5 ms·

Not sure what this has got to do with empathy. If rich people don't get favorable mortgage, it is at max an annoyance to them. They are not going to be homeless

Not sure what this has got to do with empathy. If rich people don't get favorable mortgage, it is at max an annoyance to them. They are not going to be homeless or going to ask for food stamps. If a normal family with one home and one mortgage is not able to refinance or not able to pay their mortgage for a few months, their bank will go after them and they will end up on the street. Sure we can talk about it and feel sorry for their inconvenience, but our time is better spent looking into much bigger problems of much bigger percentage of our population.

jfim 6y ago
Keep in mind that in high cost of living areas, such as the Bay area, all housing is essentially jumbo mortgages. If jumbo loans are not available or hard to obtain, this means that people who do lose their jobs face an illiquid market and don't have the option to sell their house to avoid default, and thus end up on the street.
- _curious_ 6y ago
  I wonder what % of those with jumbo loans are completely out of a job? And further in such circumstances that they cannot afford to pay even a reduced or deferred mortgage payment? Or move into a lower cost apartment in another market? Going straight to the street tomorrow sounds like a stretch with options along the way especially for someone who was in a jumbo in the first place. Loans take a long time to default/evict and lenders are probably not in a rush to put the liability on their books right now either.
  - jfim 6y ago
    Good points. I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place. I don't know what percentage of the market that is though.
    - _curious_ 6y ago
      "I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place." I'm not from/in the bay and not paying attention to it, so will go with your assumptions here. Zooming out a bit on the general topic of high COL markets though, it's interesting talking with people around my high COL community who feel like they deserve to live and stay here regardless of the changing economy. Thinking out loud: Maybe high COL markets are untenable in this economy for a certain percentage of the population? ...if there were no welfare schemes going around wouldn't these high COL areas rebalance faster to some equilibrium in line with broader affordability? Are the handouts just further propagating an attitude of entitlement while also artificially inflating high COL markets otherwise overdue for a reset?
      - jfim 6y ago
        Well, high cost of living markets are basically propped up by the surrounding economy. It's true that the high cost of living areas would rebalance, but that can leave the current homeowners underwater. As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout?
        _curious_ 6y ago
        "high cost of living markets are basically propped up by the surrounding economy." Yes - to the extent that surrounding economy can support the general COL. So if/when the surrounding economy can no longer support a relatively high COL (in this example of mortage/rent = housing), why not just let the COL adjust proportionately to the surrounding economy? So in the event the surrounding economy is strong & growing, the COL is also high and rising (as we've experiences over the past ~10 years). But when the surrounding economy is bad and declining, the COL should lower to match, no? "As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout? " Yes, among others, these programs and others like it are only artificially propping up high COL areas (housing, for example) that otherwise would experience a correction (down) tied to their respective surrounding economies.
- tren-hard 6y ago
  Then housing prices would fall to prices in which people can secure a loan and then stabilize around that.

jfim 6y ago

Keep in mind that in high cost of living areas, such as the Bay area, all housing is essentially jumbo mortgages. If jumbo loans are not available or hard to obtain, this means that people who do lose their jobs face an illiquid market and don't have the option to sell their house to avoid default, and thus end up on the street.

_curious_ 6y ago
I wonder what % of those with jumbo loans are completely out of a job? And further in such circumstances that they cannot afford to pay even a reduced or deferred mortgage payment? Or move into a lower cost apartment in another market? Going straight to the street tomorrow sounds like a stretch with options along the way especially for someone who was in a jumbo in the first place. Loans take a long time to default/evict and lenders are probably not in a rush to put the liability on their books right now either.
- jfim 6y ago
  Good points. I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place. I don't know what percentage of the market that is though.
  - _curious_ 6y ago
    "I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place." I'm not from/in the bay and not paying attention to it, so will go with your assumptions here. Zooming out a bit on the general topic of high COL markets though, it's interesting talking with people around my high COL community who feel like they deserve to live and stay here regardless of the changing economy. Thinking out loud: Maybe high COL markets are untenable in this economy for a certain percentage of the population? ...if there were no welfare schemes going around wouldn't these high COL areas rebalance faster to some equilibrium in line with broader affordability? Are the handouts just further propagating an attitude of entitlement while also artificially inflating high COL markets otherwise overdue for a reset?
    - jfim 6y ago
      Well, high cost of living markets are basically propped up by the surrounding economy. It's true that the high cost of living areas would rebalance, but that can leave the current homeowners underwater. As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout?
      - _curious_ 6y ago
        "high cost of living markets are basically propped up by the surrounding economy." Yes - to the extent that surrounding economy can support the general COL. So if/when the surrounding economy can no longer support a relatively high COL (in this example of mortage/rent = housing), why not just let the COL adjust proportionately to the surrounding economy? So in the event the surrounding economy is strong & growing, the COL is also high and rising (as we've experiences over the past ~10 years). But when the surrounding economy is bad and declining, the COL should lower to match, no? "As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout? " Yes, among others, these programs and others like it are only artificially propping up high COL areas (housing, for example) that otherwise would experience a correction (down) tied to their respective surrounding economies.
tren-hard 6y ago
Then housing prices would fall to prices in which people can secure a loan and then stabilize around that.