patrick.net

My friends just sold their home for $175k. I just looked on the assessor’s site, the loan amount was the amount of purchase price. Seriously.

Was it a VA loan?

I agree — but that doesn’t mean that prices are necessarily going to fall substantially from where they are now, either. If we get 15-20% inflation rates (which are highly likely, IMO), a return to those nominal prices is actually somewhat likely.

I didn’t say prices are going to fall substantially. YOU said houses bought today will seem “very cheap” in a decade. I disagree. Wages are going down, not up. How are people going to afford prices that make today’s prices look “very cheap”? And just for the sake of argument, if wages DO go up, then we’ll all be making more money and be able to afford the price increase anyway. So who cares? The only scenario where it makes sense to buy now as a hedge against inflation is if home prices skyrocket and wages do not, and that’s not going to happen.

That doesn't make any sense whatsoever, unless house prices were the only asset class that did not get affected by inflation, but that's just not likely. For 9 out of 10 american cities, a 50% decrease in the value of the dollar would correlate to a 100% increase in nominal prices for everything, housing included. Some places will have house price growth below inflation (because they're still overpriced, like the bay area), but if inflation is truly in the double digit range, even those house prices will rise.

Don’t underestimate the threat of inflation, especially not when there’s a $12t national debt and a real risk of riots in the streets if too many more people lose their homes.

The sheep who bought into the bubble because everyone else was doing it are not going to riot. What are they “losing”? Making interest-only payments on an overpriced home with nothing down? They were essentially renting those houses. They’re going to walk away, not riot. The people who are TRULY disenfranchised now are renters who were priced out of the market for 10 years, and are STILL priced out of the market because the government can’t keep their paws out of it. And even THEY haven’t rioted.

They don't have to literally riot, they just have to elect other people. As more and more people lose their homes, they will vote out the people in office now, and that is why those in power now will do everything that they can to make sure that people keep their homes. 75% of American families are home owners, and 90% of voters are home owners. It doesn't matter if it is a bad policy, politicians are always going to follow the course of action that keeps them in power.

You seem to have this strange idea that just because we renters have been disenfranchised that we're going to see some "fairness". There's really just no reason to expect that to ever happen. The government wants home ownership, and because they want home ownership the policies will always favor it.

Income caps are accurate for conventional loans, but the BIG difference is the down payment requirement. You simply can not get a conventional mortgage right now unless you have 20% down. The FHA is the only option if you can’t pony up 20%, and the FHA has a hard limit of 38% of gross income.

But 20% down SHOULD be the norm. The bubble years were the anomaly. You’re not SUPPOSED to be able to get an interest-only, no downpayment loan that’s impossible to ever pay back.
Note to Patrick: Quoting in this new forum is a major pain in the butt.

Obviously -- but this is what they mean when they say that credit is 'still tight'. They want a return to 2005 when credit was flowing like cheap beer at a frat party. The fact that we're never getting back to that kind of easy credit is beyond them, and as we're seeing today credit is only going to be more expensive from here on out (a 30 year mortgage is up over one and a half points in the last month, and it has a long way to go up from here once the inflation kicks in).

My friends just sold their home for $175k. I just looked on the assessor’s site, the loan amount was the amount of purchase price. Seriously.

Was it a VA loan?

I don't see how it could be. Unless she's gained ALOT of weight since she left the military.

I know three people in three different states that bought homes recently and all of them used FHA loans so they only need 3.5% down AND used 6% seller assist. Add in the $8,000 credit and it becomes clear that lending is still as ridiculous as it was at the peak of the bubble.