Here's why:
Can't get the money, can't buy the house.
Can't put down 20%, can't buy the house.
Can't lie about your job (anymore), can't lie about your income (anymore), can't buy the house.
Can't find a buyer because the buyer can't find the money, prices come down.
Mortgage rules changes skewer some sales
Drake Paul, a pediatrician, entered into a contract at the end of May to sell his two-bedroom, one-bath newly renovated house in Sparks, Nev., for $170,000. The buyer had lender approval, the appraisal was done, and the inspection checked out.
Then the lender called: Mortgage requirements had tightened, and the buyer no longer qualified for the 5% down payment for which he was approved. Only 48 hours before he was to sign the papers and get the keys, the buyer learned he would need to put down 20%, jacking up the initial payment from $8,500 to $34,000.
"Who can afford that?" asks Paul, 37, whose property is now back on the market after the deal collapsed. "A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
106 comments:
1) Old banking rule: Don't Lend [too much or any, your choice of risk] Money to a Deadbeat.
Collorary: Deadbeats don't get to own or keep houses that worth 1/2 million dollars.
Exercise for the reader, requires mirror: Are you a Deadbeat?
2) Spigot OFF. New banking rule: Don't Lend Money to Deadbeat Banks [or GSE's] that Lend to Deadbeats.
Derived: Credit Crisis is the turning off of the spigot. Look for Consolidation of Banking aka brandname recognition recycling before spigot is turned back on.
Out of the blue: traditional banks need deposits to back their lending. The building of the nation's 20% downpayment nesteggs would do a lot to fix that. So would higher interest rates. Inflation, though, is greater than the Fed rate. So the final stabilization of the system is not
yet in sight.
What we need is a Fed that is not fronted by a Volker (too tight) or a Greenspan (too loose). Bernanke might not be Goldilocks we need. In fact, he may just look like Sherman (of the March to Sea fame) for a reason. Think burning countrysides. Or Countrywides.
Again here is the fastest way to sell homes
take off the zero at the end of the price
so if the doctor asked 17k for the home with 3400 down
DONE DEAL !!!!!!!!!!!!!!
These idiots need to get off their high pedestal and come down to earth
or stop filling up space with these pie in the sky prices !!!!!!!!!!!!!!!
and in sparks nevada which is in timbuck two
a condo is worth only 20k tops !!!!!!!!
welcome to reality in 2008
Another reason you cannot sell a home in the S/E USA and prices are falling...
"If you cannot sell that over-taxed, over-priced dump in New Jersey...You cannot buy the $400K cookie cutter KB Home down south"
What these idiots don't get is 20% was always the norm until the last few years.
When I was growing up, my parents moved 4 times. Each time they had to put down at least 20%.
Ergo they are not somebody that can afford a 170k house, how about you lower the price to find someone that can afford the house?
"A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
or
A person that does not have $34,000 in cash cannot afford a $170,000 house. It just works that way.
WTF, a pediatrician can't come up with $34K for a down payment on a house? Something's not right with this story.
Now this is what we've been waiting for: a return to the 20% down payment standard. The demand curve is shifting as we speak.
As we all know here at HP, equilibrium price lies at the intersection of the supply curve and the demand curve - when the demand curve shifts down then the equilibrium price falls.
Oh, and guess what? Thanks to foreclosures, the supply curve is actually shifting to the left with more and more supply coming on the market despite lower prices. And the prices keep getting lower.
It will take a year or so at least for these factors to take effect but it will be sweet when they do. Don't catch a falling knife yet.
Bwahahahahaha
anon 12: 25:
You're right! Something is wrong with this story. What is wrong with this story is, you don't know how to read.
ATE-UP
As a banking insider let me tell you somethings that are going on---
One large Midwest bank has systematicly been packaging up all of it's balloon loans that are within a month or two of ballooning and selling them to Chase at what looks like a deeply discounted price. They know that when the loans balloon and those rates go from around 4% to 6.75% the homeowners will, #1 immediately refi with a different bank, or #2 more likely in this enviroment default on the loan.
It's become "Dog eat dog" among the banks. "Screw thy neighbor".
"A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
That quote really says it all, doesn't it? This guy is 37 years old, and he does not remember a world where 20% down was normal (probably because his nose was stuck in a medical text book between the ages of 20 and 30).
Guess what, champ . . . it does work that way . . . and your house is overpriced.
DOPES!
