patrick.net

ELC says

Call it Crazy says

Yep, why go back to the basics that worked decades ago for our parents... Just look how many foreclosures they had back in the 70's...

What worked then won't work now. Those were totally different times. It WAS possible for people to save for a down payment, not to mention the down payment was much smaller because the cost of housing was much smaller. In Florida the same condo on the ocean my parents bought for 50k is now 400k. You're either just trolling or you're totally clueless.

At the same time, a house in Detroit that used to cost $50k in the 70's are selling for $20k or less today, while people's average income in this country has gone up from $5k/yr back then to $50k/yr now. There are plenty ocean front building sites in Florida.

Down payment is the key holding down default rate . . . and retained interest is the key holding loan-originators to having skin in the game.

ELC says

It's the verifiable income that kills off most entrepreneurs as well as buyers with parents who are willing to help them out (rather than have them living at home). That leaves you with working stiffs. Working stiffs with good credit and a hefty down payment in this economy aren't going to sustain the market.

Stated income, no down payment, interest only loans, etc. performed fine for decades.

Not in combination in the same loan. Taking out a stated income loan should require 25+% down payment. Likewise, no-down-payment loan should require strong evidence of consistent income. Interest-only should also require massive down payment. Down payment percentage is the key to preventing default. Working stiff is already helped by all sorts of government programs that require very little down payment. All the rest wishing to play in the field should show us the money when they say they have income to carry the loan.

Reality says:
Not in combination in the same loan. Taking out a stated income loan should require 25+% down payment. Likewise, no-down-payment loan should require strong evidence of consistent income. Interest-only should also require massive down payment. Down payment percentage is the key to preventing default. Working stiff is already helped by all sorts of government programs that require very little down payment. All the rest wishing to play in the field should show us the money when they say they have income to carry the loan.

Strategist responds:
First time buyers may not have large down payments, but move ups usually do. There are probably millions of potential buyers with large down payments who have not been able to get stated income loans in the last 6 years because of destructively tight lending standards. With 25 to 35%

With 25 to 35% down payments they are not likely to default. Same goes for sub primes.

Call it says:
How can a condo that once sold for 50K be worth 400K now, considering that it is years older?????????

Have incomes increase by 8x since then???

How many normal people have 80K to put as a down payment on that condo??

Strategist responds:
The rich move to better areas, while the poor move to cheaper areas. How do you think New York sustains high prices, while Detroit mansions are cheaper than cars?
That trend will continue.

Mark D says

smaulgld says

Phoenix is the market most likely to get hit hard as investors are leaving that market according to recent reports

If private homebuyers can't afford or get mortgages in phoenix that market could see another collapse

do you have any sources for this?

Here you go
http://www.cnbc.com/id/101271821

Strategist says

First time buyers may not have large down payments, but move ups usually do. There are probably millions of potential buyers with large down payments who have not been able to get stated income loans in the last 6 years because of destructively tight lending standards. With 25 to 35%

I doubt anyone having 25-35% down payment, whether in cash or from sale of existing home turning equity into cash, has been having much finding financing for primary home, unless they don't have the income to make projected payments or have shoddy income history or credit history or recently got laid off.

Call it Crazy says

Strategist says

There are probably millions of potential buyers with large down payments who have not been able to get stated income loans in the last 6 years because of destructively tight lending standards. With 25 to 35%

If someone is looking to put down 25% to 35%, I doubt they would have any problem getting a mortgage, unless they have a real shaky work or income history or have some really bad black marks on their credit history.

Here is a true scenario.....
4 months ago a close friend with a $1.8 million home, and 6 rentals free and clear got declined for a $400,000 loan because his employer started paying him on a 1099 instead of W2's.
Does anyone in their right minds think he will default? The system needs to start using some common sense.

A simpler alternative is for you to put your picture on the monopoly money and see if you can get some sucker to accept them as the future of currency.

Stuff is worth whatever people agree it's worth. That goes double for currency.

Strategist says

Here is a true scenario.....

4 months ago a close friend with a $1.8 million home, and 6 rentals free and clear got declined for a $400,000 loan because his employer started paying him on a 1099 instead of W2's.

Does anyone in their right minds think he will default? The system needs to start using some common sense.

Can he carry the $400k loan on his Schedule E income from the rental houses alone? If not then the switch from W-2 to 1099 would mean he doesn't have a 2yr income history form that job. The more disconcerting thing is that, switching to 1099 is often prelude to elimination of the job in the corporate world. How much equity does he have in the $1.8mil house? why can't he use a home equity line or 2nd mortgage on that house?

