Is it wrong of me to hope all these housing bailout bills fail?

[cherrytwist]

Originally posted by: Viper GTS

Originally posted by: Xavier434

Originally posted by: DisgruntledVirus

Originally posted by: Special K


Are houses that small even made anymore though?

Being built? Most likely not. At the same time you don't need to go FIND a ~2000+ sq ft home as your first house. Growing up my parents first house was a 4/2.5 that was ~1800 sq ft and was plenty of space for 3 of us+3 dogs and a cat. We could have even had 4 of us in that house easy (5 would be pushing it though).

1800 sqft homes that are not completely falling apart in my area go for 250k or more. Some of the better quality 1800 sqft homes are going for well over 300k here. All of them are starter homes. I am in South Florida where insurance rates and property taxes are insane assuming you can even get yourself a new insurance policy.

Have you been living under a rock? There's a housing bubble! This graph should scare the hell out of any prospective home buyers:

http://upload.wikimedia.org/wi...hiller_IE2_Fig_2-1.png

The point I was trying to make (and that you missed) is that aside from the housing bubble (which is an issue unto itself) people's view of what a "normal" house is have shifted drastically in the last 55 years.

There's obviously more to the story, the mortgage lenders & realtors are partly to blame for pushing the "you must own a house or you're flushing money" crap. My g/f & I together make over $130K yet we live in an apartment that costs $866 a month. A little common sense and simple math shows that I'm far better off there than buying. If the rest of the population would do the same we wouldn't be where we are today.

Viper GTS

:thumbsup:

My wife and I are in a similar situation. We've been long time renters and people don't understand why we aren't "living in a house yet?"

We don't have kids, we're not tied down to a mortgage, and in this economic climate we may not own a house for another decade.

We are considering a multi-family dwelling, but that's another venture altogether.

 

[DisgruntledVirus]

Originally posted by: Xavier434

Originally posted by: DisgruntledVirus

Originally posted by: Special K


Are houses that small even made anymore though?

Being built? Most likely not. At the same time you don't need to go FIND a ~2000+ sq ft home as your first house. Growing up my parents first house was a 4/2.5 that was ~1800 sq ft and was plenty of space for 3 of us+3 dogs and a cat. We could have even had 4 of us in that house easy (5 would be pushing it though).

1800 sqft homes that are not completely falling apart in my area go for 250k or more. Some of the better quality 1800 sqft homes are going for well over 300k here. All of them are starter homes. I am in South Florida where insurance rates and property taxes are insane assuming you can even get yourself a new insurance policy.

Working for a major insurance company I understand completely how hard it is to get a policy in FL or on the coast period. But that doesn't mean you should try to buy a house. It means rent until A) you decide to move out of the coastal area, or B) you are able to get home insurance and a house and being able to actually afford it (even when costs increase).

 

[DisgruntledVirus]

Originally posted by: Xavier434

Originally posted by: Glavinsolo
1. These Bills should fail
2. People in these homes should take the hit and sit in it
3. If foreclosure happens then the bank will be forced to sell that home to someone more deserving this time around
4. The people kicked out of that house will have a new understanding of money and how to properly use it.
5. The people kicked out of that house will now live in a studio apartment with their 60" tv and Rooms to go furniture package.
6. The kids of the people kicked out of that house will have a stigma of their parents being burnt due to bad decisions.
7. The people who moved into the foreclosed house properly saved the 20% to do so.
8. The people who moved into the foreclosed house are properly supporting society since they are most likely to buy something on their dollar not VISA's.

Some people are mentioning in this thread that 20% is too difficult to accumulate. However, banks will take collateral. If you can prove to them that your net worth is more than 20% along with a monetary down payment you are in the clear.

Also in this thread no one is proposing a different solution to the bailout bills.

I propose reform bills for new home owners. If someone is wanting to buy their very first home. The government will analyze their financial records and back their loan. I'm pretty sure that is what SBA Federal backed loans do. I'm not 100% savvy in this area or if even a system currently exists.

