View Full Version : Bubble, Bubble; Toil and Trouble- Making House Payments
FromMyColdDeadHand
06-16-17, 22:04
http://money.cnn.com/2017/06/16/real_estate/rising-home-costs-affordability-harvard/index.html
39 million households are paying more for housing than they can afford
Nearly 39 million households can't afford their housing, according to the annual State of the Nation's Housing Report from Harvard's Joint Center for Housing Studies. One-third of households in 2015 were "cost burdened," meaning they spend 30% or more of their incomes to cover housing costs. Of that group, nearly 19 million are paying more than 50% of their income to cover their housing needs.
This is the kind of crap that gives me the willies. We have a major financial ebola attack about once a decade. 1987 S&L , 1997 LTC, 2007GFC, 2017.......
When people start not to be able to afford their houses, that is a sign of a bubble. Who can buy the houses? That is pretty much the definition of a bubble. When you look at interest rates increasing and the fact that people are overburdened with the payments now- as rates go higher, we could see a major drop in housing values and another loan-liquidity problem. And the real issue is that we haven't reloaded, or hit our monetary refractory interval- i.e. we shot our wad for the GFC and all the viagra (low interest rates) haven't gotten us to the point where we could go another round if something like a GFC hit.
Just wait for fuel costs to rise. I am convinced that the 2008 crisis was due to the the increase in the cost of gas as much as the mortgage crisis that Bill Clinton set us up for by signing the law to make housing "affordable."
Once fuel doubled folks had to choose between driving to work and paying their mortgage. Guess what we chose...
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Just wait for fuel costs to rise. I am convinced that the 2008 crisis was due to the the increase in the cost of gas as much as the mortgage crisis that Bill Clinton set us up for by signing the law to make housing "affordable."
Once fuel doubled folks had to choose between driving to work and paying their mortgage. Guess what we chose...
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You're absolutely correct.
As somebody who studied economics at the university from 2002-2006, I predicted the 2008 crisis largely, because of fuel spikes, interest, and historic trends. I was told by my economics professors, literally, "don't be silly, the Fed won't let that happen".
I personally saw those in rural areas more than 20-25 miles from the larger, developed towns selling their homes and moving to town. With $4 gas, people couldn't afford to drive their gas-guzzling trucks and SUVs 50 miles a day at 15 miles a gallon. It was enough to push them over the edge. Rural homes for cheap and rental apartments in town saw a spike. The housing market it town wasn't nearly as hurt as the surrounding areas.
Once fuel prices began to trend down around 2009-2010, those rural homes suddenly increased in value and sold much more quickly.
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just because the bank will give you the loan doesn't mean you should take it. I ran the numbers on 30 vs 15 and was amazed at how much I would pay in interest. We found a place we could stomach on a 15 year note. And it still bothers me how much I'm paying in interest alone.
just because the bank will give you the loan doesn't mean you should take it. I ran the numbers on 30 vs 15 and was amazed at how much I would pay in interest. We found a place we could stomach on a 15 year note. And it still bothers me how much I'm paying in interest alone.
Generally speaking, the payment for a 15 year loan is only 16% higher than the same amount financed for 30 years. People think it's almost doubled (duh!) when it isn't even close.
Look at the stock market. Definitely not sustainable.
Buy the dip!
Generally speaking, the payment for a 15 year loan is only 16% higher than the same amount financed for 30 years. People think it's almost doubled (duh!) when it isn't even close.
Not to mention, when you do a 15 year you'll get a better interest rate than a 30. At least that was the case for me.
Not to mention, when you do a 15 year you'll get a better interest rate than a 30. At least that was the case for me.
But you only get 15 years of tax write offs for the interest. :-)
We purchased our condo right after the crash. We looked at town homes that were twice the price but still below the amount we were pre-approved for. We chose the cheaper option and thank god for it. My wife went back to school and didn't work for two years strait. Had we chose the more expensive townhouse, there is no way we would have been able to afford for her to go to school. Now she just graduated and as soon as she gets her lisence the earning potential is twice as much as her previous vocation.
People just seem to make dumb choices. I know people who naught way more house than they needed just to keep up appearances. Some had the house for closed on, other are just house poor and are lately scraping by. But they got a giant house tho!
Home prices are not a reflection of market value anymore and haven't really been since the early 70's. They're propped up by the three legged stool of stupidity which is comprised of real estate agents using MLS stats to set sale prices, appraisers falling in line and buyers willing to pay top dollar for homes that are not in top condition. Realtors armed with MLS access are the biggest problem and were largely over looked during the mortgage crisis. A bubble has to have someone blowing into that bitch to make it bigger. Look no farther than your neighborhood Realtor.
For a number of reasons, I'd argue a 30 year fixed is a better option. You can payoff a 30 year note in the same amount of time by making extra payments. Depending on the amount and number of extra payments, you may actually pay less in interest over the life of the loan because 100% of your extra payments are applied to principal. The 30 year option can give breathing room if you take a financial hit. You just stop making extra payments.
Look at the stock market. Definitely not sustainable.
Buy the dip!
I agree. The bubble has to burst at some point regardless of what the Fed is doing.