Call it Crazy says

Strategist says

Does anyone in their right minds think he will default?

Apparently the bank does..... and they are the ones loaning him the money...

Yeah, the same banks did not think my gardener would default on a $400,000 loan with no down, no provable income, and no credit.
No wonder we had a crash, and no wonder the recovery is slower than expected.
It's a screwed up system.

Call it :
And now your whining because banks won't loosen their lending standards.... You just proved why...

But, now you're complaining that they won't give out easy money like before??? Which way do you want it???

Strategist:
How about good old fashioned common sense loans?

Strategist says

Yeah, the same banks did not think my gardener would default on a $400,000 loan with no down, no provable income, and no credit.

Even in the most lenient of times you needed to have at least one of those three. If he's like most, he probably had good credit and he defaulted because he was under water with a comparably high interest loan, not because he couldn't pay. Bankers get Government bailouts. Gardeners have to bail themselves out.

smaulgld says

Here you go

http://www.cnbc.com/id/101271821

Roberto will tell us this is BS till he's swimming back home.

""If I was a Phoenix real estate 'investor' sitting on the upside—or in the long process of readying dozens, hundreds, or thousands of houses for rent into a market about to get pounded for years with single-family rental supply—I would push the 'sell button' on everything I could"

Reality says

Strategist says

Here is a true scenario.....

4 months ago a close friend with a $1.8 million home, and 6 rentals free and clear got declined for a $400,000 loan because his employer started paying him on a 1099 instead of W2's.

Does anyone in their right minds think he will default? The system needs to start using some common sense.

Can he carry the $400k loan on his Schedule E income from the rental houses alone? If not then the switch from W-2 to 1099 would mean he doesn't have a 2yr income history form that job. The more disconcerting thing is that, switching to 1099 is often prelude to elimination of the job in the corporate world. How much equity does he have in the $1.8mil house? why can't he use a home equity line or 2nd mortgage on that house?

His job is safe, no question there.
Owes $400k on primary residence. Purpose was to lower rates without pulling any money out. Now rates have increased and there is no benefit.

Strategist says

Strategist responds:

The rich move to better areas, while the poor move to cheaper areas. How do you think New York sustains high prices, while Detroit mansions are cheaper than cars?

That trend will continue.

Yes. That's exactly what happened. The ocean condos in S. Florida are now being bought by yuppies and foreigners. The retirees are moving away from the ocean. Some of the ones that are staying are taking out reverse mortgages.

ELC says

Strategist says

Yeah, the same banks did not think my gardener would default on a $400,000 loan with no down, no provable income, and no credit.

Even in the most lenient of times you needed to have at least one of those three. If he's like most, he probably had good credit and he defaulted because he was under water with a comparably high interest loan, not because he couldn't pay. Bankers get Government bailouts. Gardeners have to bail themselves out.

He didn't have much of anything. Lots of kids and the ability to work like a horse without complaining. Maybe his kids co signed. The poor guy was in tears when he lost his home.

Call it Crazy says

You just proved the point I've been saying all along here....

How can a condo that once sold for 50K be worth 400K now, considering that it is years older?????????

Not sure what you're saying. It's beside the point what the condo is worth. It's what buyers can afford and are willing to pay. Foreigners can afford it and with the low interest rates buyers with good credit, a down payment and verifiable income can afford it. So the units are selling.

They're fools IMO, that's why I sold when I did. Condo living sucks anyway. Too many assholes that think they're in charge. Too many morons on the board spending money that's not theirs like it's water. Too many needless assessments. And it didn't help having yuppies on the board rather than old farts. Either way it attracts pricks.

Call it Crazy says

The troll here is you who thinks these price increases are sustainable and "normal" and all part of a great housing recovery???

But since you train realtors, I would expect you to continue with the pump, pump, pump..... Got to keep that "Recovery" going....

I don't think I was saying prices were sustainable. The opposite. They never went back down to where they should be. The Realtors I were training at the time of the crash wouldn't listen to me when I told them to sell. They thought those prices were the new normal. And that South Florida was different because of the influx of foreign money. I thought getting licensed and then getting into teaching would give me the knowledge to make a killing. Instead it taught me to stay away. It taught me that residential real estate is a risky labor intensive mediocre investment at best no matter how you look at it. Other than raw land, I wouldn't even call it an investment. In retrospect, the stock market is where I should have focused my time learning.

