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Disconnect between home prices and wages

Discussion in 'Members' Lounge' started by Bob Vila, Aug 23, 2007.

  1. Bob Vila

    Bob Vila ɐןıʌ qoq Admin VIP

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    What do you guys think of this article? I personally think we're in for some drastic times up ahead. I mean, Countrywide Home Loans is now looking to credit to fulfill mortgage requests....
     
  2. Capt. Orygun

    Capt. Orygun Win the Day

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    I hope it's true, the only people who can afford to buy a house in Oregon anymore are from California

    and if it happens, I'm buying a house like woa
     
  3. B16

    B16 Super Moderator VIP

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    Do you have the original link to this?
     
  4. reckedracing

    reckedracing TTIWWOP VIP

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    i've been waiting for the bubble to pop
    its gotta happen sooner or later
    i think the #1 cause of the "bubble" is the low interest rates
    i already see homes sitting on the market longer and longer and more foreclosures are coming through
     
  5. totalburnout

    totalburnout Well-Known Member VIP

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    They borrowed 31billion as of the other week.


    In terms of the "bubble bursting", the article fails to show how home prices have doubled over the past years, so even if you sell at $40k less in today's market, than you did in yesterday's market, the average home owner has still seen a ~100% increase on rate of return.

    Lamen's term, if you bought a house four years ago and you sell the house now, you're still far ahead of what you were when you purchased the home.

    The people losing out on the real estate market are those who bought the house in the recent past with plans of flipping the homes for a quick sale and quick profit. Those people will have to find ways to pay for the mortgages that they didn't expect to have for an elongated period of time or sell for big losses.

    In short, those with get rich quick schemes that involved investing all their money into today's real estate, should have taken a look at where the economy was heading and how the economy could not withstand the housing boom for an extended period of time.

    We'll hit a short recession until people get back on their feet and learn that they can't have the latest and greatest thing in terms of going from new home to new home in a short time span and everything will be back to normal.
     
  6. pissedoffsol

    pissedoffsol RETIRED

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    i don't think it will happen here.

    simply put, people won't sell it for a loss unless they absolutely HAVE to move.

    if the market crashes, i'm not selling... thats for sure. its just like the stock market. I'm down 30% the past two weeks because of everything dying. i'd be stupid to sell my stocks off for less than i paid for them. i just have to wait it out and hope it recovers (which it already started to do yesterday).

    everyone keeps talking about low interest rates.

    sorry, they are gone.

    you missed the boat on those 3 years ago.

    i'm up a full percent on my house vs what i got the mortgage for my condo on just under 2 years later.
     
  7. pissedoffsol

    pissedoffsol RETIRED

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    :werd:

    its the flippers who tried to make money and sucked who are screwing up the market. i heard somewhere that 80% of flips in georgia are being foreclosed on.
     
  8. totalburnout

    totalburnout Well-Known Member VIP

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    Buying a house like woa with what interest rate?


    The time to buy is now or in the near future when houses start dropping price and interest rates are still decent. Interest rates are only going to increase from here, as they've already started to slowly increase.

    If you don't have the money to play right now, then you're sitting this one out.
     
  9. totalburnout

    totalburnout Well-Known Member VIP

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    In line with what I said in my prior post. Those who are in it for the long haul are the ones who will make it just fine and still come out ahead of when they went in.

    Those who are getting divorced and have to sell off a house, have to move and sell a house for work, or planned on flipping a house are the ones who are going to be biting the bullet and selling for losses.

    Also, people may not want to sell for a loss but many will be forced to sell or be foreclosed on because they bought outside of their means and didn't lock interest rates in while they were low and they could. This is why I was advocating to you to buy a house well within your means.

    The earth isn't going to explode and America isn't going to fall, but many people who weren't smart with their finances are going to lose their shirts and take big losses from their poor buying decisions.

    I didn't understand three years ago when everyone was saying it was a buyer's market after the initial price increases. Thats like looking at Google's stock and saying because its successful right now that its a buyer's top choice - clearly it was a top choice years ago and now its starting to even out.

