4 ms·

Uh... neither. The former is wrong, because as you point out the housing supply isn't a matter of finance. People have homes. But your respin is kind of a wh

• xp84 1y ago
  Insert the comment everyone’s mom says about peer pressure: “if everybody else was jumping off a cliff, would you jump too?” Everyone who took an adjustable loan, interest only loan, etc., who didn’t have an exit strategy already in place in case of inability to refinance, had themselves to blame, regardless of whether “everyone was doing it.“ I don’t mean any criticism toward people who happened to lose their jobs and would’ve otherwise been able to continue paying on the loans they’d taken. Nor am I saying it’s OK to take advantage of people who don’t bother to read or understand the assumptions inherent in the contracts that they’re signing. But people were incredibly naïve if they accepted some broker’s verbal assertion that they’ll always be able to refinance the otherwise-unaffordable house on favorable terms in 3 or 5 years or whatever.
  • ajross 1y ago
    > Everyone who took an adjustable loan, interest only loan, etc., who didn’t have an exit strategy already in place in case of inability to refinance, had themselves to blame Come on. Median homeowners (even median HN commenters) are hard put to even define those terms, much less execute your strategy correctly. This kind of blame-the-dummies caveat emptor absolutism fails in the modern world. It's like demanding people decide on their own medical diagnoses and select treatments from a menu. We license realtors and banks, regulate mortgage marketing and have a CFPB for a reason.
    • xp84 1y ago
      I said it wasn't okay to take advantage of the so-called 'dummies.' But I think you're going too far to say they don't also have responsibility. That basically says they have no agency and are just passive NPCs. Also, I think you're underestimating the intelligence of the median person. If a doctor tells me that for $500, they can surgically implant a chip in me that will give me LeBron James-level basketball skills in 3 years, and I say "Cool, cut me open, Doc!" I am partly to blame because I should have known that isn't possible. Yes, the doctor should still be punished. But people should get multiple opinions for facts so obviously too good to be true and only commit to something when they understand the risks.
      • ajross 1y ago
        > give me LeBron James-level basketball skills in 3 years That doesn't seem like a good faith analog for "I got a 3.2% mortgage with 5% down and payments less than my last rental". You keep pretending that the idea that the real estate market was internally overleveraged by repackaged derivatives held by investment banks was some kind of obvious thing that regular homeowners were too stupid to see. And I'm telling you it wasn't, because no one saw it, not even the bankers and regulators, until it was too late. Blaming the homeowners for not "understanding the risks" is unfair, but also frankly non-actionable. They'll never be as smart as you want them to be in hindsight, because no one is.
        • xp84 1y ago
          > ...payments less than my last rental for 3 or 5 years though. That's part of the terms. Nothing outside of that was promised to them on paper. It's reasonable to expect someone looking at a 5/1 ARM or an 'Interest only for X years' loan to ask "What can I be guaranteed in writing will happen at the end of that period?" The right answer was "Nothing. Interest rates have historically moved between 3% and 22%. Your new payment could be 4x your old rent, or it could get even cheaper. The value of the home could go up or it could go down. By taking this loan you are betting your house, the down payment, and your credit rating on not just one but multiple assumptions: Low rates and continuing appreciation." That's setting aside the systemic risks that I agree nobody not in the financial world ought to have been expected to understand.
• smsm42 1y ago
  > the overwhelming majority of foreclosures in the wake of the '08 crisis were just regular homeowners Yes and no. Yes they were regular homeowners, but they also massively overbid on homes they couldn't afford because it doesn't matter, we'll refinance under new valuation in a couple of years and will only profit from it! And by overbidding, they made the situation worse for more careful buyers, and helped to feed the frenzy. They are not the sole guilty party, there is a lot of guilt to go around, but part of the guilt lies on people who entered into bad deals because they were sure home prices never go down ever, and it doesn't matter how bad the deal is. I've been on a number of realtor presentations at the time that explicitly said things like that. And people bought into it massively. And yes, "everybody else" (well, not literally everybody, but a lot of people) did it. That's exactly my point. It's still wrong what they did, and if they exercised more restraint and foresight, and less greed, maybe the size of the problem would be less, and less people would be hurt. I lived through it, and I had those doubts also - should I do what "everybody else" is doing? Should I participate in a clearly unsustainable bubble? Am I an idiot to not jump in at the chance of literally free money? Overwhelming majority faced the same questions, and a non-negligible part of them chose the irresponsible answer. And they got hurt. I feel for them. But I also do not forget it was their choice to make.