patrick.net

d3 says

camping says

d3 says

1a. If ones property going down leads them to financial ruin, the chances are that they were never financially sound enough to afford that property in the first place.
2a. Your interest is a tax right off and over time the amount of money going back in to principle increases as you pay off the loan. . If you are in for the long run and are responsible, your equity growth rate will increase overtime.
With this said, I do not advocate for people to buying now or waiting. I personally feel that some areas are still way over priced while other areas are not.
The only thing I disagree with is peoples over generalization of the forces at play. Just like I did not agree people telling everyone’s to buy when the market was bubbling I do not agree with people telling everyone not to buy when the market is falling. The truth is none of us have a crystal ball and what may be true for one region may not be true for another.

1a. I think you are overstating, but that's ok.
2a. Interest is a tax writeoff, but you only get a small portion back.

I agree with your last two sentences.

Buying is not necessarily better then renting.
I have rented for decades and the money I have saved has accrued lots of interest over the years that I would have not have received if I had put everything into a house.
I have always had plenty of cash available without using credit cards and could move whenever I felt like it.
Now I don't have any debts and the have not lost a penny in the economic collapse but many of my homeowning friends are house poor, have lost a big chunk of their retirement money, and are facing bankruptcy.
I still would like to buy a house but realistically I just go on renting for years if real estate prices remain as ridiculously high as they still are.

Austinhousingbubble says

It seems safe to say that the middle class will enjoy a lot of taxes (never mind what you heard Obama say during his campaign) and a lower - or at best, static - standard of living throughout the next decade.

Hopefully, the standard of living may increase for middle class who have actual cash savings. Of course, we may get a tax on savings account balances, and perhaps that tax on paid-for homes that imputes a taxable income on what the rent would be.

The Original Bankster says

depends on where you are… seems AZ is resolutely opposed to raising property tax.

True, but I am concerned with the Federal gov putting the tax on Savings Account balances, along with the Federal gov using a paid-off home as imputed taxable income.

Renting and Owning are 2 completely different things. I do not know how people can so easily confused the two.

No confusion. The prevailing sentiment regarding 3.5 down is that it is, ultimately, a piffle to walk away. That was the point I was trying to illustrate. What is the big difference between this and the dreaded riff-raff renter? The riff-raff renter was probably screened better, and in some instances, has almost as much tied up in their deposit as an FHA buyer does.

I’ve heard of Caesar Salad, but Roman Noodles…?

There is a residential demographic on Zillow referred to as Ramen Metro. The next best one Scrappy Homeowners.

I am concerned with the Federal gov putting the tax on Savings Account balances, along with the Federal gov using a paid-off home as imputed taxable income.

It seems pretty likely that there will be something like a VAT tax levied against all income levels here in the states. However they package it, I think everyone's going to feel the bite in the coming years, no matter how many strides you've made financially.

Austinhousingbubble says

I am concerned with the Federal gov putting the tax on Savings Account balances, along with the Federal gov using a paid-off home as imputed taxable income.

It seems pretty likely that there will be something like a VAT tax levied against all income levels here in the states. However they package it, I think everyone’s going to feel the bite in the coming years, no matter how many strides you’ve made financially.

Thank~you Barack Obama. The agent of 'change'. *puke*

Just because you shit your pants doesn't mean you should blame your underware. Reganomics is what it is.

Thanks for sharing your 'shit' story. Did you learn that from experience?

I suppose you also learned the difference between shit and shinola~~~the hard way.

HeadSet says

True, but I am concerned with the Federal gov putting the tax on Savings Account balances, along with the Federal gov using a paid-off home as imputed taxable income.

But seriously, Headset. This will never happen.

Higher income and gains taxes for the wealthiest 1%, yes. General taxation of all property (not just real property) at the federal level, no. I think that is extremely unlikely.

Where has this topic come up? I'd bet it is a manufactured and totally false scare tactic created by some wingnuts.

Uh, dude, "wealth increase"?

wealth increase = income + capital gains

So you're talking about a flat income tax, which is supposed to be simple, at least according to the regressive people who champion it. Why cloak it in weird terminology?