Outlander Systems
06-17-17, 09:03
Instead of buying low and selling high, folks are buying high and crossing their fingers...
Home prices are not a reflection of market value anymore and haven't really been since the early 70's. They're propped up by the three legged stool of stupidity which is comprised of real estate agents using MLS stats to set sale prices, appraisers falling in line and buyers willing to pay top dollar for homes that are not in top condition. Realtors armed with MLS access are the biggest problem and were largely over looked during the mortgage crisis. A bubble has to have someone blowing into that bitch to make it bigger. Look no farther than your neighborhood Realtor.
For a number of reasons, I'd argue a 30 year fixed is a better option. You can payoff a 30 year note in the same amount of time by making extra payments. Depending on the amount and number of extra payments, you may actually pay less in interest over the life of the loan because 100% of your extra payments are applied to principal. The 30 year option can give breathing room if you take a financial hit. You just stop making extra payments.
People must be careful with their terms. I've actually seen a few people pissed off that their bank loans specific minimal interest charges for early payoff.
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For a number of reasons, I'd argue a 30 year fixed is a better option. You can payoff a 30 year note in the same amount of time by making extra payments. Depending on the amount and number of extra payments, you may actually pay less in interest over the life of the loan because 100% of your extra payments are applied to principal. The 30 year option can give breathing room if you take a financial hit. You just stop making extra payments.
100% agree. I don't understand the allure of a 15. Yes, I understand the math, but you can make your 30 into a 15, or a 10, or a 25 by adding extra principal payments while enjoying a low minimum payment for unplanned expenditures.
The versatility of the 30 outweighs the minor rate reduction (which you almost entirely realize with extra payments on the 30 anyway) of the 15, in my opinion.
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Instead of buying low and selling high, folks are buying high and crossing their fingers...
When every one is greedy, be scared.
When every one is scared, be greedy.
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skywalkrNCSU
06-17-17, 09:56
100% agree. I don't understand the allure of a 15. Yes, I understand the math, but you can make your 30 into a 15, or a 10, or a 25 by adding extra principal payments while enjoying a low minimum payment for unplanned expenditures.
The versatility of the 30 outweighs the minor rate reduction (which you almost entirely realize with extra payments on the 30 anyway) of the 15, in my opinion.
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Especially in today's rate environment. You can still get a great rate on a 30 year and I don't even bother paying extra because I'd rather put that towards other investments.
People just seem to make dumb choices.
I can't remember what it was called, but back when I was in HS in the late 50s, early 60s, we had classes on personal finance and drivers ed. I don't believe either is taught any more, so we now have multiple generations of people that never learned either. And you can't learn it from your parents if they never learned it themselves.
Averageman
06-17-17, 11:19
I can't remember what it was called, but back when I was in HS in the late 50s, early 60s, we had classes on personal finance and drivers ed. I don't believe either is taught any more, so we now have multiple generations of people that never learned either. And you can't learn it from your parents if they never learned it themselves.
We also had Government and Citizenship Classes, see how this is working?
We've dumbed down a group of people with no idea about the basics of their history, how their Government works, their basic Constitutional rights, a basic grasp of finance and given them "rights" to things like a nice house and healthcare without having them break a sweat for any of it.
My daughter took a government class that was super rigorous. It was taught by a southern conservative Republican. She learned a lot! My niece, growing up in a midwestern liberal Democrat home thought it was a good idea to share wealth until my wife pointed out that her family had wealth. The old who has 2 cows lesson...
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I can't remember what it was called, but back when I was in HS in the late 50s, early 60s, we had classes on personal finance and drivers ed. I don't believe either is taught any more, so we now have multiple generations of people that never learned either. And you can't learn it from your parents if they never learned it themselves.
It's not about parents or school. Our particular community has an issue with "keeping up". Every Ruski has to one up the other. Some people make enough to do it others not so much. Don't know too many people who want a practical car or a practical house. Has to be big, new, modern otherwise it's old and shit.
It's not the parents. Most have had a good Soviet education. The kids tend to be more concerned about "looks"
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For a number of reasons, I'd argue a 30 year fixed is a better option. You can payoff a 30 year note in the same amount of time by making extra payments. Depending on the amount and number of extra payments, you may actually pay less in interest over the life of the loan because 100% of your extra payments are applied to principal. The 30 year option can give breathing room if you take a financial hit. You just stop making extra payments.
There you go. The downside is you have to maintain your discipline and make those additional principle payments even when you want a new toy. We paid our house off a decade ago. We bought it on a 30 year note just before we got married, it took 13 years to pay it off. We refinanced once when it paid to do so.
The other thing is people move too often merely to upgrade houses, rather than for relocation. We've done some stuff inside, built some outbuildings, but resisted the urge to move up.
What you said about MLS makes sense.
Look at the stock market. Definitely not sustainable.
You mean the Great American Ponzi Scheme?
You mean the Great American Ponzi Scheme?
No, that's social security..The stock market is more like a casino, but everything is rigged, and, not in your favor, either...
No, that's social security..The stock market is more like a casino, but everything is rigged, and, not in your favor, either...