The problem with the 20% down payment now is the correlation (is this the right word to use?) between income and housing prices now are different than they were "back in the day". I remember my parents bought a house in 1978 for $15,000. Needed about $10K in work so lets say $25K. They made $35K yearly combined. So they could get a house for 72% of their yearly income. My wife and I make $100K and if we wanted to buy a house for 72K, we would be living in the ghetto of Tampa, FL.
I RECOMMENDA THAT HE KEEPA THA HOUSEY FOR 6 MORE MONTHS AND IT WILL BE WORTHY $225K INSTEAD OF $170K.
MY MAGIK 8-BALL IS NEVA WRONG.
THAT'S WHY IM'A THE ECONOMIST THAT ALL DUMB REPORTERS QUOTE ENDLESSLY AND YOU ARE THE RENTERS!
You HP'ers are a bunch of dopes, stupid asses and all around idiots. You keep hoping for a cataclysmic crash and it won't happen.
The real estate market is experiencing temporary trouble. But in the long term, real estate always goes up.
In a year or two, the days of putting 3% to 5% will be back. Then prices will start heading up.
Call me kooky, but I was raised by parents that told me, If I don't have 20% to put down on a house to buy, then you don't get it.
This is how the world worked for a majority of time in the 20th century.
But then deregulation came in and mad the "american dream" attainable via imaginary income. Weeeeee!!! and here we are.
we live in a land of self entitled, ego motivated, my poop doesn't stink, teeth missing elitiests.
To purchase a house in the bay area, escrow/closing costs are between $8,000-20,000 DOLLARS!
The place is loosing money before even moving in.
On top of that - prices will keep falling for years and years to come.
This real estate market has been the longest "bull" market in world RE history...there will be at least 7 years of home prices before we hit the trough.
Who wants this kind of financial frustration?
So true ... prices will keep falling for sometime to come, it's just been allowed to drag out now even longer.
With Ca.'s budget crisis, it will be interesting to see how things play out amoung city, county and state jobs - people here (who once thought they were immune) are also going to be feeling the pinch.
average joe said...
Again here is the fastest way to sell homes
take off the zero at the end of the price
so if the doctor asked 17k for the home with 3400 down
DONE DEAL !!!!!!!!!!!!!!
These idiots need to get off their high pedestal and come down to earth
or stop filling up space with these pie in the sky prices !!!!!!!!!!!!!!!
and in sparks nevada which is in timbuck two
a condo is worth only 20k tops !!!!!!!!
welcome to reality in 2008
Unrealistic sellers hoping for 2005 (or even 2007) prices take notice!
The same thing happened to me when I sold a property recently. The bank changed the "approved" loan requirments 3 times, each change included more $$ down.
GT Charlie
Many higher professionals are also deep in depth, so this is no surprise to me - in fact, many went with "Alt-A" and "Teaser" loans - the next and bigger wave of mortgage defaults getting ready to reset.
Anonymous said...
WTF, a pediatrician can't come up with $34K for a down payment on a house? Something's not right with this story.
Panicearly said:"A person that does not have $34,000 in cash cannot afford a $170,000 house. It just works that way."
Considering the negative savings rate, we have to flirt with 1980's home prices to afford a 20%+ downpayment.
A lot of folks will outright refuse this reality, but there no other option.
Check out thsi video of Greg Swann!!
http://tinyurl.com/5j2tsj
In order for me to buy a house that's 72% of my income in my neck of the woods, I need to make $1,111,110. Unfortunately I make less then 1/10 that.
This is what I've been saying over and over again.
The bubble is done because there's no more helium (bullshit loans) to keep it inflated.
"A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
wow, talk about bizarro world.
NICK SAID...
The real estate market is experiencing temporary trouble. But in the long term, real estate always goes up.
Put your money where tour mouth is and start buying, after all now is a good time to buy right..Ignorance truly is bliss
Anonymous said...
In order for me to buy a house that's 72% of my income in my neck of the woods, I need to make $1,111,110. Unfortunately I make less then 1/10 that.
August 07, 2008 3:21 PM
====================
So move somewhere else. I'm so sick of hearing from people who live in high cost areas about the high cost. You sound like people who move next to the airport and then complain about the plane noise.
You want cheap housing, move to Cleveland or St Louis or Tulsa or Syracuse. You can buy a home for under $100K there and in many other cities. $250K gets you a 4000 sq ft McMansion in the best area of town.
