The initiative calls for pumping money into state housing agencies in California, Arizona, Nevada, Florida and Michigan to fund programs to prevent foreclosure for people who are unemployed or who owe more than their homes are worth
Just when I thought I would have a shot at a house after all this Gov help went away in the next few months, looks like we are going to throw another 1.5B at it.
http://money.cnn.com/2010/02/19/real_estate/housing_help_unemployed/index.htm?cnn=yes&hpt=T2
When will this stop.
Not sure if this is meant to help the people who bought too much house. From the article, it states that this money is meant to help those "people who are unemployed or who owe more than their homes are worth." In other words, it's trying to stop people adding to the inventory of empty houses because people are just walking away.The government should not be bailing people out of their homes. I'm sorry, but if you were so stupid you got a loan you knew you couldn't afford, you deserve to lose your house. Forclose and go rent a house. Property ownership is NOT a right, and not everyone is cut out for property ownership.
Not sure if this is meant to help the people who bought too much house. From the article, it states that this money is meant to help those "people who are unemployed or who owe more than their homes are worth." In other words, it's trying to stop people adding to the inventory of empty houses because people are just walking away.
Selective assistance:thumbsdown:
Right, it isn't actually intended to assist the specific people who are receiving mortgage relief. That is only the direct mechanism. It's purpose is to prevent further decline in the housing market, because any such decline has a rippling effect on the macro-economy.
If this was just about "do gooding" to help out certain people, I'd oppose it myself.
- wolf
Why was it bloated in the first place?The housing market in California was already bloated, and this is just going to keep it bloated. Housing prices are too high and need to come back down to market-sustainable rates on their own.
In Central California 4 years ago, 3-bedroom 2-bathroom houses were were going for upwards of $300,000 in suburbia and shitty neighborhoods. Those are NOT market-sustainable rates. Those same houses are going for roughly $120k now, and it's still too much.
Why was it bloated in the first place?
Even before all that, were the prices bloated?Because government programs and regulation caused banks to lend more aggressively, putting people in houses who never would have been able to afford them in the first place.
It might slow down the decline, but a house is worth what it's worth. If someone paid more than what it's worth, then they're eventually going to reap the benefits of such a sound investment decision. All the government is doing is blowing air into a balloon with a big hole in it. The air they're using is the same air I need to breathe.Right, it isn't actually intended to assist the specific people who are receiving mortgage relief. That is only the direct mechanism. It's purpose is to prevent further decline in the housing market, because any such decline has a rippling effect on the macro-economy.
If this was just about "do gooding" to help out certain people, I'd oppose it myself.
- wolf
If $1.5 billion were being given to BigWig Bank, this thread would not exist and no one would care.
The president has no authority to make such a declaration. The money is coming from my paycheck for next year.The president just announced that for all spending that congress is on a pay-go approach. Where are the 1.5 billion dollars in cuts coming from???
Even before all that, were the prices bloated?
Also, I doubt there was any legislation/regulation that required mortgage lenders to make such a high rate of risky (subprime) loans when prices were at its peak:
This is a pure and simple handout to both banks and to people who can't afford to live in their home.
In other countries, if you can't afford to live in your home, you move somewhere else. Oh no. Not in the US. If you can't afford your home, you can keep living there. The government will pay for it.
The housing market in California was already bloated, and this is just going to keep it bloated. Housing prices are too high and need to come back down to market-sustainable rates on their own.
In Central California 4 years ago, 3-bedroom 2-bathroom houses were were going for upwards of $300,000 in suburbia and shitty neighborhoods. Those are NOT market-sustainable rates. Those same houses are going for roughly $120k now, and it's still too much.
I live in California, in the bay area actually, where $500,000 will buy you an outhouse, and that is *after* prices have come down about 30%. However, there are multiple market reasons why prices are so high here. Property taxes being low is one of them. Local anti-growth policies which constrain the supply side, while temperate weather and other factors making it a desirable place to live keeps propping up the demand side. It isn't, however, in an articificial bubble. That is now gone. We've had 40 years of real estate being higher by far than the national average. That isn't a bubble. It is the particulars of supply and demand in a local market.
While I'm quite happy if the prices don't go back up, I don't think it is going to help the economy here to see them go down even further due a spate of foreclosures. And I speak as someone who is now in the market to buy a house (because I might be able to afford one now that prices have come down), so a further lowering would actually help me out quite a bit.
- wolf
Right, and when natural market forces keep prices in desireable places to live high, that's perfectly fine. $500k for a shoebox in SF normal, because the average pay rate in SF is much higher than the national average.
However, I was specifically speaking about the area between Stockton and Merced, where the predominant blue collar jobs are meat packing and fruit picking. There are very, very few high paying jobs here, and while it is a fairly popular place for people to live who commute to the Bay Area or Sacramento to work for much more money, there are certainly not enough of them to cause a 400% increase in the prices of homes.
There are, certainly, some very nice places to live in this area. But, the fact remains that the price explosion caused by banks giving loans to nearly everyone has not quite gotten back to earth in this area. I could afford the $120K house no problem in a 30 year traditional loan, but I want to wait for the market to get back to where it is naturally sustainable. Programs like this, which prevent banks from forclosing or allow borrowers who borrowed too much or stupidly to stay in their homes, do nothing but keep prices artificially high. They may not be as high as they were, but they're still higher than is natural for the market.