I disagree. The reason the market continues to go up (and up, and up...) is because everyone's 401Ks continue to pump money into it. With no other viable option to earn any sort of return, it's all supply and demand. The value of any given company's stock has nothing whatsoever to do with the actual value of the company.
It's a disaster waiting to happen, which is why I have not one thin dime in the market. I'll never be rich, but I sleep like a baby.
skywalkrNCSU
06-17-17, 15:26
No, that's social security..The stock market is more like a casino, but everything is rigged, and, not in your favor, either...
Dollar cost averaging in low cost index funds isn't much of a gamble for long term investing. Short term type trading is foolish.
People just seem to make dumb choices. I know people who naught way more house than they needed just to keep up appearances. Some had the house for closed on, other are just house poor and are lately scraping by. But they got a giant house tho!
I struggle to get my wife to understand this very basic concept. She sees other people buying this and doing that and she gets jealous. "Well they make less than we do, so how did they afford that house and go on that vacation?" I have to explain that they are living above their means, while we are living, quite comfortably, below our means. At first she didn't buy it, and then she saw a few friends lose their homes and file for bankruptcy. During that same time frame we bought another home and a ranch property. The rent on those two properties pays for the house that we live in. I think she gets it now. Or at least she has capitulated the long term financial planning decisions to me.
But its okay. Despite her lack of long term financial understanding, she has some other fantastic assets. She makes a great sammich and I haven't done laundry or made a bed in 20 years.
I struggle to get my wife to understand this very basic concept. She sees other people buying this and doing that and she gets jealous. "Well they make less than we do, so how did they afford that house and go on that vacation?" I have to explain that they are living above their means, while we are living, quite comfortably, below our means. At first she didn't buy it, and then she saw a few friends lose their homes and file for bankruptcy. During that same time frame we bought another home and a ranch property. The rent on those two properties pays for the house that we live in. I think she gets it now. Or at least she has capitulated the long term financial planning decisions to me.
But its okay. Despite her lack of long term financial understanding, she has some other fantastic assets. She makes a great sammich and I haven't done laundry or made a bed in 20 years.
I always explain to people that just because I can finance a new ferrari doesn't mean I can afford a new ferrari. It's always funny when it fails to sink in.
Thankfully people aren't currently being offered loans for 125% of the homes current value and people who make $30k aren't qualifying to buy $300 homes, that's what really tanked things last time. Especially those who had I/O or adjustable interest mortgages, of course they were simply going to default when they ended up severely upside down. The bottom had to fall out.
Also home prices aren't skyrocketing like last time. My home is still only worth 2/3s of what it appraised for during the bubble period. Then the bottom fell out and I lost 25 years of equity when my home was valued at exactly what I had bought it for decades ago. Things have finally normalized and so long as there isn't another "flip this house" craze and people aren't given loans for ten times what they make in a year, things should be ok.
I disagree. The reason the market continues to go up (and up, and up...) is because everyone's 401Ks continue to pump money into it. With no other viable option to earn any sort of return, it's all supply and demand. The value of any given company's stock has nothing whatsoever to do with the actual value of the company.
It's a disaster waiting to happen, which is why I have not one thin dime in the market. I'll never be rich, but I sleep like a baby.
And there is the rub, I never drew a salary over $80,000 in my life, yet that old market has made me quite comfortable in retirement, essentially living off dividends. It sucks to be part of the problem, but I'm not giving the money back.
If you've read the book 'Sapiens' you understand what I mean when I say that I hope our capacity to believe in the fiction continues.
Dollar cost averaging in low cost index funds isn't much of a gamble for long term investing.
This has made a seriously good retirement for me. It is all about the compounding.
Dollar cost averaging in low cost index funds isn't much of a gamble for long term investing. Short term type trading is foolish.
As with any investment scheme in the market, DCA is still a gamble. You couldn't prove on bet it'll make any more money over time.
This has made a seriously good retirement for me. It is all about the compounding.
Really? Your the first person to ever have made a "seriously good retirement" off of DCA. You should write a book and let everyone in your strategy. You'll make another fortune.
It's not about parents or school. Our particular community has an issue with "keeping up". Every Ruski has to one up the other. Some people make enough to do it others not so much. Don't know too many people who want a practical car or a practical house. Has to be big, new, modern otherwise it's old and shit.
It's not the parents. Most have had a good Soviet education. The kids tend to be more concerned about "looks"
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This is why I never dated girls from the Mother Land. Or maybe they just didn't date me cause I had a Pontiac, not a BMW. Either way it worked out.
skywalkrNCSU
06-18-17, 08:51
As with any investment scheme in the market, DCA is still a gamble. You couldn't prove on bet it'll make any more money over time.
Really? Your the first person to ever have made a "seriously good retirement" off of DCA. You should write a book and let everyone in your strategy. You'll make another fortune.
Any more money compared to what? It sure beats trying to time the market, which you won't do over the long run.
WHEN someone chooses to invest heavily (maxing out contributions) has more of an impact on your long term return than getting lucky with a "hot stock tip" from your buddy.
