7 ms·

dangerous play (as I've read so far) home values are hugely inflated when they drop too, you'll end up with negative equity and possibly a denied refinancing

dangerous play (as I've read so far) home values are hugely inflated when they drop too, you'll end up with negative equity and possibly a denied refinancing worst of both worlds

vkou 3y ago
[flagged]
- slater 3y ago
  [flagged]
  - bsder 3y ago
    [flagged]
    - nickphx 3y ago
      Huh? Sub-prime no-doc, interest only loans were handed out like Costco samples, repacked as mortgage backed securities and dumped on the market .
      - bsder 3y ago
        Mostly to minority housebuyers who had very few other choices as, in reality, they didn't qualify for a loan. You had a large number of predatory banks with a big helping of fraud filling out bogus paperwork and shoving junk loans into the system. The homebuyers lost their money, their house, and their credit. The economy almost collapsed. A tiny number of bank loan officers at the bottom got convicted as scapegoats. And all the bank fat cats got bailed out. The fact that Obama didn't simply nationalize every single failing megabank was possibly his biggest failure as President.
    - fortran77 3y ago
      [flagged]
      - pessimizer 3y ago
        People who qualified for better rates were steered to subprime.
    - pessimizer 3y ago
      Highest proportion, but nowhere near "primary."
  - vkou 3y ago
    Yes, and the policies enacted since then have heavily contributed to the insane growth in the cost of housing.
hadlock 3y ago
We might see a pull back to December 2019 prices but there's no way absolute house prices will crash to 2014 or 2012 prices. Weak markets might continue to see a decline in prices but in competitive markets (read: where the jobs/growth are/is) demand far outstrips supply to the tune of about 7 million homes per the Fed.
- solumunus 3y ago
  I wouldn’t ever say “no way” when it comes to markets. A black swan could always be right around the corner.
- pessimizer 3y ago
  But aren't those the places being most damaged by the end of free money?
  - hadlock 3y ago
    It's offset by a massive housing shortage nation wide. 7 million new homes is like 175 new, large apartment complexes in every city over population 100,000.
  - appplication 3y ago
    I don’t think so. Most current homeowners have absolutely no incentive to sell, and the market has to work both ways. The high interest rates and increase in housing prices mean if you bought a home within the last 15 years there’s a 0% chance a homeowner could buy the same home they live in today for anywhere similar in price. It’s not like stocks where you can sell to reap your gains and just hold onto the cash or move it to a different asset. You have to live somewhere. For most people, selling their home now means moving into a worse quality rental and paying more, or paying 2-3x what you were paying on your 2013 mortgage payment for the same quality home. Prices aren’t going to come down just because interest rates and prices scare away buyers. The sellers don’t care that there are no buyers because they’re also not selling. It’s a weird unhealthy place for the economy where everyone except the banks seem to be losing.
- almost_usual 3y ago
bsder 3y ago
Why? The government will bail them out. As long as lots of people get crushed simultaneously, the banks will demand to be bailed out, too. A bunch of Southern California homes are already in this state--the banks are allowing the "owners" to simply pay the tax and interest and still live there. Why? Because if they foreclose on just a few too many houses, the basis value will plunge, the "owners" will walk away, and the bank will be stuck with a house they can't sell which will promptly get vandalized. Only suckers use cash as long as the government keeps bailing them out.
- oneTbrain23 3y ago
  That is because USD is reserve currency. In coming 2 decades you will see RMB and Ruble dominates. Already in many parts of Asia RMB is used like USD way more than USD like 5 ywars ago. Once BRICs and digital yuan kicks into high gear in 3 years, tsunami of recessions and inflations hitting USA shores like crazy. Many of my friends there now shifted out of USD and park their money in regional currencies like Yuan, Yen, SG, and even Ruble. Some opt heavily in gold and park it in Singapore.
  - marak830 3y ago
    The ruble? Really? There is a chance the RMB will become a more highly trade and used more as a 'basw' currency, but there is absolutely zero chance the ruble will. BRIC's is one of the weakest coalitions recently formed - SA just stated today they won't let EU president in, it's an absolute paper tiger. To out in perspective, I'd love to see EU bring in a strong coalition to offset the US dominance because competition is always good.
almost_usual 3y ago
But you have a place to live and you don’t have to worry about unforeseen displacement or rent hikes. I’ve always believed that if you want to buy a home and can afford it you should buy it. Timing the market is too hard. Will it make you house poor? Possibly, especially in a place like the Bay Area where many people will risk being house poor to own a home.
- seanmcdirmid 3y ago
  Rent makes sense sometimes. Like when I was paying $1000/month for an apartment in Beijing that the landlord was trying to sell for $1 million. No point of buying into a crazy market if rents are low enough.
foogazi 3y ago
> when they drop too, you'll end up with negative equity and possibly a denied refinancing If rates go down prices will rise
- seanmcdirmid 3y ago
  Not necessarily. If rates go down, there will be more liquidity, which could make prices go down. Right now inventory is super tight since most people have good rates and would lose a lot if they sold and bought something else.