But anyway, your idea of fair taxation is incredible regressive, and will result in the US descending to the developmental level of a banana republic. And you, bap33, will not be a plantation owner, but one of the peons that work there. Seriously, I do not mean it as a put-down, but you will. I just think you do not realize it.

http://en.wikipedia.org/wiki/Georgism

"Georgism, named after Henry George (1839-1897), is a philosophy and economic ideology that holds that everyone owns what they create, but that everything found in nature, most importantly land, belongs equally to all of humanity."

I am not particularly sure I am an advocate, but I found it interesting. It would mean NO income or capital gains tax, but definitely property or 'land' tax.

"George preferred taxing unimproved land value, in part because this would be less disruptive and controversial in a country where land titles have already been granted to individuals. With the revenue from this "single tax", the state could avoid having to tax any other type of income, wealth or transactions. Although introducing a large land value tax would cause the value of land titles to fall significantly, George was uncompromising on the idea of compensation for landowners, seeing the issue as a parallel to the earlier debate about compensating former slave owners."

"everything found in nature, most importantly land, belongs equally to all of humanity"

Now thats a slippery slope. does that mean all the illegal immigrants have the same right to our land as us ?

>>it is all wealth and should be taxed evenly.

I assume this means that you are against California Prop. 13?

>> comes in lumps and chunks from rich people

What many people do not seem to understand is that the wealth of the wealthy would not be possible without the labor and other efforts of the less wealthy.

A progressive tax (where percentage paid increases with income) is meant to balance the forces that would otherwise create an ever increasing gap until everyone is either dirt poor or filthy rich. And it is fair, because it re-distributes (gasp, I know) what was first distributed to the rich and the ownership class.

renter for ever_san jose says

“everything found in nature, most importantly land, belongs equally to all of humanity”
Now thats a slippery slope. does that mean all the illegal immigrants have the same right to our land as us ?

No, someone still holds a land title. I.e. you don't just share land ownership or use, you title that use similar to deed of 'ownership' now. In effect, it's the same thing as ownership except the value of land titles are less since they are the one thing that is taxed. Turns our current system on it head or sideways, since most states get revenues in thirds - 1/3 income, 1/3 sales, 1/3 property. This would make it 100% property tax. In CA, we get a lot less from property tax due to prop 13 (and therefore pay a larger % in sales and income taxes comparably). Under Georgism you still have rights of 'ownership' but you pay tax to the state for the land title. Illegals would not have any right to use nor would they benefit in any way through those taxes (hypothetically) since they are not part of the citizenry. Frankly, immigration really has nothing to do with it in my view.

But again, I am not the expert nor am I necessarily advocating this, just adding it to the debate.

Famous Georgists include Henry Ford.

Thank~you Barack Obama.

Regardless of what side of the street you're on politically, drastic tax measures were going to be an inevitability. I have to think that even the biggest Obama proponents are feeling a little unimpressed by this administration/congress. They should be. Other than maybe the increase to the GI Bill and anti-usury policies, it seems like more of the same.

jabailo says

Housing inflation started in the 80s and ran for 3 decades. Why would you expect for housing deflation to only last a year and then suddenly “recover”?

You forgot the early to mid 90's~~~you know when the real~estate market was in the toilet.

http://finance.yahoo.com/news/Stock-futures-moderately-apf-2848453904.html?x=0&sec=topStories&pos=main&asset=&ccode=

"ap
Investors finally find good news on unemployment
Better-than-expected jobs report pushes stocks higher, feeds hopes for economic recovery"

Stock market rally this morning. We shall see if it holds on. Nevertheless, good news for the economy. Should make all those of you who voted for Obama very pleased that he is pulling this country out of the recession and lifting markets from their lows.

I've been seeing this "rebound" BS in the news the past few weeks, and just dropped by to comment. Good to see people aren't buying it--but what do you suppose is the motivation here--to fuel another mini-bubble in the markets, to inject some optimism in consumer spending, or some other bubble is in the works?

I find all this "rebound" talk ominous, because it suggests that big business thinks it can keep things afloat without anybody seriously questioning their business models, especially those who rely heavily on the retail end. IMO, we won't see a real rebound until defunct business models crash and burn, the banks finally open their books, and housing prices return to fundamentals. In other words--wages get in line with a real money supply, and housing follows that. We have a long way to go, and it will be a painful return to reality for overleveraged America.