Instead you all want to live in NY City or Boston or Los Angeles and yet still pay Tulsa prices. Doesn't work like that folks and it's about time you come to this simple realization.
"Who can afford that?" asks Paul, 37, whose property is now back on the market after the deal collapsed. "A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
That quote has appeared several times in this thread but I had to post it again, it's just such a perfect example of the mindset that got us into this mess. For the entire century before the year 2000 you needed %20 down to buy a house. For the last few years banks tried something different. It didn't work. Now they're back to the old ways of lending money. A lot of people out there need to learn some hard lessons about homeownership.
Perhaps the seller can lend the $34000 to the buyer for the down payment?
Check out thsi video of Greg Swann!!
http://tinyurl.com/5j2tsj
HA! WHAT A PORKER!
Anyone care to explain this? Housing prices are still high and always will be - you are all wrong.
WASHINGTON - A measurement of pending home sales rose in June in a rare piece of positive news for the beleaguered market.
The National Association of Realtors' seasonally adjusted index of pending sales for existing homes rose 5.3 percent
Swann's been eating his stress
I'm one of the sorriest son of a bitches around and even I can come up with 20% down on a 170k house.
If you can't, rent a 1BR shithole in shittown like I do...
"A person that can afford a $170,000 house does not have $34,000 in cash.
Well, in that case he must wait until he has saved $34,000. "Wait" and "save" are two concepts that seem to have been forgotten about in America.
"A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
I like that quote, too, because it shows what went wrong and has to be fixed: those without real downpayment can NOT afford the house. The abolishment of real downpayments was the single most important reasons for housing bubble and bust, and the danger grew stronger as the downpayments got smaller: Even the tiny 3% down for FHA loans was too much for many, and they got FHA mortgages with seller assisted downpayments, which now default at three times the rate as 3%-down-mortgages.
"Anyone care to explain this? Housing prices are still high and always will be - you are all wrong.
WASHINGTON - A measurement of pending home sales rose in June in a rare piece of positive news for the beleaguered market."
Home sales always rise in the summer. Watch sales fall off again in september.
Getting loans is not that difficult. You need good credit and a good down payment of 10%. It is just back to the way it was before they were giving money away!!!
Typical mortgage/real estate doomsday nonsense...If this guy applied for a FHA loan (no 'declining market' restrictions) he could get away with 3% down...If the seller was willing to contribute 5-6% of sales price to a down payment assistance program (nehemiah, ameridream, etc) buyer could get into this house with litterally $0 out of pocket - 3% for downpayment and 2-3% for closing costs.
Of course, the article doesn't go into unknowns like perhaps the house didn't appraise for $170k but that's a different story.
Wait a minute, I'm confused.
You say;
Can't get the money, can't buy the house.
I'm gonna have to think about that for a while. That's a tricky concept.
I think the main reason prices will continue to fall is that the underlying economy is worsening.
I am seeing lots of stress when I visit businesses. Sales are obviously down.
I see the few people out there with any cash left, buying foreclosures at prices that are still too high.
The housing bail out bill? Useless.
Cost of living way up.
Incomes & employment. DOWN!
Check out thsi video of Greg Swann!!
http://tinyurl.com/5j2tsj
HA! WHAT A PORKER!
Greg's a "chlub" all right!. Greg your trying to motivate people to do whatever they put there ind to doing and you sport a disgusting body like that? The dude standing next to you could probably bench press you! Greg you are a slave,a slave to fat fast food diet. Looks like you have lunch with Karl Rove. Spend some of your 6% commisions on nutrisystem or something...yuck "Americano Snapper Turtle!"
I can't decide whether to post that swanndive video
It's too good to be true. But the guy's already having a tough time without us piling on...
hmmm...
"Check out thsi video of Greg Swann!!"
OH MY GOD, THAT'S GREG SWANN???
THAT FAT, OUT OF SHAPE WINDBAG, FUKTARD ISN'T EATING RAMEN!!!
HE'S EATING OUT OF DATE POTATO CHIPS...
BY THE TRUCKLOAD!!!
DOPES!!!
I don't know about Reno, but in Atlanta you can get a mortgage with 3% down using a city program. Only stipulation is the house must be inside the city limit and you can't already own a house. I'd guess all cities/counties have those types of programs available.
You want cheap housing, move to Cleveland or St Louis or Tulsa or Syracuse. You can buy a home for under $100K there and in many other cities. $250K gets you a 4000 sq ft McMansion in the best area of town
That is if you can find a job in a place where houses go for $100K. There's a reason why Cleveland and Syracuse have hemmoraged people for the past 30-40 years: there's no good work there any more.