The Professor says

If you can't afford a house, rent it from someone that can!

Don't you mean, "if you can't finance a house, rent it from someone that can."

I've signed up, but to get started I need to buy in or receive 100 or more XRP from someone.
Here is my public address if you can please help me get started:
rsNjXRYNo6M2xTpDmLh51M39poDFJt29iK

Make it rain!

I'm starting to think bgamall is making a lot of sense. Obviously, this is what happened. Crisisactors.org had Rebeka's photo on their website http://crisisactors.org/photo . Then, rather than using an unknown person to play Kaitlin, they decided to use Rebeka for no particular reason, even though she was already listed as an actress and her photo was published on the web. Then, they did miraculous surgery on her chin to make it look different, from which she recovered instantly, with no scars whatsoever, and changed her teeth, and died her hair. They did all that, but failed to change her appearance enough so that she couldn't easily be discovered by keen internet watchdogs. They even left her picture up on their website, because even though they had the resources to do amazing reconstructive surgery, they bungled everything else.

See? It's all perfectly logical.

Call it Crazy says

A new car was only about one-third the cost of the annual average income.

I'm sure you could build a 1938 car for around one-third the cost of the annual average income. I'm not sure anyone would want to drive it. Crappy drum brakes, poor handling, service every 1000 miles, cramped, loud, no air, 75k mile engine life (maybe), 70hp with 75 mph top speed, maybe 20mpg, no safety of any kind.

Compare that to the 2014 rental corolla I just drove across NV at 90-100 mph in perfect comfort that sell for 18k new getting 30mpg if driven normally.

Would you like to compare a dc3 with a 747 next.

Call it Crazy says

Strategist says

So what if the dollar loses value? Has no relevance to the standard of living.

Hmmmmm ?????? Sure, who cares if a loaf of bread is $2.50 or $100. Gas at $85. a gallon, hell it doesn't matter, right??

Strategist says

Our standard of living is determined by the introduction of new technologies, not maintaining the value of a currency.

WOW (scratches head).... Who would have known I could sell my old cell phone, laptops and flat screen to buy a house or a car???

Why am I holding on to all these pieces of paper with dead presidents on them??? Silly me....

By your logic, an iPhone 5s would cost 10 cents back then. LOL.

Call it Crazy says

Call it Crazy says

Strategist says

Strategist:

How about good old fashioned common sense loans?

Please explain what your version of these are: ie: LTV, down payment percentages, income ratios, etc...

I'm still waiting for your criteria......

Ok, you just don't give up.
Example.....
I bought my first home fresh out of college in 1986 with a stated income, neg am loan. Start rate 7.95%. I lied through my teeth to get it. My parents helped me out with the 25% down. I quickly got a job, struggled and managed to pay on time.
My payments were never higher than the rental value. In 2000, with my wife's nagging I paid off the balance. It was a wonderful feeling.
What was wrong with that loan? Nothing. It hurt no one, but helped me.
Can we bring that program back?

Call it Crazy says

Strategist says

By your logic, an iPhone 5s would cost 10 cents back then. LOL.

I sure as hell hope someone else in your family does the finances....

My wife pays all the bills. She says I am irresponsible.

bob2356 says

Call it Crazy says

A new car was only about one-third the cost of the annual average income.

I'm sure you could build a 1938 car for around one-third the cost of the annual average income. I'm not sure anyone would want to drive it. Crappy drum brakes, poor handling, service every 1000 miles, cramped, loud, no air, 75k mile engine life (maybe), 70hp with 75 mph top speed, maybe 20mpg, no safety of any kind.

Compare that to the 2014 rental corolla I just drove across NV at 90-100 mph in perfect comfort that sell for 18k new getting 30mpg if driven normally.

Would you like to compare a dc3 with a 747 next.

Well if you bought the RIGHT car back in 1938 and kept it up you could sell it today for a bit better than inflation:
http://www.businessweek.com/stories/2006-03-05/1938-mercedes-benz-540k-sport-cabriolet
http://www.rmauctions.com/lots/lot.cfm?lot_id=1061672

But you are talking about a totally different time. You can't compare the eighties to now. The housing market was never more than twice the median income in the eighties. It's a completely different market now. Actually, it's one of the historically radical differences within this market and why a lot of people feel it's volatile and artificial.

hrhjuliet says

But you are talking about a totally different time. You can't compare the eighties to now. The housing market was never more than twice the median income in the eighties. It's a completely different market now. Actually, it's one of the historically radical differences within this market and why a lot of people feel it's volatile and artificial.