    These stragglers are the ones who missed the train but were still hoping and jumping at the tracks. Now they're all out in the cold with their finances blowing in the wind.
     
    Last edited: Aug 23, 2007
  10. Capt. Orygun

    Capt. Orygun Win the Day

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    VA loan for the win
     
  11. B16

    B16 Super Moderator VIP

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    People are having to foreclose because they simply can't afford the house. Of course you wont sell because you can afford your loan. I think so far there have been something like 800% more foreclosures than last year.

    Shit, I hope prices come down some soon. My wife and I make great money together and can't afford shit out here. :(
     
  12. Capt. Orygun

    Capt. Orygun Win the Day

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    It's bound to happen everywhere one way or another, if nothing else the dieoff of the boomers over the next 15 years will cause prices on allot of stuff to fall
     
  13. totalburnout

    totalburnout Well-Known Member VIP

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    Are you figuring 3 or 4% annually for inflation?

    The fact that people are living so much longer and have to spread their money over a much longer time span is one of the reasons why things are more expensive, but not the reason.

    You won't be seeing any price decreases in normal market goods for quite awhile, especially after we pick up after the blip in the stock market.

    I just wish that all this happened three years from now, when I'll be older and more well prepared to capitalize. If I had a $30,000 bank roll, I would have went nuts buying stocks when the market dropped the other week.
     
  14. pissedoffsol

    pissedoffsol RETIRED

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    i bought a little bit.... my bank roll is tight with my house clsoing coming up, so i couldn't really do anything.

    ideally, i could have taken my 10 grand i got lying around in my check book for my closing costs, and dump it all on something thats down hard core and pary it comes up and pull out a couple days before my clsoing :D but if i lose that money, i'm screwed. lol so i didn't
     
  15. totalburnout

    totalburnout Well-Known Member VIP

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    Thats definitely risky.

    Thats the same reason why I won't take the ~$5k sitting in the bank right now and throw it into the stock market. Its a long term move, not a short term move.
     
  16. B16

    B16 Super Moderator VIP

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    Should have thrown it all into VMWare when they went IPO, sell it tomorrow :p
     
  17. BigJ

    BigJ I'm just about that action Boss. VIP

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    A guy at my school(complete legend in business) took out a humongous student loan and bought some google at IPO. Fucking lucky.



    My dad actually has about 300,000 in equity in his house, so he's looking to upsize while the market is dying. Most comps in our area are right around 500, and he bought his house for 200 years ago, so he can literally go buy a house for about 650-750 and pay the same mortgage rate even with the upsized house.

    Personally, I know he makes well enough to keep the house he's living in, and just buy a nice rental house to sit on for a while. I'm not sure why he doesn't, but hes a very conservative person. For the first time in his career, he started personally running two crews, and subcontracting out to his brother, and cousin as well, so he's going to run into some serious money.






    But what's funny is, even though the market is bout to go to shit in the NW, customs are going up like crazy. But they don't take out loans for houses. We couldn't be more swamped and I'm leaving in september so we're looking for help desperately.
     
  18. totalburnout

    totalburnout Well-Known Member VIP

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    Wreaks of illegal if it was a federally subsidized loan. Student loans are supposed to be applied *ONLY* to school related costs, otherwise you need to take out personal loans. If the loan wasn't federally subsidized than the interest rates are on par with personal loans and any person could have done the same thing as this guy, given a strong credit history.

    Intelligent move regardless of how he materialized the money.
     
  19. BigJ

    BigJ I'm just about that action Boss. VIP

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    Doubtful it was a subsidized loan. Subsidized loans are mostly given to people like me with a very low efc (estimated family contribution). From what Ive been told his family was ridiculously well off(like the rest of god damn college kids, jp) and made his "own" money.
     
  20. Celerity

    Celerity Well-Known Member

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    I would have much rather bought low with a high interest rate. My rate is 5.7%. That means I can NEVER re-finance. I paid a quarter million for a 3 bedroom (With a 1000+ sqft garage !)

    Now in order to make that money back, I'll need to ensure that everything I do adds to that house. I wanted to make it a 2 bedroom, but 2 bedroom places don't sell. Scrap that idea.
     
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