When I worked an assignment in rural Virgina, you could by an OK house for $100K and a nice one for $200K. The only problem there was there were virtually no jobs paying over $25K a year. In 2005, teachers and police officers there were below $20K/year, and the most I saw advertised for hourly work was $8/hr.
Luckily I was on a Boston-area salary at the time, but in relative terms I'd say housing there was at least as unaffordable as it was at home.
If you're moving primarily for housing costs, make sure that you have a job lined up and several alternatives identified in case your company leaves your target area or your work just evaporates.
Just because houses are cheaper elsewhere doesn't mean it's any more affordable.
I'd like to address two points here, first:
"Anyone care to explain this? Housing prices are still high and always will be - you are all wrong."
Property values appear to be increasing because what is reported is the average sales price. This is indicative of higher priced homes continuing to sell, whereas lower priced homes are not. Consequently the mix of homes selling consists of higher priced homes and this brings up the average. In other words people with money have not been impacted by the economy yet and still have the funds to conduct their business. On the other hand, not as many lower priced homes are selling because people at an average income are feeling the pinch. Plan for a local market correction when you see this type of value increase in an economy such as ours.
and...
"A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
I just had to say, that a person with $34,000 in cash is not going to buy a $170,000 house in Sparks.
"The problem with the 20% down payment now is the correlation (is this the right word to use?) between income and housing prices now are different than they were "back in the day". I remember my parents bought a house in 1978 for $15,000. Needed about $10K in work so lets say $25K. They made $35K yearly combined. So they could get a house for 72% of their yearly income. My wife and I make $100K and if we wanted to buy a house for 72K, we would be living in the ghetto of Tampa, FL."
August 07, 2008 2:25 PM
-----------------------------------
Bingo..... This is what most HPers' don't understand.
Housing will NEVER get back to an acceptable income to price ratio.
The swindling shysters at the fed reserve WILL keep printing money to monetize debt and pump up the stock market.
This WILL keep housing prices the same in most areas as everything else goes up (accept your income ofcourse) in dollar terms. This is because more dollars are chasing the same goods and services. It's not the prices that are going up, it is the value of the dollar going down, thus requiring more of them to buy the same thing.
You people waiting for housing to get to some historic price to income ratio are STOO-PID!!!! The fed gov and fed reserve WILL NEVER ALLOW THAT TO HAPPEN!!!!
LOL.... Man, the sheer ignorance of you brain dead freakin goyim never ceases to amaze me.
Honica Jewinski
I was chatting with a realtor who is destitute because of the few sales he's made this year, they've all fallen through due to no loans.
One of the potential buyers had an 800 credit score and could not get a loan.
Hmm.....
a condo is worth only 20k tops !!!!!!!!
A condo is a scam where they take an apartment and sell it to insecure ego-driven people under the guise of "ownership."
Sorry but if you're in a condo you don't own any land around you so what's the point?
The problem with the 20% down payment now is the correlation (is this the right word to use?) between income and housing prices now are different than they were "back in the day". I remember my parents bought a house in 1978 for $15,000. Needed about $10K in work so lets say $25K. They made $35K yearly combined. So they could get a house for 72% of their yearly income. My wife and I make $100K and if we wanted to buy a house for 72K, we would be living in the ghetto of Tampa, FL.
You, sir, have just explained the very economic principle of why we're nowhere near bottom and prices will drop lower than anyone can now believe.
When the average American can afford 20% down and owning is again cheaper than renting, we'll have hit bottom.
Until then, enjoy the ride down.
"Anyone care to explain this? Housing prices are still high and always will be - you are all wrong.
WASHINGTON - A measurement of pending home sales rose in June in a rare piece of positive news for the beleaguered market.
The National Association of Realtors' seasonally adjusted index of pending sales for existing homes rose 5.3 percent"
Oooo, ooo ALLOW ME!
A PENDING sale only means that some dum dum has said 'we want the house', signed the contracts and ponied up their meager deposit of $500 (depends on your area, of course). Anyone can walk in and do that...and if you put in a mortgage contingency you can simply walk away if you can't get a loan. After tying up the home for 3 months!
The numbers that COUNT are the CLOSED sales, when the loan is actually given and keys exchanged...as does the CLOSED price, vs. the LIST PRICE which is what shows when a home pends.
Get it now?