Start early and max out in low cost index funds. While there is no guarantee in anything (real estate, stocks, metals), having million*S* upon retirement should be quite attainable.
I've several retirement buckets and low cost index funds are one of them - and the largest.
Its not returns that are ruining retirement savings, it's contributions.
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Really? Your the first person to ever have made a "seriously good retirement" off of DCA. You should write a book and let everyone in your strategy. You'll make another fortune.
You sound jaded. Must have not done well in the markets.
I'll give it away here for free. My DCA consisted if buying into a diversified dividend-paying big-cap mutual fund with every paycheck via a 401K over a 15 year period with all dividends reinvested.
No individual stocks. No market timeing. Every pay check in good and bad times, no matter what. And after I retired I let it continue to compound. My average compound growth rate since I retired and quit contributing 15 years ago has been around 8% and mostly due to the reinvestment and compounding of dividends.
Market timing is a fools game. And so is individual stock investing for most of us that aren't pros.
It seems like it was about time for another one of these "doom and gloom" stock market / economic crisis threads...
The assessment that a third of American households are paying more than 30% of their income in housing costs is not "A third of American's can't afford their homes" or even that those people are having any trouble making the payments. It's less than ideal, but far from the beginning of the end.
We paid off our 30-year mortgage in 7 years, so no mortgage. I do have a looming $16k septic repair coming up, so hello, HELOC.
If your paying it, you can afford it.
Paying 30% does not mean billed 30%. How much is extra?
We pay about 25% of our take home salaries on housing. We are not even close to being "burdened".
RetroRevolver77
06-18-17, 20:27
As with any investment scheme in the market, DCA is still a gamble. You couldn't prove on bet it'll make any more money over time.
Really? Your the first person to ever have made a "seriously good retirement" off of DCA. You should write a book and let everyone in your strategy. You'll make another fortune.
Everyone is dollar cost averaging each time they put money in their 401K, 403b, IRA etc.
If your paying it, you can afford it.
Paying 30% does not mean billed 30%. How much is extra?
We pay about 25% of our take home salaries on housing. We are not even close to being "burdened".
While I disagree with your premise that making the payments mean you can "afford them", if I woke up paying 30% of my take home pay, I wouldn't panic. I would plan to increase my income, or consider moving down in house as a last resort if the house prevented me from my other goals.
The problem is that most people are up to their eyeballs in debt, they are buying cars on 7 year notes, and buying houses on 30 notes and leave very little margin for life to happen. Most people have a significant life event in every decade. People who are barely treading water can sink. 30% easily turns into 40% or 50%. Hard to save, invest, and avoid debt when all your income goes out essentially before you take it home.
Averageman
06-19-17, 06:51
I've been paying off this house for ten years now, the payment is half my .mil retirement and I now have the cash in my 401K to pay it off free and clear. That is a comfortable feeling.
I know a lot of people who buy way more house than they need and when the kids move out of the house, they have little equity in it, but way more house than they can maintain or pay for in retirement.
Having a five bedroom house on four acre's at 65 isn't something I would look forward to. Being realistic and not falling in to the trap is important.
Planning is key.
I've been paying off this house for ten years now, the payment is half my .mil retirement and I now have the cash in my 401K to pay it off free and clear. That is a comfortable feeling.
I know a lot of people who buy way more house than they need and when the kids move out of the house, they have little equity in it, but way more house than they can maintain or pay for in retirement.
Having a five bedroom house on four acre's at 65 isn't something I would look forward to. Being realistic and not falling in to the trap is important.
Planning is key.
Some unsolicited advise: Consider not touching your 401K and let it continue to compound tax deferred. Instead make extra payments on your house to pay it off quicker if you can.
Averageman
06-19-17, 08:11
Some unsolicited advise: Consider not touching your 401K and let it continue to compound tax deferred. Instead make extra payments on your house to pay it off quicker if you can.
That's the intent, but it is very nice to know that in an emergency I'm able to pay it off in one fell swoop.
It's looking like I will spend another nine months to a year in my favorite sandbox soon, the intent would be to take that cash and pay off what is left of the mortgage and leave the 401K and Roth alone until I retire.
Fifty nine and a half is getting a lot closer, as in a two years and some months. That money will be "touchable" then without penalty. I'm getting a bit nervous about my risk rate, but that will edge back a bit here soon.
Having two retirements and the possibility of Social Security remaining solvent looks pretty good.
Crow Hunter
06-19-17, 12:06
That's the intent, but it is very nice to know that in an emergency I'm able to pay it off in one fell swoop.
It's looking like I will spend another nine months to a year in my favorite sandbox soon, the intent would be to take that cash and pay off what is left of the mortgage and leave the 401K and Roth alone until I retire.
Fifty nine and a half is getting a lot closer, as in a two years and some months. That money will be "touchable" then without penalty. I'm getting a bit nervous about my risk rate, but that will edge back a bit here soon.
Having two retirements and the possibility of Social Security remaining solvent looks pretty good.
Something to keep in mind with your planning, you don't have to wait until 59.5 and you can avoid the penalty, if you need/want to.
https://www.irahelp.com/slottreport/10-rules-know-about-72t
If everything works out the way I have planned, I will be using this rule when I do my early retirement in a few years.