The people who cannot afford a 20% down payment do not have collateral to present. That is not a realistic argument.

In addition, there are tons of people whose homes are being foreclosed upon and not all of them are the irresponsible spenders that so many people are making them out to be. They just wanted to buy a home so they went to mortgage lender. They didn't want a huge house, but when they were told that it is realistic that they could afford a larger house than what they expected they were pleasantly surprised especially after they were shown why this is true. So, being mislead with no purpose other than to make the rich even richer, they bought the larger place thinking everything would be ok. We all know what happened next. No matter how you slice it, everyone should not be expected to be as educated on this matter as much as a mortgage lender, a tax economics genius, or know all of the ins and outs of insurance. They need to know enough but for the most part they should be able to rely on the experts whom they have no choice but to deal with.

IIRC, there were bills being considered that are targeting these people while leaving the flippers and people who made a more obvious effort to buy something that was way over their heads in the wake. Those are the bills that I support more.

So they shouldn't be buying a home. It's really that simple.

That is also their fault for believing the broker (who is completely in the wrong). I don't care what they say, I want to see the numbers and how they make it work before I sign anything.

Second opinions are golden.

 

[nakedfrog]

Originally posted by: Xavier434
In addition, there are tons of people whose homes are being foreclosed upon and not all of them are the irresponsible spenders that so many people are making them out to be. They just wanted to buy a home so they went to mortgage lender. They didn't want a huge house, but when they were told that it is realistic that they could afford a larger house than what they expected they were pleasantly surprised especially after they were shown why this is true. So, being mislead with no purpose other than to make the rich even richer, they bought the larger place thinking everything would be ok.

Poppycock. I could have qualified for $40k more (maybe higher) than I got, but I said "No, I'm not comfortable spending any more than x amount, so it's not going to happen."
You can't make them out to be victims of their own gullibility and poor choices.
I got one of those 0-down 80/20 ARMs, and refinanced as soon as the rate adjusted. If I hadn't been able to refi, it would have stung a bit, but I still would have been able to pay the bills, money would just be a bit tighter around the house.

 

[BoomerD]

Regardless of who's at fault in the current housing crisis...hoping Americans continue to lose their houses in record numbers MUST be a good thing if it allows you to buy a house a bit cheaper...right? :roll:

 

[Glavinsolo]

Originally posted by: Xavier434

Originally posted by: Glavinsolo
1. These Bills should fail
2. People in these homes should take the hit and sit in it
3. If foreclosure happens then the bank will be forced to sell that home to someone more deserving this time around
4. The people kicked out of that house will have a new understanding of money and how to properly use it.
5. The people kicked out of that house will now live in a studio apartment with their 60" tv and Rooms to go furniture package.
6. The kids of the people kicked out of that house will have a stigma of their parents being burnt due to bad decisions.
7. The people who moved into the foreclosed house properly saved the 20% to do so.
8. The people who moved into the foreclosed house are properly supporting society since they are most likely to buy something on their dollar not VISA's.

Some people are mentioning in this thread that 20% is too difficult to accumulate. However, banks will take collateral. If you can prove to them that your net worth is more than 20% along with a monetary down payment you are in the clear.

Also in this thread no one is proposing a different solution to the bailout bills.

I propose reform bills for new home owners. If someone is wanting to buy their very first home. The government will analyze their financial records and back their loan. I'm pretty sure that is what SBA Federal backed loans do. I'm not 100% savvy in this area or if even a system currently exists.

The people who cannot afford a 20% down payment do not have collateral to present. That is not a realistic argument.

In addition, there are tons of people whose homes are being foreclosed upon and not all of them are the irresponsible spenders that so many people are making them out to be. They just wanted to buy a home so they went to mortgage lender. They didn't want a huge house, but when they were told that it is realistic that they could afford a larger house than what they expected they were pleasantly surprised especially after they were shown why this is true. So, being mislead with no purpose other than to make the rich even richer, they bought the larger place thinking everything would be ok. We all know what happened next. No matter how you slice it, everyone should not be expected to be as educated on this matter as much as a mortgage lender, a tax economics genius, or know all of the ins and outs of insurance. They need to know enough but for the most part they should be able to rely on the experts whom they have no choice but to deal with.

