5 ms·

Bob should stop treating real estate as an investment vehicle and instead just use as you would a car. It depreciates, it appreciates, you extract benefit from

Bob should stop treating real estate as an investment vehicle and instead just use as you would a car. It depreciates, it appreciates, you extract benefit from it regardless of its speculative value.

ivalm 5y ago
Except his mortgage is still under water and the banking system will fail (also rational Bob should just walk away from the house to lower his debt through bankruptcy and house repurchase). This is kind of similar to what happened in 2008, except 2008 was still “small” scale.
- SinParadise 5y ago
  >Except his mortgage is still under water So? The house is as livable the day before the mortgage went underwater as the day after mortgage went underwater. It only matters if Bob care about selling the house. If Bob's primary intent is to live in the house as opposed to selling it, it wouldn't be a problem.
  - ivalm 5y ago
    At the very least you are screwing the owners of the mortgage who will have to write off lots of loans as Bobs everywhere walk away from the underwater mortgages (which is oftentimes the right thing to do even if one didn’t intend to use the house as an investment). But also it significantly limits Bob’s options in life. They can no longer refinance to repair the roof, they can’t move to a different city for a better job, etc.
    - xenihn 5y ago
      >At the very least you are screwing the owners of the mortgage who will have to write off lots of loans as Bobs everywhere walk away from the underwater mortgages Yes, that's the point... >But also it significantly limits Bob’s options in life. They can no longer refinance to repair the roof, they can’t move to a different city for a better job, etc. Bob knew the risks.
      - lumost 5y ago
        If everyone is a bob it’s the banks problem rather than a bob problem. Within the legal system remedies Bobs everywhere are going to bankrupt. Banks can arrest the bankruptcy by changing the legal system, and Bobs everywhere can change the legal system to make bankruptcy more lenient. At the end of the day a large portion of the population is not going to simply accept that they need to shoulder the losses for a bubble they didn’t make and had no perceived choice but to participate in. Particularly not when it occurs twice in two decades.
        xenihn 5y ago
        >At the end of the day a large portion of the population is not going to simply accept that they need to shoulder the losses for a bubble they didn’t make and had no perceived choice but to participate in. They (you?) don't have to accept it. That's not a factor at all. Your acceptance is not required.
        lumost 5y ago
        Who takes the loss is a matter of societal acceptance. There are many historic examples of societies clearing debts through jubilees, negotiated settlements, nationalization, revolution, and economic restructuring.
    - diffeomorphism 5y ago
      So? They wrote a 500k mortgage on a 200k house and they knew that. Bob had no real choice, but they chose to profit off that 300k error. That is not "screwing" it is "correcting".

Bob should stop treating real estate as an investment vehicle and instead just use as you would a car. It depreciates, it appreciates, you extract benefit from it regardless of its speculative value.

ivalm 5y ago

Except his mortgage is still under water and the banking system will fail (also rational Bob should just walk away from the house to lower his debt through bankruptcy and house repurchase). This is kind of similar to what happened in 2008, except 2008 was still “small” scale.

SinParadise 5y ago
>Except his mortgage is still under water So? The house is as livable the day before the mortgage went underwater as the day after mortgage went underwater. It only matters if Bob care about selling the house. If Bob's primary intent is to live in the house as opposed to selling it, it wouldn't be a problem.
- ivalm 5y ago
  At the very least you are screwing the owners of the mortgage who will have to write off lots of loans as Bobs everywhere walk away from the underwater mortgages (which is oftentimes the right thing to do even if one didn’t intend to use the house as an investment). But also it significantly limits Bob’s options in life. They can no longer refinance to repair the roof, they can’t move to a different city for a better job, etc.
  - xenihn 5y ago
    >At the very least you are screwing the owners of the mortgage who will have to write off lots of loans as Bobs everywhere walk away from the underwater mortgages Yes, that's the point... >But also it significantly limits Bob’s options in life. They can no longer refinance to repair the roof, they can’t move to a different city for a better job, etc. Bob knew the risks.
    - lumost 5y ago
      If everyone is a bob it’s the banks problem rather than a bob problem. Within the legal system remedies Bobs everywhere are going to bankrupt. Banks can arrest the bankruptcy by changing the legal system, and Bobs everywhere can change the legal system to make bankruptcy more lenient. At the end of the day a large portion of the population is not going to simply accept that they need to shoulder the losses for a bubble they didn’t make and had no perceived choice but to participate in. Particularly not when it occurs twice in two decades.
      - xenihn 5y ago
        >At the end of the day a large portion of the population is not going to simply accept that they need to shoulder the losses for a bubble they didn’t make and had no perceived choice but to participate in. They (you?) don't have to accept it. That's not a factor at all. Your acceptance is not required.
        lumost 5y ago
        Who takes the loss is a matter of societal acceptance. There are many historic examples of societies clearing debts through jubilees, negotiated settlements, nationalization, revolution, and economic restructuring.
  - diffeomorphism 5y ago
    So? They wrote a 500k mortgage on a 200k house and they knew that. Bob had no real choice, but they chose to profit off that 300k error. That is not "screwing" it is "correcting".