I lot of people feel it is volatile and artificial because so many got burnt so bad. People are justifiably scared. The 2008 crash was the worst since the Great Depression. I'm sure people said similar things in the years following the depression, but bad times do not last forever. If you stay focused on the long term horizon you would have seen 2 years ago was the perfect time to buy. If you missed the boat, don't worry, another boat has just arrived.
This is truly a once in a lifetime opportunity you cannot ignore. We don't live in caves anymore, we have to build houses. The last 6 years saw very little home building, which has resulted in a severe housing shortage, which is exactly why rents are so high.
A few months ago I even put my parents retirement account, and my sons college savings into home building stocks, I'm that confident.
Housing is not going to zero.

I didn't miss the boat, I just can't get behind a market that has dramatically shifted from the historical average. I know a lot of people who were burned in the last boom and I was suspicious for the same reason the last time and even had people angry at my husband and I for not buying into the market we were told by all the experts would never go down. Well, it did go down, and it seems just as odd and questionable as the last time.

housing already went back to historic norms. if this chart doesn't scream BUY i don't know what does:

New Renter says

Well if you bought the RIGHT car back in 1938 and kept it up you could sell it today for a bit better than inflation

Except that you'd be WAY too old to enjoy the money.

Strategist says

So what if the dollar loses value? Has no relevance to the standard of living.

Cell phones, large screens, computers, life saving drugs, internet did not even exist a hundred years ago. How the hell are you gonna make a comparision? Our standard of living is determined by the introduction of new technologies, not maintaining the value of a currency.

Our standard of living is based on both. Just imagine how much better off we'd be if we didn't destroy our currency or wealth while yet kept innovating. I don't think an Iphone 5 would cost $500 but certainly not 10 cents either.

This graph does not apply to the
Bay
Area
If it did, you would see a giant slant up way past its historic average. Something is still not right here.

hrhjuliet says

This graph does not apply to the

Bay

Area

If it did, you would see a giant slant up way past its historic average. Something is still not right here.

typical ploy for some to mask the still over inflated SFBA home prices.. still open to
correction...

Call it Crazy says

what he seemed to believe was ‘white privilege.’”

wow... thats remarkable... how people have changed completely what Robertson
was saying...

"being white trash poor farmer working with black farmers in the fields hoeing cotton."

thomaswong.1986 says

"being white trash poor farmer working with black farmers in the fields hoeing cotton."

No, no -- he suggested that blacks didn't seem to him to be suffering all that much before the civil rights movement.

Look, we all gets a kick out of rustic hirsute hillbillies with highly delineated eyebrow musculature; but face it, Tom...it's pretty fucked up thing to suggest.

I gotta say...Emilie's arm is looking a-okay to me, Big Mal.

JodyChunder says

No, no -- he suggested that blacks didn't seem to him to be suffering all that much before the civil rights movement.

Look, we all gets a kick out of rustic hirsute hillbillies with highly delineated eyebrow musculature; but face it, Tom...it's pretty fucked up thing to suggest.

no.. he made no such comments about the civil rights movements. the critics would like to make many people believe what happened in Mobile Alabama or Mississippi was common across every city in the South, even in a small town in Louisiana and of course, every white person was in the Klan enforcing Jim Crow laws. THEY ARE WRONG!

what Robertson was critical about was entitlement and welfare which has crippled Black communities.. Heck there are lots of Black Economists and Political figures who also state that.

it would be a shame to overlook that in a small town in Louisiana, where Robertson came things were different and perhaps poor white farmers were more respectful to poor black farmers as they both worked in the fields..." I am with the Blacks"...seems to have been lost in his comments.

Yes, Jim Crow laws and Racism are wrong and immoral.

"I never, with my eyes, saw the mistreatment of any black person. Not once. Where we lived was all farmers. The blacks worked for the farmers. I hoed cotton with them. I'm with the blacks, because we're white trash. We're going across the field.... They're singing and happy. I never heard one of them, one black person, say, 'I tell you what: These doggone white people'—not a word!... Pre-entitlement, pre-welfare, you say: Were they happy? They were godly; they were happy; no one was singing the blues."