dangerous play (as I've read so far) home values are hugely inflated when they drop too, you'll end up with negative equity and possibly a denied refinancing worst of both worlds

vkou 3y ago

[flagged]

slater 3y ago
[flagged]
- bsder 3y ago
  [flagged]
  - nickphx 3y ago
    Huh? Sub-prime no-doc, interest only loans were handed out like Costco samples, repacked as mortgage backed securities and dumped on the market .
    - bsder 3y ago
      Mostly to minority housebuyers who had very few other choices as, in reality, they didn't qualify for a loan. You had a large number of predatory banks with a big helping of fraud filling out bogus paperwork and shoving junk loans into the system. The homebuyers lost their money, their house, and their credit. The economy almost collapsed. A tiny number of bank loan officers at the bottom got convicted as scapegoats. And all the bank fat cats got bailed out. The fact that Obama didn't simply nationalize every single failing megabank was possibly his biggest failure as President.
  - fortran77 3y ago
    [flagged]
    - pessimizer 3y ago
      People who qualified for better rates were steered to subprime.
  - pessimizer 3y ago
    Highest proportion, but nowhere near "primary."
- vkou 3y ago
  Yes, and the policies enacted since then have heavily contributed to the insane growth in the cost of housing.

hadlock 3y ago

We might see a pull back to December 2019 prices but there's no way absolute house prices will crash to 2014 or 2012 prices. Weak markets might continue to see a decline in prices but in competitive markets (read: where the jobs/growth are/is) demand far outstrips supply to the tune of about 7 million homes per the Fed.

solumunus 3y ago
I wouldn’t ever say “no way” when it comes to markets. A black swan could always be right around the corner.
pessimizer 3y ago
But aren't those the places being most damaged by the end of free money?
- hadlock 3y ago
  It's offset by a massive housing shortage nation wide. 7 million new homes is like 175 new, large apartment complexes in every city over population 100,000.
- appplication 3y ago
  I don’t think so. Most current homeowners have absolutely no incentive to sell, and the market has to work both ways. The high interest rates and increase in housing prices mean if you bought a home within the last 15 years there’s a 0% chance a homeowner could buy the same home they live in today for anywhere similar in price. It’s not like stocks where you can sell to reap your gains and just hold onto the cash or move it to a different asset. You have to live somewhere. For most people, selling their home now means moving into a worse quality rental and paying more, or paying 2-3x what you were paying on your 2013 mortgage payment for the same quality home. Prices aren’t going to come down just because interest rates and prices scare away buyers. The sellers don’t care that there are no buyers because they’re also not selling. It’s a weird unhealthy place for the economy where everyone except the banks seem to be losing.
almost_usual 3y ago

bsder 3y ago

Why? The government will bail them out. As long as lots of people get crushed simultaneously, the banks will demand to be bailed out, too. A bunch of Southern California homes are already in this state--the banks are allowing the "owners" to simply pay the tax and interest and still live there. Why? Because if they foreclose on just a few too many houses, the basis value will plunge, the "owners" will walk away, and the bank will be stuck with a house they can't sell which will promptly get vandalized. Only suckers use cash as long as the government keeps bailing them out.

oneTbrain23 3y ago
That is because USD is reserve currency. In coming 2 decades you will see RMB and Ruble dominates. Already in many parts of Asia RMB is used like USD way more than USD like 5 ywars ago. Once BRICs and digital yuan kicks into high gear in 3 years, tsunami of recessions and inflations hitting USA shores like crazy. Many of my friends there now shifted out of USD and park their money in regional currencies like Yuan, Yen, SG, and even Ruble. Some opt heavily in gold and park it in Singapore.
- marak830 3y ago
  The ruble? Really? There is a chance the RMB will become a more highly trade and used more as a 'basw' currency, but there is absolutely zero chance the ruble will. BRIC's is one of the weakest coalitions recently formed - SA just stated today they won't let EU president in, it's an absolute paper tiger. To out in perspective, I'd love to see EU bring in a strong coalition to offset the US dominance because competition is always good.

almost_usual 3y ago

But you have a place to live and you don’t have to worry about unforeseen displacement or rent hikes. I’ve always believed that if you want to buy a home and can afford it you should buy it. Timing the market is too hard. Will it make you house poor? Possibly, especially in a place like the Bay Area where many people will risk being house poor to own a home.

seanmcdirmid 3y ago
Rent makes sense sometimes. Like when I was paying $1000/month for an apartment in Beijing that the landlord was trying to sell for $1 million. No point of buying into a crazy market if rents are low enough.

foogazi 3y ago

> when they drop too, you'll end up with negative equity and possibly a denied refinancing If rates go down prices will rise

seanmcdirmid 3y ago
Not necessarily. If rates go down, there will be more liquidity, which could make prices go down. Right now inventory is super tight since most people have good rates and would lose a lot if they sold and bought something else.