IIRC, there were bills being considered that are targeting these people while leaving the flippers and people who made a more obvious effort to buy something that was way over their heads in the wake. Those are the bills that I support more.

1. So Family X bought a house that was more than they could afford since they were shown that it was possible.

Sure Family X you can borrow up to 30% more to get a bigger house and when you start making more money you can tap into that HELOC and fill it with Chinese made crap.

2. Family Y bought a house that was less than they could afford since they knew who stood to gain if they were conned into buying more than they could afford.

So Family Y is appreciating their fixed interest rate and stored equity in their home.


No one is asking you to be up to date on tax code or know every definition to every word in their mortgage paperwork.

Just that you know that unpredictable things happen and you should cover all your bases before you plunge into a binding contract.

Next thing you know there will be some kind of foreclosure insurance.

 

[mugs]

Originally posted by: Xavier434
They didn't want a huge house, but when they were told that it is realistic that they could afford a larger house than what they expected they were pleasantly surprised especially after they were shown why this is true. So, being mislead with no purpose other than to make the rich even richer, they bought the larger place thinking everything would be ok.

When you're buying a house, you should know exactly what you can afford and what you want to spend, and what the bank tells you should have no impact on that. People who do what you describe need to educate themselves. One of the biggest reasons people have financial problems is that they are not educated, and they are afraid to educate themselves about finances.

 

[Glavinsolo]

Originally posted by: BoomerD
Regardless of who's at fault in the current housing crisis...hoping Americans continue to lose their houses in record numbers MUST be a good thing if it allows you to buy a house a bit cheaper...right? :roll:

The houses aren't cheaper. The house is just valued at the right market price. We live in a free market and therefore if someone is willing to pay more money for something then that is the new price.

People didn't want to wait to move into their first homes so they cut corners and were granted loans that shouldn't have gone through [Banks Fault] These people took those loans [Home owner's fault].
This money in turn was used to buy a home. This created an artificial rise in price since this allowed unqualified people to buy a home. The house therefore was priced higher than what the market could afford causing more people to turn to sub-prime or interest only loans.

What is happening now is that the housing market is correcting itself and setting those homes to true value.

 

[dpert1]

social darwinism ftw

/thread

 

[CptObvious]

I think the American Dream fueled the subprime mortgage crisis. It's in our culture that you should move out when you turn 18, buy a house before you turn 30 (or 35) and become wealthy by 50. People think they should be buying a home because they hit a certain age regardless of their finances. As painful as it is to rent, if you roll the dice and buy an interest-only ARM, you should be prepared for the risk. No one goes to the casino and expects the house to bail them out after they lose.

 

[TheNinja]

No it's not wrong. I agree with you. I couldn't afford a place so I continued to rent and invest elsewhere. Meanwhile a couple friends were always like "Dude, just get in a house, get an interest only, I made $100k on my house last year b/c it went up 40%". I'm like "uhhh, you didn't make d1ck b/c the entire market went up 40% so unless you plan on selling and moving you didn't come out ahead." Now look what happens when you have a 5 year interest only on a house you bought for $550k and now it's worth $325 and your interest only period is about up.

Can you say upside-down??

 

[Slew Foot]

Originally posted by: yinan
Its not just people buying a house they couldnt afford. At the time I bought my house I didn't have the best credit, so I got one of the ARM loans and used that time to fix my credit so I could refinance to a better rate when I earned it. I have now been approved for much lower fixed rates, but I cant refi because the value of my house is not there. I have lost almost $100,000.00 Now my payment will probably double and there is nothing I can do about it. No one takes into account their payment doubleing when they buy a house. I have made all my payments, so tell me where exactly did I go wrong and deserve to be punished?

Yinan

Are you some kind of idiot?