As I understand it, yes, under certain circumstances you can avoid the 10% penalty, but your are still going to have to pay FIT on what you withdraw minus your cost basis.
Crow Hunter
06-19-17, 14:47
As I understand it, yes, under certain circumstances you can avoid the 10% penenly, but your are still going to have to pay FIT on what you withdraw minus your cost basis.
Now I haven't done it, so I can't speak from experience but from what I understand it works the same as taking Required Minimum Distributions so you have to pay taxes on the whole distribution since it was tax deferred contribution and earnings.
That rule only applies to 401k and Traditional IRA accounts.
I think the other accounts have completely different rules.
The gubbamint always gets their cut. ;)
FromMyColdDeadHand
06-19-17, 14:56
My point was the larger macroeconomic issues that our economy faces. The GFC didn't happen because people is rural areas where hit with high gas prices. Moving money here and there isn't the answer to a Depression level event.
There is a lot of money floating around now. In the past few years it was being held a protection in case of a downturn, but I think it is leaking out in the desire for higher returns. Look at things like cobalt metal pricing. While I know that the use in batteries is driving some of the rise, the metal is a classic for traders to screw with. The market is about small enough to be able to influenced with attainable resources and not get swamped by the market- but big enough to generate a god return. The market used to be fairly cyclical as traders would often come in at the end of the year and drive up prices. The last one was, like a lot of commodities, in 2007-08. It is starting to rise again- but earlier in the year than past plays. Like I said, maybe battery demand is driving it. I think that low interest money is starting to flow around and traders are trying to get better returns.
So what that means is that all this money that has been in cold storage could get warm and start to flood the market. That long suspected rise in inflation could be coming (and the rise in interest rates to tamp it down, belatedly usually) as the velocity of money increases on a very high money supply.
Now I haven't done it, so I can't speak from experience but from what I understand it works the same as taking Required Minimum Distributions so you have to pay taxes on the whole distribution since it was tax deferred contribution and earnings.
No. With RMDs you have to recalculate your cost basis each year on Form 8606, but for most folks that have long term (20-30 year) traditional IRAs, they will be paying FIT on the vast majority of the distribution. Last year for me was 98% taxable.
I've been paying off this house for ten years now, the payment is half my .mil retirement and I now have the cash in my 401K to pay it off free and clear. That is a comfortable feeling.
I know a lot of people who buy way more house than they need and when the kids move out of the house, they have little equity in it, but way more house than they can maintain or pay for in retirement.
Having a five bedroom house on four acre's at 65 isn't something I would look forward to. Being realistic and not falling in to the trap is important.
Planning is key.
Another thing to consider besides taxes depending on the number of years you have been in the mortgage you may not be paying much interest. You also need to consider that the property tax and insurance cost don't go away when you pay off your house. My wife and I are in our mid 60's and recently toyed with the idea doing a HELOC to consolidate our liabilities and give us the opportunity to enjoy life a little more before we get to old to enjoy it. We have a (9 years left to pay) 90K payoff on our home that is worth 300K and a couple of car loans at under 2% with balances under 1/2 the vehicle's current values. After doing the math we concluded that we cannot borrow our way out of debt!! We then looked at taking the money out of our 401k/IRA to pay off the house. We are both in a 25% tax bracket so that math didn't work either! I our case keeping our debt cost less than any other option.
My point was the larger macroeconomic issues that our economy faces. The GFC didn't happen because people is rural areas where hit with high gas prices. Moving money here and there isn't the answer to a Depression level event.
There is a lot of money floating around now. In the past few years it was being held a protection in case of a downturn, but I think it is leaking out in the desire for higher returns. Look at things like cobalt metal pricing. While I know that the use in batteries is driving some of the rise, the metal is a classic for traders to screw with. The market is about small enough to be able to influenced with attainable resources and not get swamped by the market- but big enough to generate a god return. The market used to be fairly cyclical as traders would often come in at the end of the year and drive up prices. The last one was, like a lot of commodities, in 2007-08. It is starting to rise again- but earlier in the year than past plays. Like I said, maybe battery demand is driving it. I think that low interest money is starting to flow around and traders are trying to get better returns.
So what that means is that all this money that has been in cold storage could get warm and start to flood the market. That long suspected rise in inflation could be coming (and the rise in interest rates to tamp it down, belatedly usually) as the velocity of money increases on a very high money supply.
All production and transportation of goods and services requires fuel. Fuel prices go up, we see all prices increase, thus less disposable income and less demand. It really is that simple. Combine that with unsound financial practices, the market couldn't be sustained.
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All production and transportation of goods and services requires fuel. Fuel prices go up, we see all prices increase, thus less disposable income and less demand. It really is that simple.
Look at oil inventories. Total stocks excluding the strategic reserve are consistently growing (up 16% year over year). Net imports are down. American output is outpacing OPEC cuts and they won't be able to convince their member states to turn off the taps simply to keep prices high. Many countries need to sell oil to keep their supply of income coming in. This is their economic reality. Prices tend to stay lower as inventories rise. It really is that simple.
