Don’t Buy A Home: You’ll Get Burned

 

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  • #16170

    Albert Freeman Effect of gasoline shortage in Washington, DC 1942 Europe had hundreds of inspectors check 130 banks for a year in that stress test. Wh
    [See the full post at: Don’t Buy A Home: You’ll Get Burned]

    #16171
    Ken Barrows
    Participant

    Hmmm. Credit is the tightest in decades, but total market credit debt continues to rise. What a conundrum!
    https://research.stlouisfed.org/fred2/series/TCMDO
    I guess it’s because it’s still easy for corporations and government to borrow.

    #16172
    Kerry Wilson
    Participant

    Funny, but I bought a home earlier this year and had no trouble at all getting a mortgage. And I’m the sole earner in my household and Ben Bernanke makes more in one double-talk session — otherwise known as a speech — than I make in 2-1/2 years of working.

    While it’s true that the process was more stringent than it was when I made my previous purchases, there was never a moment when I thought the mortgage application was in jeopardy. In fact when I called their bluff on some of the more outlandish requests, they backed off.

    Having said that, I agree that now might not be the best time for a young family to buy their first house. Better to save up pennies now and purchase a house at a more favorable time. Boomers will be retiring en masse 5 years from now, and many bought their houses years ago when the prices were more sane. I see some good opportunities coming up on the horizon.

    #16174
    jal
    Participant

    You don’t have to live in your car.
    Build a house you can afford.
    Here is your starter home building plan.

    https://www.scarefx.com/project_coffin_2.html

    #16175
    rapier
    Participant

    The capital shortfall of EU banks, be it $15bn or even $500bn isn’t really all that much. The Fed, BOJ and ECB can print that up in no time flat. The only problem being, for now, how to get it to the banks that need it. That problem can be solved easily when crisis hits. Just do it, As they say, it’s easier to ask forgiveness than permission.

    I have to drag out Karl Rove most every day it seems to explain it all.

    The aide said that guys like me were “in what we call the reality-based community,” which he defined as people who “believe that solutions emerge from your judicious study of discernible reality.” … “That’s not the way the world really works anymore,” he continued. “We’re an empire now, and when we act, we create our own reality. And while you’re studying that reality—judiciously, as you will—we’ll act again, creating other new realities, which you can study too, and that’s how things will sort out. We’re history’s actors…and you, all of you, will be left to just study what we do.”

    https://en.wikipedia.org/wiki/Reality-based_community

    #16176
    Professorlocknload
    Participant

    The Feds will do whatever it takes to pump up housing again. Even make Section 8 government rent vouchers permanently apply to mortgage payments. Home Building/Sales/Materials is big business with powerful lobbies. It’s also a big jobs producer for the lower end of the labor market.

    Might be, when the common folks realize that their only means of hedging against currency devaluation is Real Estate, housing will again become a conduit for wage and price inflation. Who knows. But for sure, we are heading further into a state controlled economy, and away from any semblance of a fundamental market based one, so place your bets.

    Seems to me a politically inspired blanket amnesty should put some buying and renting pressure on inventory, as well. And I just don’t see the Feds cutting rent subsidies and home buying incentives anytime soon, if ever. Plus, we’re talking the old “American Dream” here, aren’t we?

    #16177
    Professorlocknload
    Participant

    ++ on that one, Jal!

    #16178
    rapier
    Participant

    Off topic of the day but a good outline of a probable ebola future.

    https://www.wired.com/2014/10/ebola-endemic/

    I sort of hate to use the term globalization or its derivatives but ebola is probably going to be another kick in its nuts. Endemic not epidemic or pandemic. A constant headwind against trade, travel, order. Note that any flareups in in the West are going to be hugely expensive for governments, or else. In the US a devastating cost for the industry, which is 17% of GDP.

    #16181
    Raleigh
    Participant

    All-cash buyers and investors have steeply cut back on their purchases. Homes are not selling, and the percentage of homes for sale in major cities with a drop in listing price has increased 25 to 30%. The “interest only jumbos” that were handed out like candy in 04/05/06 had ten years before resetting to regular payments. The ten years are up.

    Desperation is setting in! Anyone buying a house now, even at these low rates, risks losing a huge chunk off the value of the home in short order. Sit back, relax, and pick up a house (although a lot of the young people I talk to don’t even want one; in fact, most don’t even want a car) for half the price a few years from now.

    #16189
    earlmardle
    Participant

    While superficially I agree, in fact, if you can get a 90%+ mortgage, I would say go for it. Sequester any other assets in a trust, take the house and gently fade off your repayments. If the crash is as close as we suspect, the chances that the banks will get to you, or WANT to foreclose and reveal their massive losses grow slimmer by the day.

    There’s even a good chance that said bank itself will go under and, since the banks few actual creditors are covered by FDIC and the rest of the money is fictional, you may get to live there for a long time.

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