The government is propping up prices with low interest rates. It is not at a natural eq. Wait until the fed boosts rates back up to 4%.
I hear what you're saying. I am less aware of the market you're talking about because I don't live there. However, where I live I think the market is now at a real equilibrium because prices have been static for about 18 months.
The problem with large numbers of foreclosures happening at once is that it can produce a chain reaction, a rippling effect, which temporarily causes the market to go below its natural equilibrium, i.e. the opposite of a bubble. Then wealthy investors come in and buy up the cheap property, and make a mint, but not before it causes short term economic misery, including harm to the financial system.
- wolf
Bailout the Banks, complain about the Banks getting Bailed out and not helping the Average Person.
Bailout the Average Person, complain about the Banks getting Money and the Average Person getting Money.
While *
Complain
There is a third alternative. Don't bail out anyone and no one except the deadbeats will complain.
There is a third alternative. Don't bail out anyone and no one except the deadbeats will complain.
Selective assistance:thumbsdown:
Bailout the Banks, complain about the Banks getting Bailed out and not helping the Average Person.
Bailout the Average Person, complain about the Banks getting Money and the Average Person getting Money.
While *
Complain
Yeah, I oppose(d) bank bailouts.
And "NO" they are not bailing out the average person. It's those whose homes are in trouble, and only those from a few states. I.e., those of us not living in those states, even if in trouble, get no help just the bill.
I've got an idea, how about we just stop the fvcking bailouts?
Fern
Bailout the Banks, complain about the Banks getting Bailed out and not helping the Average Person.
Bailout the Average Person, complain about the Banks getting Money and the Average Person getting Money.
While *
Complain
These entitlements are not helping the average person. We complain about banks getting bailed out because if they cannot be managed correctly they need to go out of business.
The White House keeps spending like this and before you know it we will have a $1.6 trillion deficit. Hell, I gambled away all my money and can't afford gas or food. Where is my free money?
If something is unstable, it's not always best to give it temporary, artificial stability - this approach simply gives a false sense of security. If a bridge is collapsing and I use a jack from my car to hold it up a bit longer, all I've really done is condemn the people that happen to be on the bridge when it finally gives way.You gotta bring Stability into the system. That's the point of the Bailouts.
If something is unstable, it's not always best to give it temporary, artificial stability - this approach simply gives a false sense of security. If a bridge is collapsing and I use a jack from my car to hold it up a bit longer, all I've really done is condemn the people that happen to be on the bridge when it finally gives way.
The government is propping up prices with low interest rates. It is not at a natural eq. Wait until the fed boosts rates back up to 4%.
I can easily afford my home but since banks were giving loans out to everyone that couldn't afford it has caused me to lose all equity plus some in my home and that's after major remodeling. Big banks got to walk away from crappy deals with a bonus but I get shafted with a home that keeps losing value?
Why? Why not fix the hole? Stabilization will still lead to failure, only at greater cost than if nothing were done. If a cannonball comes through a load-bearing wall of my house, I can stand there and try to hold up the wall, but I'll fall asleep eventually, at which point I'll be right there when the wall falls.When a failure will leave a huge hole in your System, you stabilize.
Still nothing in the legislation/regulation that required mortgage lenders to make those loans in that amount.The prices were higher than most places in the country, yes, but look at your own graphs. A 20-fold increase in subprime lending by amount. Eventually, as your second graph demonstraits, more and more people were considered "subprime" because of the massively over-inflated value of homes in California.
In 1990, a 4 bedroom 2 bathroom home sold for around $110k. In 2005, that same house was appraised at nearly $400k. The owners would not have been able to afford it under a traditional, conforming 30yr loan at that price. Some increase in value is to be expected, but not nearly a 400% increase.
Add us to that list. Even after putting on a new roof, new A/C, fresh paint, and tile throughout all 4 years ago our place is now worth far less than what we owe. Now we're stuck in a place that's renting for far less than what we're paying between mortgage, insurance, taxes, and homeowners association. I called my mortgage holder (Bank Of America) to discuss options and they told me we didn't qualify for the 'Making Homes Affordable' plan. All they would do is extend our term to lower the payment. It's not the payment that's the problem it's the value to principle ratio. The temptation to say 'fuck it' and walk away is there. :\
Add us to that list. Even after putting on a new roof, new A/C, fresh paint, and tile throughout all 4 years ago our place is now worth far less than what we owe. Now we're stuck in a place that's renting for far less than what we're paying between mortgage, insurance, taxes, and homeowners association. I called my mortgage holder (Bank Of America) to discuss options and they told me we didn't qualify for the 'Making Homes Affordable' plan. All they would do is extend our term to lower the payment. It's not the payment that's the problem it's the value to principle ratio. The temptation to say 'fuck it' and walk away is there. :\
Why? Why not fix the hole? Stabilization will still lead to failure, only at greater cost than if nothing were done. If a cannonball comes through a load-bearing wall of my house, I can stand there and try to hold up the wall, but I'll fall asleep eventually, at which point I'll be right there when the wall falls.
No, it doesn't. It borrows money and shoves it into the hole in the wall. When the wall collapses, which it inevitably will since the structural issues were never addressed, the money will be buried in the rubble.That's what it does.
When you prop up houses like this you also quite obviously keep people in houses who economically don't deserve them and keep people out of them who do. If you didn't prop them up most houses would still end up with occupants, just different ones, those more deserving or able to pay for the house at its true value.