Absolutely but that doesn't have much to do with with the 08 crisis. If I remember, oil production and refining production was pretty much maxed out at the time. Fortunately, times have changed.
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Absolutely but that doesn't have much to do with with the 08 crisis. If I remember, oil production and refining production was pretty much maxed out at the time. Fortunately, times have changed. Point being that we aren't in a position when rising fuel prices should be a factor.
Point being that we aren't in a position when rising fuel prices should be a factor.
Good on you for pointing out the obvious. We were talking about 07/08 specifically, when it was a major influence.
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Good on you for pointing out the obvious. We were talking about 07/08 specifically, when it was a major influence.
We also basically put zero safety measures in place to prevent 07/08 from happening again. Many people, myself included, believe the market is still due for a massive correction since we've been artificially propping it up for so long that 07/08 will look like a little hiccup by comparison once the pendulum is finally allowed to swing back. We can't artificially hold that pendulum up forever and the swing back will be massive. We need to get back to a place where free-market is allowed to make smaller and more regular corrections. What good is anti-trust if we allow entities to exist that are 'too big to fail' once it proves out that they're no longer a viable asset to our economy?
The first thing I notice when the real estate market is poised to turn is open houses. I started seeing open houses again the end of last summer. The next thing is commercials selling 'real estate investment with no money down' which I listened to over the winter. This spring I'm seeing many more for sale signs than I saw in the last few years because houses are going on the market and staying there now. The real estate market is going to correct again and if it happens to coincide with a fuel price hike, dollar collapse, food cost increase or all of the above we could be in trouble.
RetroRevolver77
06-19-17, 22:47
We also basically put zero safety measures in place to prevent 07/08 from happening again. Many people, myself included, believe the market is still due for a massive correction since we've been artificially propping it up for so long that 07/08 will look like a little hiccup by comparison once the pendulum is finally allowed to swing back. We can't artificially hold that pendulum up forever and the swing back will be massive. We need to get back to a place where free-market is allowed to make smaller and more regular corrections. What good is anti-trust if we allow entities to exist that are 'too big to fail' once it proves out that they're no longer a viable asset to our economy?
The first thing I notice when the real estate market is poised to turn is open houses. I started seeing open houses again the end of last summer. The next thing is commercials selling 'real estate investment with no money down' which I listened to over the winter. This spring I'm seeing many more for sale signs than I saw in the last few years because houses are going on the market and staying there now. The real estate market is going to correct again and if it happens to coincide with a fuel price hike, dollar collapse, food cost increase or all of the above we could be in trouble.
My grandfather grew up during the Great Depression. He believed his entire life that SHTF was right around the corner.
FromMyColdDeadHand
06-19-17, 22:50
I can gauge the sanity in the real estate market by nail gun sound and the number of 'scrapes'. 2009- it was quiet- literally- in my neighborhood versus when I moved out here in 2005. In 2011 you started to see people buying and re-habbing houses. Then you say a couple where they would tear down the house, but keep the foundation and double the size of the house. Now they are just wholesale whacking houses and putting up McMansions. 5-6500ft2 houses on 9000-10000ft2 lots with seven bed rooms 8 baths- like you can have a big family and afford the houses- but that is the size of the house needed to support the prices.
Second point is an exec at a home builder who told me that they are creeping back into the low/no downpayment with funky income verification.
We live in a nice, convenient place in Denver. What I can't understand is the people paying $900k+ for places that are basically Kansas, in bad locations. I think our house is overvalued, but I look at some prices in the market and I think we are underpriced comparatively- but then I try to figure out how anyone is entering the market now.
And that gets back to the issue- that people can't afford to buy their own house now, let alone buy their "parent's house". Someone has to buy them- and if they start to do it with the funky loans- what does that mean for the housing market when we hit even a standard recession.
I can gauge the sanity in the real estate market by nail gun sound and the number of 'scrapes'. 2009- it was quiet- literally- in my neighborhood versus when I moved out here in 2005. In 2011 you started to see people buying and re-habbing houses. Then you say a couple where they would tear down the house, but keep the foundation and double the size of the house. Now they are just wholesale whacking houses and putting up McMansions. 5-6500ft2 houses on 9000-10000ft2 lots with seven bed rooms 8 baths- like you can have a big family and afford the houses- but that is the size of the house needed to support the prices.
Second point is an exec at a home builder who told me that they are creeping back into the low/no downpayment with funky income verification.
We live in a nice, convenient place in Denver. What I can't understand is the people paying $900k+ for places that are basically Kansas, in bad locations. I think our house is overvalued, but I look at some prices in the market and I think we are underpriced comparatively- but then I try to figure out how anyone is entering the market now.
And that gets back to the issue- that people can't afford to buy their own house now, let alone buy their "parent's house". Someone has to buy them- and if they start to do it with the funky loans- what does that mean for the housing market when we hit even a standard recession.
Exactly what I was saying with funky loans & no money down investing. We live in one of the stronger markets in the nation & I'm still seeing these signs.... Not good.