Cry me a River...
If you cannot come up with 20%, you shouldn't be allowed to buy,
We need to return to this standard.
"...Check out thsi video of Greg Swann!!
http://tinyurl.com/5j2tsj"
BaT. SHit. cRAzY megalo-bipo-maniac.
CHRIST; he's starting to breathe heavy just standing there ranting.
It's a "bottom-up" business, all right.
Home prices typically fall as a result of a recession. This time home prices are getting crushed before a recession even hit full swing.
What do you think will happen to home prices when unemployment rises above 7% next year...
Prices will go back to 2002 and earlier all over this country.
Our on going national disgrace, disgraces (?) Disgraci, what ever, has us turning on each other. After nearly thirty years of hate mongering by politicians perhaps it's to be accepted that we can no longer identify with our fellow man. What bothers me is that other wise good people, good real estate people, good mortgage people are mislabeling other good people for political convenience!
It bothers me that so many have lumped the "have nots" with the "undeserving!" I can't define "undeserving" although I often think I know them when I see them. What I can define are the "have nots." For our purpose "have nots" are those people that don't make as much as we do, which of course means that except for Bill Gates, et. al. we are all "have nots!"
When mortgage and real estate people start talking about people with out large down payments being undeserving a home of their own, I have to wonder, did they pay cash for their home? Where do they draw the line? If people with little or no down payment are undeserving, what about those that put 20% down? What about those who put up a big down payment, but who's home has depreciated to the point they have no remaining equity? What is the difference between no original equity and no current equity?
What does a big down payment do? Does it protect the home owner? Truthfully, big down payments protect no one except the bank! Little or no down payment may even protect the home buyer, by marinating his liquidity and putting the bank mutually at risk with the home buyer.
How dare these bigots lump the "have nots" with the "undeserving!" These bigots are most often blaming low down payments for the mortgage crisis, but other than being PC to do so what proof do they offer? How do they explain the over whelming masses that used these loans to successfully join the "haves?!"
We are thinking of buying early next year and every time we speak to a lender the rates are up and the amount we qualify for is less. You use to be able to get %50 income ratio with IO ARM now no IOs less ARMs and ratios of no more than %40.5 income. So since last year our purchasing power dwindled by about 100k or so. Not that I am complaining I sure don't want to be an FB, but what does this mean for sales and prices?
That is if you can find a job in a place where houses go for $100K. There's a reason why Cleveland and Syracuse have hemmoraged people for the past 30-40 years: there's no good work there any more.
That is changing as everything becomes virtual and internet-based. Two friends of mine are millionaires (one is a bestselling author, the other an internet marketer) and both live in Boise, Idaho for the quality of life and raising a family there. It doesn't matter that there's no "good work" because the need for that is going away.
People can live anywhere now and have a good job remotely or run an internet-based business. That's a big reason why homeownership is dropping in popularity.
A PENDING sale only means that some dum dum has said 'we want the house', signed the contracts and ponied up their meager deposit of $500 (depends on your area, of course). Anyone can walk in and do that...and if you put in a mortgage contingency you can simply walk away if you can't get a loan. After tying up the home for 3 months!
You just hit the nail on the head. I know two realtors. They have each had about 10 pending sales this year but only one actual sale between the two of them (and the seller lost $500k on that one).
Check out thsi video of Greg Swann!!
http://tinyurl.com/5j2tsj
HA! WHAT A PORKER!
KEITH GIVE THIS ITS OWN THREAD!
Looks like Greg boy has had too many cabernets and gourmet dinners. He stomach and personality are indicative of a heart attack waiting to happen. Been there, it will come.
> If the seller was willing to contribute 5-6% of sales price to a down payment assistance program (nehemiah, ameridream, etc) buyer could get into this house with litterally $0 out of pocket - 3% for downpayment and 2-3% for closing costs.
Those seller assisted downpayments have been forbidden for FHA loans now: the House (Barney Frank) said it wanted to keep them, but a clause in the senate version of the recent housing bill forbid them and that clause was adopted in the compromise. That didn't prevent some congress members, like Maxine Waters, to immediately propose a bill to allow them again, but so far it is only a bill, and I hope it stays that way.
Frank@Scottsdale-Sucks.com said...
The problem with the 20% down payment now is the correlation (is this the right word to use?) between income and housing prices now are different than they were "back in the day". I remember my parents bought a house in 1978 for $15,000. Needed about $10K in work so lets say $25K. They made $35K yearly combined. So they could get a house for 72% of their yearly income. My wife and I make $100K and if we wanted to buy a house for 72K, we would be living in the ghetto of Tampa, FL.
