3 ms·
Probably needs to be taken with a large grain of salt and might be exaggerated but I recently heard a claim (https://www.youtube.com/watch?v=iKdtyDnGM-o https:/
by ThePhysicist 2y ago
Probably needs to be taken with a large grain of salt and might be exaggerated but I recently heard a claim (https://www.youtube.com/watch?v=iKdtyDnGM-o https://www.youtube.com/watch?v=iKdtyDnGM-o) that the FHA program basically prevents a large number of foreclosures from happening as the government effectively keeps paying for loans where borrowers are already in default, and without the program many homes would be on the market again suppressing prices. If my understanding is correct the home owners get the interest payments made by the government tacked onto their mortgage so once they would go into default they would be faced with a home that is not worth enough to pay off the mortgage due to previously inflated market prices and all the added interest payments. Not sure if we have a new subprime crisis in the making here, it seems unhealthy in any case. But then again, never believe stuff influencers tell you on Youtube, so I take it with a healthy dose of skepticism.
- JohnFen 2y ago> without the program many homes would be on the market again suppressing prices. At the same time, though, the people who lost those homes will be on the market looking for a different place to live, increasing demand. This is not my field of expertise, but on the surface it appears to me that this kind of thing is a wash. A housing unit is made available, increasing supply, at the same time as a new demand is created for a housing unit, decreasing supply.
- recursive 2y ago> people who lost those homes will be on the market looking for a different place to live At a lower price point obviously. There's still a net movement to lower prices.
- aprilthird2021 2y agoForeclosing on a house probably means you are not going to buy another one for a while
- tbrownaw 2y agoSubsidies do raise the demand curve for whatever's being subsidized.