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What if there were no mortgages available?
2011 Mar 25, 9:53am 3,725 views 14 comments
by kunal follow (0)
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That if you wanted to live in a place that you called your own, you would save up the money for it.
How are people supposed to save significant amounts of money if there are no mortgages? The only reason people can save up lots of money is that others borrow it.
This is ridiculous, now.
There are numerous countries where there are or were no mortgages. People could still save lots of money. Heard of Vietnamese boat people coming with bags of gold coins? Do you think there were gold mortgages there :-)
Here are my thoughts: Prices would have to be reduced to the levels of the construction cost + land value of where you intend to live (or even build a house). At that point no one can fool around with the monetary system in place before and after a home is purchased. i.e. no mortgage, no derivative financial instruments.
If a home represents 2 man-years of labor (miners, foresters, designers, etc.), at $50K per man, then that's a $100K floor on the price of a home.
Even after Quantitative Easing, there is only about $6K of money for each person in the US. How are lots of people supposed to stuff $100K in a piggy bank to save for a house?
BTW, mortgages don't even have to involve lending money If I'm selling my home, I can just let them pay that $100K over 10 years or whatever, through seller financing. Even if banks and all of Wall Street disappeared, mortgages wouldn't.
There are numerous countries where there are or were no mortgages. People could still save lots of money. Heard of Vietnamese boat people coming with bags of gold coins?
Sure SOME people could save lots of money, and SOME vietnamese had bags of gold coins. But was not possible for lots of people do to so, since there were only so many gold coins in existence. Limit savings to a commodity, and total savings will be very limited.
bubblesitter
@
2011 Mar 29, 9:21am
If you can’t pay cash, fuck it.
And fuck bankers running anything larger than a village credit union.
Just chop them into bite-sized pieces for the domesticated animals.
Snack time, Fluffy!
Genius!
@MarkinSF - Why can’t people save $100k in today’s currency system? Hasn’t the FDIC limit on savings accounts been raised to $250k recently? If your bank fails, the Fed just prints up the cash!
Of course in today's currency system you can. But our currency system requires somebody to be in debt a dollar for every dollar somebody has. The poster was asking what would happen if there was no debt, and people just paid for homes up front.
Extend the posters question: What if governments had to run balanced budgets and never have any debt?
What if people had to save money to buy everything in cash, and never use a credit card or car loan?
What if nobody was ever in debt?
My point is it would be impossible for almost everybody to save to buy a home if they had to pay up front, and debt based savings (lending to debtors) was not available.
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Just a thought.
What if, no one was willing to give you money to purchase property that you would want to live in?
That if you wanted to live in a place that you called your own, you would save up the money for it. And then buy or build it.
Here are my thoughts: Prices would have to be reduced to the levels of the construction cost + land value of where you intend to live (or even build a house). At that point no one can fool around with the monetary system in place before and after a home is purchased. i.e. no mortgage, no derivative financial instruments.
Is this a step back? a Devolution and hence stupid? or have we evolved so far along as an economy and a monetary system that its just not possible?
#housing