Nice to see you again.

The big stock market rebound has pushed up interest rates on 10 year treasuries.
That will really help the mortgage market.
I am hearing from a source inside a foreclosure prevention organization that the next dump of properties by the banks in Southern California is likely to happen in about 6 to 8 weeks. Right as the prime home buying season and the moratorium are both coming to an end.
He also thinks that higher rates and the supposedly "improving economy" will cause the Alt-A resets to be
much larger than current payments.

chrisborden says

When will some of you learn that when you have a mortgage, YOU OWN DEBT. Net worth consists of ASSETS (savings, etc., if you have any) MINUS LIABILITIES (a mortgage, credit card debt, etc., etc.). If you believe debt=wealth, you are a fool. Why don’t they teach this in schools anymore? Oh, sorry, housing ALWAYS APPRECIATES, THEREFORE EVERYONE IS GUARANTEED OF WEALTH. Forgive me for being the stupid one.

Who here believes that debt=wealth? I certainly don't. I doubt that anyone here does. No one here believes that housing 'always appreciates'. At least no one that I can tell.

pinnacle says

The big stock market rebound has pushed up interest rates on 10 year treasuries.

That will really help the mortgage market.

I am hearing from a source inside a foreclosure prevention organization that the next dump of properties by the banks in Southern California is likely to happen in about 6 to 8 weeks. Right as the prime home buying season and the moratorium are both coming to an end.

He also thinks that higher rates and the supposedly “improving economy” will cause the Alt-A resets to be

much larger than current payments.

Can we know who this 'source' is?

It is very interesting reading all the varied opinions here. I realize no one has a crystal ball, but since foreclosures seem to be a problem, commercial RE problems on the horizon and mortgages harder to get, what does the mortgage rate future look like in your opinions.

I know mortgage rates are tied to the 10 year treasury and the have shot up recently. Rates are almost 6% for a conventional 30 yr. full documentation.

If rates continue up it may kill the foreclosure purchases etc.

Where do you think rates will go in the next 30 to 45 days????

Bap33 you got a great rate. I am buying a new build. Opted to use Pulte Mortgage via the builder to get the incentives which total over $6000. Now sort of at their mercy. I could get financed elsewhere, but do not want to give up the incentives. They seem to be 1/4 to 1/2 higher than others, but the additional cost is $45 a month which would take about 12 years to break even.
I will just follow the MBS and try to get the best rate available in the next 35 days which is when I have to lock the rate.

Bap33 says

I was wrote a 4.75 30yr fixed on Thursday ….. 6% is for suckers … as is thinking there is a reason to over-pay for a stucco-wrapped POS in mexifornia. Wages X 2 folks, max.

What do you mean wrote up? Do you have a signed lock in at 4.75? If so did you have to pay any points or hidden back end fees, ie YSP? I do not know about the city you are in but the very best rates in my area with no points are around 5.3. Average is in the upper 5's

The free fall has stopped:

http://www.nytimes.com/2009/08/10/opinion/10krugman.html?ref=opinion

Select quote:

And aren’t you glad that right now the government is being run by people who don’t hate government?

>>they can simply say, “Um, it would have been worse if we hadn’t done anything.

And they would be correct, so why quibble?

"They would be correct, so why quibble?"

Just like the Government's response to the Stock Market crash of 1929? The economic downturn of the 1930s only persisted because of misguided Government intervention. Politicians created the Great Depression and risk repeating the feat with stupid and damaging public policy today.

It would have been better and much shorter had the Government not created the problem to begin with or lengthened the downturn by not allowing the markets to clear.

whitneyross,

>>Just like the Government’s response to the Stock Market crash of 1929?

The government response was to increase interest rates (too late), which then plunged the country into the great depression.

>>by not allowing the markets to clear.

"Allowing markets to clear" would cause ALL banks to go under , and all savers to lose all of their deposits. It seems rather obvious to me that such an outcome would NOT be a good thing.

Even FDIC (which did not exist yet in 1929) could not withstand massive bank failures. (in 2007).

I understand that Market Fundamentalism is appealing to a lot of people, but I do not think that they have understood the consequences.