 

[dmw16]

nope. my fiance and I are in the same boat. the market we are in hasnt crashed like some areas, but I don't feel bad for MOST of the people that got in over their heads. There are some people who I think banks preyed on and took advantage of. But most buyers should have known better but figured they could just sell or refinance.

They dug their grave and I really don't want my tax dollars going to help them. If they want to give handouts, give me some money to help me buy a house I can afford.

 

[imported_Baloo]

The bailout has already happened, bush bailed out the predatory lenders.

 

[imported_Baloo]

Originally posted by: yinan
Its not just people buying a house they couldnt afford. At the time I bought my house I didn't have the best credit, so I got one of the ARM loans and used that time to fix my credit so I could refinance to a better rate when I earned it. I have now been approved for much lower fixed rates, but I cant refi because the value of my house is not there. I have lost almost $100,000.00 Now my payment will probably double and there is nothing I can do about it. No one takes into account their payment doubleing when they buy a house. I have made all my payments, so tell me where exactly did I go wrong and deserve to be punished?

Yinan

You don't deserve punishment. The OP does not understand the issue. It's the lenders that are the bad guys.

 

[shopbruin]

Originally posted by: yinan
Not bad, just not perfect. $265,000 was about as cheap as you could find anything.

no one said you HAD to buy a house. people were telling me a few year ago "go buy a house, you can get an interest only loan, and they don't care where your income comes from."

i said that was a recipe for disaster. even if the mortgage payment was the same as my rent payment, i felt that there was no guarantee that i would actually come out ahead in five years.

thank goodness i didn't listen to them.

 

[Special K]

Originally posted by: Baloo

Originally posted by: yinan
Its not just people buying a house they couldnt afford. At the time I bought my house I didn't have the best credit, so I got one of the ARM loans and used that time to fix my credit so I could refinance to a better rate when I earned it. I have now been approved for much lower fixed rates, but I cant refi because the value of my house is not there. I have lost almost $100,000.00 Now my payment will probably double and there is nothing I can do about it. No one takes into account their payment doubleing when they buy a house. I have made all my payments, so tell me where exactly did I go wrong and deserve to be punished?

Yinan

You don't deserve punishment. The OP does not understand the issue. It's the lenders that are the bad guys.

Are you being sarcastic? What about personal responsibility? People should not be entering agreements and signing contracts they don't fully understand.

 

[Slew Foot]

Originally posted by: Baloo

Originally posted by: yinan
Its not just people buying a house they couldnt afford. At the time I bought my house I didn't have the best credit, so I got one of the ARM loans and used that time to fix my credit so I could refinance to a better rate when I earned it. I have now been approved for much lower fixed rates, but I cant refi because the value of my house is not there. I have lost almost $100,000.00 Now my payment will probably double and there is nothing I can do about it. No one takes into account their payment doubleing when they buy a house. I have made all my payments, so tell me where exactly did I go wrong and deserve to be punished?

Yinan

You don't deserve punishment. The OP does not understand the issue. It's the lenders that are the bad guys.

Because lenders held a gun to people's head and had them sign loans they couldnt afford?

 

[LegendKiller]

Originally posted by: Baloo
The bailout has already happened, bush bailed out the predatory lenders.

Predatory implies not knowing what one is signing up for. This is a massive misnomer, since it vilifies anybody who gives out what others will take freely without considering the borrower's own motivations.

The massive amount of these mortgages were given to people who knew exactly what they were getting themselves into.

To the idiot who said they didn't know payments could double, bullshit.

 

[0roo0roo]

Originally posted by: DisgruntledVirus

Originally posted by: Special K

Originally posted by: Viper GTS

Originally posted by: Xavier434

To the posters who are talking about how buying a home is not supposed to be easy, consider the past. It used to be A LOT easier to buy a home even when taking inflation into consideration. I have spoken with a lot of adults in their mid 50's about this topic and all of them agree that they do not understand how young people (late 20s to early 30s) are able to afford it these days. They realize that people figure out ways, but what they are witnessing is that homes are being owned less and less by the middle class and lower-middle class compared to the past. To me, that is a very bad thing. If it was possible for people who fit in those classes to comfortably afford homes like that in the past then why should we not be aiming for the same level of ease today? Something has gradually gone horribly wrong. It should not be this difficult. Life in general in this country is not better that way.