.....
"You, sir, have just explained the very economic principle of why we're nowhere near bottom and prices will drop lower than anyone can now believe."
.....
You sir are either.....
A. Stoned out of your mind
or
B. Understand nothing of modern economics.
This aint yer daddys Amarrca.
Honica Jewinski
"Check out this video of Greg Swann!!
http://tinyurl.com/5j2tsj
HA! WHAT A PORKER! KEITH GIVE THIS ITS OWN THREAD!
Seconded. They were at the HERD museum!
So many comedy angles I thought I was in geometry.
Cabernets and gourmet dinners no way try ramen washed down with PBR! Hyperventilating type-A athiest unemployed nutjob! I pity the fool! NOT!
I've got a family member who's having absolutely hell trying to sell a home in Pearland, TX.
(keep in mind the Houston area is considered the most booming-est part of America, given the oil/gas infrastructure there)
It's appraised at 200k, give or take. He's motivated(though not motivated enough if you ask me) and is asking 185k, give or take.
He's had three SERIOUS buyers in the past month or so, the first two got blown out of the water quickly for not having their finances ready whatsoever(clowns thinking they could walk into a home with no money, no income, no assets).
The third contract fell through b/c the prospective buyers couldn't scrounge together $5,000 dollars!
How pathetic is it that someone who thinks they can afford a home doesn't have $5,000? How do they think they deserve a house with no CASH? I mean, if they're that broke, they couldn't even cover the deductible on a fender-bender, or go on a simple vacation)
PATHETIC! The people in the market right now are completely broke, but full or arrogance and delusion.
My words of advice: Keep yer Powder DRY! Those with cash and no debts will have endless opportunities once these debt-laden asshats stop murking up the mortgage waters.
maybe the doc did not get all the insurance company charges money but yet not just cost a chicken for his services like someplaces and given the commodoty price rise coming here?
in places where borrowing is not part of the get housing equation....the housings have one of the zeros on the end omitted........did i get suckered and gonna take em all with me???///// down........
buddy there are places a lot less priced than the ones you named and damned if i will tell you where as i dont need the crowds to hone in on my need..............
You might want to roll a big one before reading this!
http://tinyurl.com/5qxcp2
That is if you can find a job in a place where houses go for $100K. There's a reason why Cleveland and Syracuse have hemmoraged people for the past 30-40 years: there's no good work there any more.
======
Not really. Plenty of jobs in those cities for well educated people. The malaise is from the loss of manufacturing jobs. Union members who are used to making $45 an hour to screw in a bolt are the ones who can't find a job. And that is a good thing as those people should never have been making that much to begin with. Not when the value they are contributing is a fraction of their hourly wage.
And besides in an information economy, jobs are not in any one place anymore. They are virtual. I run my own consulting company. I have clients all over the country. I have never met some of my clients face to face, everything is done over the phone and online. I also subcontract work out to folks all over the country as well. Again I have not met most of them face to face. And the ones I do know personally, I see maybe once or twice a year.
This whole notion of move where the jobs are is about 30 years out of date. Living in a high cost area simply because of a job is about the stupidest financial decision one can make. Do some quick math and you'll see soon enough. The difference in cost of living in low cost areas more than makes up for the difference in salaries you can earn in high cost areas.
half of new york city housing stock was government subsidized when built thus proving financial predators always earn again what they spent if thery write the rules?
Anonymous, August 07, 2008 7:21 PM:
> If people with little or no down payment are undeserving (to buy a house), what about those that put 20% down? What about those who put up a big down payment, but who's home has depreciated to the point they have no remaining equity? What is the difference between no original equity and no current equity?
This are interesting questions to discuss, and I wanted to answer, but the anonymous author then writes:
> These bigots are most often blaming low down payments for the mortgage crisis, but other than being PC to do so what proof do they offer?
I despise that name calling and won't spend any further time on that author.
TexasTexasYeeHaw,
That's odd. My wife's cousin sold her house in Houston in June. It was on the market for 5 days and she had 2 offers on the house. The deal did go through.
again im thinking of new york properties that would not sll for a quarter of their tax assessed values for ten plus years and get sold at a third of therir tax assessed values to avoid the yearly tax equal to 18 percent of the final sales price yearly.....and newer costs of local infrastructures and political "wants" and with an attitude fostered by such to say "drop dead aholes!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!
