionally) this formula and blew the housing price bubble.

When this formula is followed homes are affordable and loans are sustainable.

[link to www.standardandpoors.com]

when i bought my house it was 3 times my income.

now it is worth 2 times my income.

soon it may be again worth 3 times my income, due to a reduction in income.

the 20% down is wiped out.

something is not computing.

A valid option, perhaps?
[link to www.youtube.com]

pride is a stubborn thing. not going to go down that road
unless i cant make payments.

i just wish i could refinance to a lower rate..but no equity left in home.

Housing will recover when the market is allowed to crash, and housing prices find their natural market again. No sooner.

We've been playing games with interest rates, FHA, and Fannie and Freddie for years now, and prices have still come down, and will continue to decline, despite the government's machinations, until they have reached whatever price supply and demand, demands.

The crash can be quick and painful, or slow and more painful.

Only two options. There's just too damn many houses at inflated prices, and very few people still qualify for loans.

"The crash can be quick and painful, or slow and more painful."

Ain't it the truth.

The average hourly wage in America is 16 bucks an hour.

The problem is that people who make 16 bucks and hour cannot afford a $600,000 home.

Also, they cannot afford to pay $2,000 per month rent.

The rent they can afford to pay, which is maybe 40 percent of their monthly income at most, dictates the worth of apartment buildings. Since otherwise the apartments will be vacant.

And then based on the revenue generated by those rents, that determines the value of rental property.

And if it does not make a profit, then it is not going to be an asset to anyone. No one would buy it, in a flat real estate market, since it will cost them money.

So right there you have one of the capitalist systems prime price regulators.

Now if you have rich people from another country and you let them buy your apartment buildings, they will mess up your free market by buying them as holding properties or to launder illegal drug money etc.

Under normal circumstances, what a person makes as hourly wages, determines what they can afford to pay as rent, which then determines the value of rental properties, which then determines the market price of homes.

The rest is just people talkin.

"The rest is just people talkin."

You see thats the law of toyland right there. And so as you increase the gap between the rich and the poor, all that does is lead to boom and bust. The rich people cannot figure out why the house prices cannot maintain their value when they are such nice expensive houses.

But wages, are the determining factor alone in real estate pricing.

Without the ability to pay, no sales can be made period.

But the current model, does not take into account the fact that most people do not get much in the way of wages.

And the cost of wages affects the cost of goods, and business and industry which strives to be competitive wants to limit wage increases.

But it goes much deeper than this, because in any business, when their business grows, and they make huge profits, they still don't raise wages. Human greed.

So that is one of the weal points in the capitalist system which always causes real estate to crash back down to wage earners level.

Now unless you build castles, instead of timber construction, you cannot expect to get a 100 year mortgage and have higher real estate prices by lowering the payments over a longer amortization.

You see that then makes the people indentured, and they pass the property to their children who continue to pay off the castle, but it lasts hundreds of years as opposed to the 25 year life expectancy of a wood frame house.

3 little pig economics 101

People want to feudal lords, but they can't convince the peasants to be indentured servants, and they refuse to build real castles.

If you want to change real estate, you need a hundred year mortgage, and you need to build castles. 3 foot thick walls, with one foot of waterproofing, and all the rest to make them super-buildings.

Dumbasses tried a 50 year mortgage a few years ago. I think every single one of them is currently in default.

As a financial dumbass, I'm wondering what impact Operation Twist will have on house prices?
I'm struggling to understand some of the concepts there, but did it in fact manage to push interest rates down?

Opinion.
Banks would not get me to buy a home because they stole so many I may end up in someone's stolen home.

Banks aren't alive...so it's really the CEO and board of directors who are behind this.

No way will they get my support.

I've actually seen a very slight increase in the last few days. 30 year rates went down about .125-.25% in the first couple of days, and now, they're up from the pre-Twist rates about the same amount.

No idea about housing. Probably minimal effect one way or the other.

Last Edited by ReVbo™ on 09/29/2011 12:15 AM

I have owned six homes in my life. Each one had at least a 20% down payment and the monthly mortgage including property taxes and insurance were within my budget. I for the life of me can't understand either side in this debacle, the banks or the borrowers. If you aren't patient or responsible enough to save for a 20% down payment, you aren't ready to be a homeowner. The mortgage payment is just part of the expense. You have maintenance, repairs and improvements if you so choose. I have no sympathy for people in over their heads. They made poor choices. The caveat to that being people who unexpectedly lost their jobs and can't find another but wee otherwise perfectly suited for home ownership. It is not a RIGHT, it's a RESPONSIBILITY. BTW - never late on a payment, never defaulted - in good standing and plan on staying that way because....... we have a plan and always have.