Go look at the houses people were buying then vs the houses people think they should be able to buy today.

1950: 983 square feet
2005: 2412 square feet

From here:

http://crosslandteam.com/blog/...-keeps-getting-bigger/

No idea how accurate these numbers are but they seem to be in the ballpark of what I'm finding elsewhere.

Viper GTS

Are houses that small even made anymore though?

Being built? Most likely not. At the same time you don't need to go FIND a ~2000+ sq ft home as your first house. Growing up my parents first house was a 4/2.5 that was ~1800 sq ft and was plenty of space for 3 of us+3 dogs and a cat. We could have even had 4 of us in that house easy (5 would be pushing it though).

well lots of things get bigger and better and remain the same cost or less. i dunno, how much was a 20" tv back then in todays dollars? a car? it doesn't matter how big the house was. what matters is what % of the household income was required to buy it.

 

[alkemyst]

The whole 20% argument is not supported by even those with a ton of cash. The reasons are that property values have really outpaced salaries.

In the 60's property values really outpaced incomes.

1960 the median household income was around $6k and the average house about $15k, by 1970 the median household was up to about $9k...but homes were approaching $30k...it's only gotten worse and worse.

Shortly after these times getting that 20% for a average house was now more than ones annual income, where in the past it was a bit below it.

 

[alkemyst]

Originally posted by: Viper GTS
1950: 983 square feet
2005: 2412 square feet

you really can't base anything in real estate on the time between 2003-2007 as being an indicator.

Most of the homebuilders are planning on introducing 'right sized' homes in the near future. Since the boom, homes have gotten larger and larger.

1950 is a bit far back as well to base anything in today's markets...different methods of construction, better plumbing/electrical/hvac...etc.

2412 sq ft for a home is a bit much for the average joe...typically a decent starter home for a couple would be comfortable at 1200 sq ft in a 2/2 configuration and maybe 2/2.5 (under air) and 1500 sq ft for another 2 bedrooms and a bath.

Part of the modern techniques to maximize sq ft bang for buck is getting rid of the closed floor plan model and getting rid of both the formal dining room and living rooms moving the space to a great room with attached open kitchen with eating area. Most families in the past did not focus eating around the TV...since around the 1950's though the TV has become a center of a family meal.

I am part of a top 10 homebuilder and this is a lot of the buzz right now as the only way to make a house cheaper is by making it smaller. Lots have already been cut down to the minimums for most construction.

 

[Chaotic42]

No, I do too. Fortunately, the dropping housing prices have allowed me to purchase. Thanks, suckers!

 

[Gothgar]

Originally posted by: Viper GTS

Contrary to popular opinion it's OK for stupid to hurt.

Viper GTS

what a great line... :thumbsup:

 

[Eeezee]

Originally posted by: darkswordsman17
Sorry if someone already mentioned this, but while I agree that its not good to bail out people/businesses who make bad decisions, the fact is, by helping them, the government is actually helping you by preventing the economy from sliding. Its the same reason that the government does things like give money for college. Sure, you're helping to foot the bill, but by helping others you're helping yourself as well. A healthy economy is good for everyone.

Now, of course, all of that is in theory, and we all know the execution of that tends to be..off. I agree they should let them fail because of the fact that its these people who are running around screaming about the economy going to collapse when its really not nearly as bad as they think, and they're making it worse by trying to drum up so much FUD. If they get bailed out, they won't learn their lesson, or the understanding that the economy will move on (recessions, let alone reduced growth, are just part of the overall cycle).

LOL

More money will be spent on this mortgage fiasco than the govt has paid to students in the last 10 years combined!