The problem with telecommuting from low cost locales is that few companies will actually let people do it - they enjoy the control aspect.
if some of those rust belt cities house prices went any lower ...inner city farmer might be profitable..............
if he had any concept of grannies era ... 100,000 is top end not bottom end and had only with cash........................and top end is top end not shit as it is seen today.............
where substenance can be felt and seen and touched........
substantial./
Part of the problem is that for too long regulations were tailored to the musings of people who have no business who assume to know how to make a fricking loan.
The dude is a doctor... ok, he's an educated dude and he's got 37 years of life experience under his belt. I'm sure he's not a complete dolt. But, just as I would not presume to try to tell him how his business should be done, he should s.t.f.u. when it comes to making presumptions about how the lending business should operate.
Smug Bastard
"The real estate market is experiencing temporary trouble. But in the long term, real estate always goes up.
In a year or two, the days of putting 3% to 5% will be back. Then prices will start heading up."
You should get back to your meeting Timmy. I think I hear your Scout Master calling for you. It is time to work on your Economics Badge.
Smug Bastard
Low down payment requirment contributes to the problem in two ways:
(1) On the way down, people with negative equity simply "puts" the house to the lender;
(2) On the way up, the financially unsophisticated bid up the prices to unsustainable levels; those who understand the game in (1) mentioned above and have no moral scruples would also be tempted to make a bet using what eventually would be the taxpayers' money.
Don't pile on Swanny. He's not looking too good. He may not have much time left. I had no idea he was in that bad a shape. Egad.
Re: 'Haves', 'have nots', 20% down or no down.
The benefit of higher transaction costs (like 20% down payments vs. 3% down payments) is that it has a dampening affect on the market for the asset. Higher transaction costs lowers the volatility of the subject market.
Commodity markets are famously volatile... because traders have some much leverage. You can control a $1,000,000 contract of whatever commodity using only $10,000. Only problem is: the moment the market moves against you, you must bail out... or be wiped out.
The same behavior has been seen for at least 500 years, across most any market you'd care to look at. Do some research on "Tulip Time", "South Sea Bubble" or "Japan's Lost Decade".
Same story (too easy credit / too much leverage / too low transaction costs) = same ending (boom/bust).
Anon 9:07 pm said"
"maybe the doc did not get all the insurance company charges money but yet not just cost a chicken for his services like someplaces and given the commodoty price rise coming here"
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What language is this?
I'm a patriotic idiot. I just contracted with my neighbor to buy their 8+ acres of land for over $200K. I have been waiting for big price drops, but that may not happen in my location for another year. I am thinking I may lose up to $100K value in the next few years. If I don't buy now, it may become a junk yard. It's extortion I say! Since I have the cash, I don't see that I have a choice.
So, I guess I am doing my patriotic duty to help prop up prices. Sorry, but I would rather not.
The problem with telecommuting from low cost locales is that few companies will actually let people do it - they enjoy the control aspect.
I've been doing it for 6 years. I know plenty of others who do as well. It's a lot more widespread than you think.
Without FHA LOANS, there would be absolutely no market right now!
People wake up and smell the dead roses!
We are in the early stages of a severe downward housing spiral.
Do the banks think they can honestly get away with 20% down.
Pretty soon houses will be hard to give away much less require $30,000downpayments.
Once severe unemployment numbers start escalating, homebuying is going to be the least on everybodys mind.
SURVIVAL MODE WILL KICK IN AND CASH WILL BE KING!!!!!
THE SIGNS ARE ALREADY AROUND, THATS THE ONLY REASON WHY THE BANKS WILL WANT YOUR CASH!!!!!
ICEMAN
who's going to buy these houses now?
the middle class is being wiped out as we speak.
this really bad.
Would you rather have a union employee making $45 an hour doing actual productive work contributing to are economic growth or give it to CEO's or Wallstreet thieves?
I say give it to J6P for many, many reasons.
#1 he will spend it
""Who can afford that?" asks Paul, 37, whose property is now back on the market after the deal collapsed. "A person that can afford a $170,000 house does not have $34,000 in cash. It just doesn't work that way."
I can. And I am not a doctor.
Can't get the money, can't buy the house.
Can't put down 20%, can't buy the house.
Can't lie about your job (anymore), can't lie about your income (anymore), can't buy the house.
Can't find a buyer because the buyer can't find the money, prices come down.