Exactly what I was saying with funky loans & no money down investing. We live in one of the stronger markets in the nation & I'm still seeing these signs.... Not good.
It may be a regional thing. I live in an area that was largely unaffected by the 07/08 mess and is a pretty hot real estate area. I haven't seen anything like you are describing. Houses are flying off the shelf.
It may be a regional thing. I live in an area that was largely unaffected by the 07/08 mess and is a pretty hot real estate area. I haven't seen anything like you are describing. Houses are flying off the shelf.
While we were largely affected in 07/08 in housing (not in other areas---we didn't ever see unemployment), right now houses are selling fast. Land values are insane. It's almost hard to buy right now. My spouse and I made offers on several houses, some for cash at asking price and couldn't get a house. It took us 6 months before somebody took our offer. Houses in good neighborhoods sell in less than a week right now in our area. There are new business cropping up and constant construction in this area. Things are booming.
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FromMyColdDeadHand
06-20-17, 08:30
It may be a regional thing. I live in an area that was largely unaffected by the 07/08 mess and is a pretty hot real estate area. I haven't seen anything like you are describing. Houses are flying off the shelf.
Actually, that is the problem. I'm not saying that houses aren't selling, I'm saying they are selling and the valuations are getting out of line again. Here in CO, we have so many people moving in and due to some real-estate/builder laws, there aren't a lot of condos being built so home prices are going crazy.
Now, the question is if valuations are out of line and people start to default when the next downturn comes, does that matter nearly as much if the CDOs and other instruments that put the financial system in peril aren't there. I assume they aren't, but you know how things can go wrong when you assume and put profit motive on Wall Street together.
I still just get blank stares everytime I ask economists what is going to happen to all the US debt that the Fed holds.
What's going to happen to US debt held by the fed? Nothing. The fed isn't going to call that debt until they've exhausted their ability to control rates via interest.
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Actually, that is the problem. I'm not saying that houses aren't selling, I'm saying they are selling and the valuations are getting out of line again. Here in CO, we have so many people moving in and due to some real-estate/builder laws, there aren't a lot of condos being built so home prices are going crazy.
The point I was making was regarding the funky loans/no money down thing. Generally speaking the real estate market is pretty brisk, in spite of increased valuation, in most places. I was merely pointing out the markers he has seen, I haven't seen.
While we were largely affected in 07/08 in housing (not in other areas---we didn't ever see unemployment), right now houses are selling fast. Land values are insane. It's almost hard to buy right now. My spouse and I made offers on several houses, some for cash at asking price and couldn't get a house. It took us 6 months before somebody took our offer. Houses in good neighborhoods sell in less than a week right now in our area. There are new business cropping up and constant construction in this area. Things are booming.
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A few years ago a couple made an offer on our house. It wasn't on the market, they were driving by, saw it, and stopped. Now with an impending $16K septic repair I wish we had sold it.
May I ask, where do you live? (Or as they say on the street here, "where you stay?").
A few years ago a couple made an offer on our house. It wasn't on the market, they were driving by, saw it, and stopped. Now with an impending $16K septic repair I wish we had sold it.
May I ask, where do you live? (Or as they say on the street here, "where you stay?").
I'm in Southeastern Missouri. All the larger towns in the area are booming. We got lucky with our house and bought it under-value. We were fortunate because we didn't go through the banks. The couple was divorcing and had to move it quickly so our low-ball cash offer kept them from delaying their court date.
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A few years ago a couple made an offer on our house. It wasn't on the market, they were driving by, saw it, and stopped. Now with an impending $16K septic repair I wish we had sold it.
May I ask, where do you live? (Or as they say on the street here, "where you stay?").
...and you could have bought a new place and needed a septic there too after a few years. What really chaps my ass is that I pay the local borough (our form of counties) up here over $300 a month in rent (in form of property taxes). Even though it is technically paid for, I'll really never own my house.
...and you could have bought a new place and needed a septic there too after a few years. What really chaps my ass is that I pay the local borough (our form of counties) up here over $300 a month in rent (in form of property taxes). Even though it is technically paid for, I'll really never own my house.
You get that everywhere, unfortunately. My dad paid typically $700 a year for 327 acres and two houses. I'm a county north of there and my house is $1200 a year.
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You get that everywhere, unfortunately. My dad paid typically $700 a year for 327 acres and two houses. I'm a county north of there and my house is $1200 a year.
You guys are getting off really cheap! You should see the annual property tax bills in the larger cities.
...and you could have bought a new place and needed a septic there too after a few years. What really chaps my ass is that I pay the local borough (our form of counties) up here over $300 a month in rent (in form of property taxes). Even though it is technically paid for, I'll really never own my house.
Agreed. Our taxes are about $2,200/year, and reasonable by local standards. I loathe the concept of property taxes. We homeschool our 6 kids; I don't get any tax incentive or kick-back, yet we pay into the county schools via our property tax. If I was a single or childless homeowner, I would really be ticked about it.
If I was a single or childless homeowner, I would really be ticked about it.
I resemble that remark.