Some Guy says

knightparzival says

What do you mean wrote up? Do you have a signed lock in at 4.75? If so did you have to pay any points or hidden back end fees, ie YSP? I do not know about the city you are in but the very best rates in my area with no points are around 5.3. Average is in the upper 5’s

You are correct. Bap33 is obviously just talking out his ass.

I, too, find it a bit suspicious.

looks like lot of old timers who were whistle blowers for housing bubble are now pulling the trigger.

>>I’d rather have the government cover depositors losses directly than give trillions of dollars to insolvent banks

I think you have missed the point. The accumulated cost of liquidating the banks would be many times the cost of the current bailouts. That's the whole point of doing the bailouts in the first place.

I agree that the bailouts are distasteful, and have also been to lax (I think in particular that we should put a major hurt on the bank upper management and risky traders). But it is still cheaper than letting everything unravel. This idea that we could somehow let Citi (say) fail without taking everything else with it is just a pipe dream of the libertarians.

Someguy,

>>Bear Stearns and Countrywide failed. Did they take everything else with them?

You've got your facts wrong. Bear Stearns was on the brink of failure, but was bailed/bought by JP Morgan.
Countrywide was also on the brink of failure, and they were bailed/bought by by BofA.

But back to the big picture:

It was Lehman Brothers that was actually "allowed" to fail (go bankrupt). The bankruptcy announcement of Lehman on 2009-09-14 created a full scale panic in the financial markets, and people lost real money in their money market funds. The Reserve money market fund still has only paid out about 80% of what was invested in their money market fund, and it is almost one year since the Lehman incident.

Are you sure you understand what would happen to us all if Citibank would have to file for bankruptcy? Citi had 1930B in assets in 2008. Lehman had $275B in assets (including all the BAD ones) at the time it went bankrupt.

Do you understand what would happen to the world if Citibank went under? Can you understand how gigantic the realized losses would be during the ensuing panic liquidation of everything from bonds to buildings to factories to farms to houses?

I can't help but think that the crowd that chants no-bailouts-under-any-circumstances just od not realize the incredibly bad consequences of their positions, and the immensely high self-cost of instant punishment for the bankers.

YES, I want to put a major hurt on the bank managers and traders. NO, I don't think it is worth worldwide panic, destruction and losses to accomplish it. There is a better way, and I think in due time we will get to it. But fer gods sake, don't be so blood-thirsty that you must have revenge at ANY cost!

Some Guy,

>>I don’t think YOU understand. Countrywide certainly had a similar amount in assets.

Wrong again. Countrywide had 211B in assets at the end of 2007. That is ~1/9th the size of Citi.
There *is* no bank big enough to absorb Citi. And the buyouts of Countrywide, Bear, and
Merill Lynch has already stretched the healthier banks to the limit. BofA needed a bailout itself
in order to absorb ML.

I'll try to stop there -- I do not care all that much that you cannot be convinced otherwise.
I'm only posting to correct the misconceptions, and hoping that others that have been fooled
by the no-bailouts-under-any-circumstances fundamentalist mantra will realize that their is a
good reason to do this.

And yes, I AM holding my nose all the way to the bank. And I want the Bankers to get their
punishment in due time. And I want housing prices to be 3x income.

http://blogs.wsj.com/deals/2009/08/07/taking-wall-streets-pulse-dawn-of-an-economic-recovery-is-here/#mod=yahoo_hs

'It's Official~ish: Whole World Calls Market BOTTOM'

I really am starting to like reading some of these sunnier stories. They seem to be appearing more and more each and every day. I had the same feeling when I started reading Patrick.net years ago: each day~~~little by little~~~more stories began to appear about the 'bubble' then, of course, the 'bubble' exploded and an onslaught of 'bubble' news appeared each and every day and all positive news stories faded away. The opposite is beginning to happen now.

Perhaps Obama and the stimulus package are good for America? We will find out soon enough.

TOB,

make the taxpayer buy *what* things? I cannot respond unless you are specific.

what TOB and the likes are cribbing about is that some people made bad choices and are not paying for it.
I would say , Life is not perfect ..just get over with it and move on.

BTW, I never made any bad choices during the bubble and always saved...