Its called demand destruction.
"What language is this?
{lol}
You weren't the only one who thought that, brother.
Paul said...
Would you rather have a union employee making $45 an hour doing actual productive work contributing to are economic growth or give it to CEO's or Wallstreet thieves?
I say give it to J6P for many, many reasons.
#1 he will spend it
August 08, 2008 4:38 AM
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That is such a flawed argument. The optimal wage is where marginal cost equals marginal revenue. When the wage is $45 and the revenue gained is $4.50, that wage is too high.
As for the CEO spending or not spending, again flawed. If I earn $1 I can do one of things with it. Buy something, or invest in something. So the CEO gets $1M. Say he spends $250,000. He has $750,000 left over. He takes that $750,000 and puts it in a bank. That bank then takes 98% of that $750,000 and lends it out to someone who starts a business and employs 10 people.
My advice to you is get some rudimentary understanding of economics and you'll quickly see how idiotic your class warfare arguments become.
The banks need to get the guidelines in place. Do you put down 5%, 10% or 20%. Come on 48 hours before closing....
I have a friend that 1 hour before closing the bank came back said they could'nt do the the loan.
Flip Flop banks GET IT TOGETHER!!!!!
Average Joe is completely correct.
Well done....AJ...I used to be in real estate (one failed year 77-8).
So I do know what rules used to be.
I also watch prices. They are outrageous. A house I lived in, in a neighborhood which did not change it's demographics went up 400 percent in 17 years. Usual doubling rate is double once, 200% every 15 years.
Wages went up maybe 150%.
grandma pkk
works for me. I have up to 80k to put into a down payment. I hope they keep dropping.
LOL - I doubt 72% of income is anything like an historic average! Try 300-400% unless you're in sticksville and/or interest rates are sky-high.
Back-of-the-envelope time: Assuming a 20% down payment, a 6% interest rate, and a DTI of, say, 25% of gross income, a person might be able to afford up to 5x his/her income. As an example, $100k income, $25k towards the payments, at 6% that's around $400k of debt, at 80% LTV that's $500k of house.
That DTI and LTV are very reasonable historic metrics. Now you can see why houses in major metro areas where a two-earner family might be pulling in $150k are priced north of $600k. The limiting factor is more likely to be lack of a down payment than income.
This is starting to sound a bit like Alice Cooper's "Lost In America." I even recall a Beavis and Butthead episode where they said that Alice Cooper "makes sense."
Lost in America
Anon said:" You understand nothing of modern economics."
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Modern economics? Leverage is over. No more CDO's, Conduits, MBS, calling debt-capital, rating trash bond AAA, and anything else except CASH.
What will 'modern economics' be without deriveratives and leverage?
Thats all modern economics really is.
Sorry, but we're going back to basic economics!
Anon said:"So, I guess I am doing my patriotic duty to help prop up prices. Sorry, but I would rather not."
Let some other knife catcher buy this place. Buy it two years from now from the forclosured owner at half price.
"A person that can afford a $170,000 house doesn't have $34,000 cash. It doesn't work that way."
But it used to, and it will again.
Soon.
"Nick wrote @ August 07, 2008 2:49 PM
In a year or two, the days of putting 3% to 5% will be back. Then prices will start heading up."
Pure spin, lies, Realtor/broker dissemblement and fiction. That loose credit is going away for a long time. 20% is the new standard. Deal with it.
There is nothing to suggest, other than stupid, blind, self-serving optimism, that we are anywhere near the bottom or that 3% down with 54% DTI are going to come back.
Pure nonsense, Nick. Your comment is a totally self-serving lie. People just don't buy your brand of b.s. anymore.
-Lee.
About 40 years ago my wife and I decided to buy our first house. We had 1/3 of the money in cash. We both had jobs. The price of the house was about 3 year's income for me (not counting my wife's pay) and before our down payment. I remember the banker spending 2 hours questioning us about whether or not we could afford the payments.
How things changed during the past few years!
I personally think that anyone who has less than 10% for a house down payment is not a serious buyer.
I have a question for the board. FHA loans are still available for 3% down, right? I'm looking at a home and am trying to get the price down, saying nobody can afford to put the 20% down that the banks are requiring. She said it was an FHA approved house and a first time buyer would only need 3%. Why don't we hear more about these kinds of loans? And is she just bull shitting me?
Congratulations,
House has been appraised for
$350,000 sigh here
now lets go to lunch and
the golf course.
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