Agreed. Our taxes are about $2,200/year, and reasonable by local standards. I loathe the concept of property taxes. We homeschool our 6 kids; I don't get any tax incentive or kick-back, yet we pay into the county schools via our property tax. If I was a single or childless homeowner, I would really be ticked about it.
I have no children that I'm aware of and if we do have any, we intend to homeschool. I find the notion of paying without taking out asinine. Especially since the majority of education expenses comes from Federal grants...taken out of Federal taxes which I pay a shit-ton of. Last year we paid in $15k and then owed nearly 5k more at the end of the year. Meanwhile people tell me they didn't pay but a few hundred and their kids earned them 5-10k "back". Back!? You didn't get YOUR taxes back, you got mine ya freaking welfare bum.
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Agreed. Our taxes are about $2,200/year, and reasonable by local standards. I loathe the concept of property taxes. We homeschool our 6 kids; I don't get any tax incentive or kick-back, yet we pay into the county schools via our property tax. If I was a single or childless homeowner, I would really be ticked about it.
Try this. That bitch Wassserman tacked on "free day care" for everyone which is added to property taxes. So not only do I pay for public school that I don't use, I pay for day care as well.
You are thinking of Warren, Wasserman is the poodle.
http://michellemalkin.com/wp-content/uploads/2014/03/imgres.jpg
You are thinking of Warren, Wasserman is the poodle.
http://michellemalkin.com/wp-content/uploads/2014/03/imgres.jpg
Posting that picture has got to somehow be against site rules...
Mods...?
Meanwhile people tell me they didn't pay but a few hundred and their kids earned them 5-10k "back". Back!? You didn't get YOUR taxes back, you got mine ya freaking welfare bum.
Sooo if you get money back when you file your taxes at the end of the year, you're a "welfare bum"? Over the course of last year I paid a little over 10 grand in federal taxes and another couple grand in state taxes. I have three kids, so I am able to take advantage of the child tax credit, which resulted in me getting a little over four grand "back". I didn't get YOUR money back, I got the money I loaned to the federal government at zero interest back. I am by no means a "welfare bum" because of this.
As far as property taxes go, the local school district I live in holds what I like to call "shadow referendums" every two years to raise school taxes. I call them "shadow" because little to no press is given to these, so even though I dutifully show up to vote NO every time, it seems the majority of homeowners in this area never come out to vote. Then there also that little law where ANYONE can vote on these referendums whether they own property or not. So yeah, all the people who rent always vote YES because it has no impact on them when property taxes go up. My property taxes have gone up every two years on account of it, it's infuriating to say the least.
Sooo if you get money back when you file your taxes at the end of the year, you're a "welfare bum"? Over the course of last year I paid a little over 10 grand in federal taxes and another couple grand in state taxes. I have three kids, so I am able to take advantage of the child tax credit, which resulted in me getting a little over four grand "back". I didn't get YOUR money back, I got the money I loaned to the federal government at zero interest back. I am by no means a "welfare bum" because of this.
As far as property taxes go, the local school district I live in holds what I like to call "shadow referendums" every two years to raise school taxes. I call them "shadow" because little to no press is given to these, so even though I dutifully show up to vote NO every time, it seems the majority of homeowners in this area never come out to vote. Then there also that little law where ANYONE can vote on these referendums whether they own property or not. So yeah, all the people who rent always vote YES because it has no impact on them when property taxes go up. My property taxes have gone up every two years on account of it, it's infuriating to say the least.
You missed the detail where he said the folks getting $5-7K "back" only paid a "few hundred" into the pot in the first place...
It happens and they are welfare bums.
You paid thousands more than You got credited back and are not a welfare bum. End of story.
For a number of reasons, I'd argue a 30 year fixed is a better option. You can payoff a 30 year note in the same amount of time by making extra payments. Depending on the amount and number of extra payments, you may actually pay less in interest over the life of the loan because 100% of your extra payments are applied to principal. The 30 year option can give breathing room if you take a financial hit. You just stop making extra payments.
This, exactly.
As far as property taxes go, the local school district I live in holds what I like to call "shadow referendums" every two years to raise school taxes. I call them "shadow" because little to no press is given to these, so even though I dutifully show up to vote NO every time, it seems the majority of homeowners in this area never come out to vote. Then there also that little law where ANYONE can vote on these referendums whether they own property or not. So yeah, all the people who rent always vote YES because it has no impact on them when property taxes go up. My property taxes have gone up every two years on account of it, it's infuriating to say the least.
Same issue, same gripe. If the property owner are the ones ponying up the greenbacks for education via property taxes, then they should be the only ones who vote in referendums which affect taxes.
Furthermore, in NC we have the "education lottery." They started the lottery a few years ago to get money for education. They rake in more and more money every year, and still cry about how underfunded public education is.
Whiskey_Bravo
06-21-17, 09:27
Sooo if you get money back when you file your taxes at the end of the year, you're a "welfare bum"?
Helps to read the rest of his post(pay a little in and get a lot back). It's called earned income credit.
You missed the detail where he said the folks getting $5-7K "back" only paid a "few hundred" into the pot in the first place...
You are correct, I did overlook the "few hundred" part of his comment. That's my bad
double tap. All has been smoothed over.
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