Debates
17 Jan 08
17 Jan 08
Mortgages are becoming more expensive - despite relatively low interest rates.
Repossessions - esp in US are accelerating. The banks are running out of liquidity so easy credit is scarce.
Does lending need to get more expensive and cumbersome to ensure this does not happen again?
Why aren't the repoesessed houses resold at a discounted rate to keep liquidity in the system, to keep the areas prone to sub prime mortgages habitated and in turn help to keep the rest of the world economy afloat?
17 Jan 08
Originally posted by invigorateBecause demand is down as well, due to the high interest rates, so this is a very bad moment for selling.
Why aren't the repoesessed houses resold at a discounted rate to keep liquidity in the system, to keep the areas prone to sub prime mortgages habitated and in turn help to keep the rest of the world economy afloat?
17 Jan 08
Originally posted by invigoratethe real problem has been govt. deregulation of the banking and lending industry. many of the loans that were made, never should have been. My wife is a realtor, and she has gone into $500,000 homes that people live in, but they can't afford any furniture to put in it; whereas if they had bought a home for $150,000 less, they could easily pay the mortgage, heating bills would be lower, taxes would be lower, and maybe they could sit in a chair, instead of a milk crate
Mortgages are becoming more expensive - despite relatively low interest rates.
Repossessions - esp in US are accelerating. The banks are running out of liquidity so easy credit is scarce.
Does lending need to get more expensive and cumbersome to ensure this does not happen again?
Why aren't the repoesessed houses resold at a discounted rate to keep ...[text shortened]... to sub prime mortgages habitated and in turn help to keep the rest of the world economy afloat?
17 Jan 08
1 edit
Originally posted by invigorateBecause house prices in the US are falling every month. No one wants to buy a house on the market today selling for 200K wehn it will be 180 or 170K a couple months from now.
Why aren't the repoesessed houses resold at a discounted rate to keep liquidity in the system, to keep the areas prone to sub prime mortgages habitated and in turn help to keep the rest of the world economy afloat?
If you're in the market for a new home, you'd be crazy to buy right now. Most of the stuff from the economists I've been reading are saying the housing market will continue to decline for about another 12 months before bottoming out.
In other words, this will get worse before it gets better. If you have any stocks, get out now and stay in GIC's etc for about a year while waiting for the stock market to bottom out.
17 Jan 08
Originally posted by uzlessThen why don't the banks choose to sell at bottom prices today? Why are they waiting?
Because house prices in the US are falling every month. No one wants to buy a house on the market today selling for 200K wehn it will be 180 or 170K a couple months from now.
If you're in the market for a new home, you'd be crazy to buy right now. Most of the stuff from the economists I've been reading are saying the housing market will continue to decl ...[text shortened]... now and stay in GIC's etc for about a year while waiting for the stock market to bottom out.
The thing is that people buy the house for a longer term future than 1 year. It's true that some hold out from buying, hoping it falls even more before buying, but the reality is that it's an unstable equilibrium but supply is key here.
Banks are holding to property or selling it to investors (that intend to hold and then sell) because they know that if they take the repossessions to the market the price will fall even more abruptly. So it's a waiting game and they try to open the valves little by little. If the main banks manage to do so, then the prices will slowly and the crisis will less harsh (but maybe slightly longer lived).
The problem is that if one of the major banks starts selling fast and at low prices, then all banks will rush to be the first out the door leading to a rout (and possibly many more "Northern Rock"'s).
17 Jan 08
Originally posted by duecerHEHEHE. I just finished putting a small addition ($30k) on a $800,000. house. They didn't even have a bed. Is it me?
the real problem has been govt. deregulation of the banking and lending industry. many of the loans that were made, never should have been. My wife is a realtor, and she has gone into $500,000 homes that people live in, but they can't afford any furniture to put in it; whereas if they had bought a home for $150,000 less, they could easily pay the mortgage, he ...[text shortened]... ld be lower, taxes would be lower, and maybe they could sit in a chair, instead of a milk crate
Granny.
17 Jan 08
Originally posted by uzlessmy wife tells me ( realtor) that the prices in New England have bottomed out. The problem isn't cost; banks are just very strict about who they will lend to right now. You need 20% down, and perfect credit history. If you have cash, now is a good time to invest in real estate.
Because house prices in the US are falling every month. No one wants to buy a house on the market today selling for 200K wehn it will be 180 or 170K a couple months from now.
If you're in the market for a new home, you'd be crazy to buy right now. Most of the stuff from the economists I've been reading are saying the housing market will continue to decl ...[text shortened]... now and stay in GIC's etc for about a year while waiting for the stock market to bottom out.
17 Jan 08
Originally posted by duecerMy theory is that baby-boomers approaching retirement put money into real estate because it was 'safer' over the last 15 years. That pushed prices steadily upwards. After awhile, it started to look like there was demand that would never end so a lot of other people got suckered in.
my wife tells me ( realtor) that the prices in New England have bottomed out. The problem isn't cost; banks are just very strict about who they will lend to right now. You need 20% down, and perfect credit history. If you have cash, now is a good time to invest in real estate.
And then it did end. What would restart the demand for all the homes that are out there? Who is going to buy the really big homes? Foreigners with lots of euros, but who else?
As for the future, the house and lawn you don't mind taking care of at 55 starts to look pretty big at 70. So if I was buying investment property it would be warm-climate condos at this point, not trophy homes. A lot of baby boomers will need to sell their mansion after their second heart attack.
17 Jan 08
Originally posted by spruce112358fairly astute observation. another factor would be the nuber of second homes people have bought, and will one day have to unload.
My theory is that baby-boomers approaching retirement put money into real estate because it was 'safer' over the last 15 years. That pushed prices steadily upwards. After awhile, it started to look like there was demand that would never end so a lot of other people got suckered in.
And then it did end. What would restart the demand for all the homes ...[text shortened]... homes. A lot of baby boomers will need to sell their mansion after their second heart attack.
17 Jan 08
Originally posted by duecerI don't believe they have to unload. They may take their profit in a high market, but if the property is yielding rent they are unlikely to sell.
fairly astute observation. another factor would be the nuber of second homes people have bought, and will one day have to unload.
If you had £100k today where would you put it?
Interest rates are falling, stock markets are falling, property prices are less than stable. You wont get much oil or gas for your money.
I would argue in these conditions buy to let represents the best investment - maybe and commercial/residential mixed use building - generally year one will produce about 6% before tax.
18 Jan 08
Originally posted by duecergenerally speaking these second homes are "getaways" and produce no revenue, but are taxed and need to be heated, and have maintanance costs. The aging boomer population will (in the next 15 years begin to put one of their homes on the market).
fairly astute observation. another factor would be the nuber of second homes people have bought, and will one day have to unload.
18 Jan 08
1 edit
Originally posted by invigorateI must be psychic, no?
You jest - but I make and sell soup. Soup sales are 80% up this year compared to last.
people love big thick soups when they are feeling miserable.
BTW: Where is my soup!!!! Please don't tell me, "No soup for you!!"