Housing Market to Bush what Stock Market was to Clinton
Interesting parallels here; both are being criticized for ignoring the signs of a corrupt system that in the end bites the "average American" in the ass while many others walk away with huge profits.
Republicans said this about Clinton and the stock market; now Dems are saying this about Bush. Before that it was the Savings and Loan mess.
What's next? Can we really lame blame for corrupt systems at government officials or is it just the bad side of a free market system?
Stock market internet frenzy followed by real estate investment frenzy cause by greedy average joe jumping on the band wagon. Those crying are those who jumped on the wagon after it had left. Not sure you can blame democrats or republicans either one.
Honestly, I think the same folks that left the dot.com said "I am not going to get into stocks, I'll invest in something safe - REAL ESTATE!"
Then, summarily unimpressed with stable single digit returns, or continued greed looking for ways to sustain the obscene returns (some parts of Cali and Las Vegas), the same folks found a way to corrupt the RE market by offering deals that, once again, seemed too good to be true.
The inability of folks to plan, invest, hold, and be reasonably Happy with historic "regular" returns, has created an "investor" that is ripe for corruption in that they are looking for the quick buck.
They will move from real estate to the next "big thing" that should be safe and corrupt it too.
Overall it's the erosion of "work hard, be rewarded" and a sense that everyone should be able to capitalize on flipping houses and cashing in on a dotcom. Fact is - everybody CAN'T - but the get rich quick stories are so alluring, it's easy to get caught up in the hype. The last in are usually the folks least able to absorb a loss and the highest likelihood that they got in after the decline has already stated.
__________________
Life should NOT be a journey to the grave with the intention of arriving safely in a well preserved body, but rather to skid in sideways, chocolate in one hand, martini in the other, body totally worn out and screaming ~ WOO HOO what a ride!
I have the hardest time trying to explain this market to my clients in Real Estate. Most of us homeowners remember that it was only until about 7 years ago that the common saying was that you had to stay in your home 5 years, just to break even. And yes, that had almost always been consistent.
Now, I have clients in these "down" times, that are still making over 100% appreciation over when they bought 5 years ago, and they're freaking out because it's no longer 150%. The ones that are hurting are those who bought in peak time about a year and a half ago. They HAVE truly lost money. That sucks for them, but that's the danger we play with in any investment.
__________________
'99 Silver GTS..Connolly Leather..K&N..smooth tubes..B&M Short Shifter..Roller Rockers..Aluminum flywheel..Baer Racing Brakes with 2 piece rotors..3.55 Gears..urethane suspension bushings..And many more mods to come....
I see some parallels but I don't see how housing "corruption" can be anywhere near as successful as insider trading and inflated stock value.
Clinton turned a blind eye to Wallstreet corruption. What is Bush supposed to do about housing, tell people to go look at the property before buying?
Or at least do something to crack down on these predatory lenders.
I was just talking about the mortgage mess. It is a sign that you are involved in a bubble, and that it is about to pop, when people who have no business being involved in the area start getting involved. When you neighbor opens a brokerage in his basement: bad sign. When you stay at home wife starts pulling coin selling homes: bad sign.
What abso-freakin-lutley kills me is that sub prime mortgages and the huge rush to issue them.
I am going to quote, directly from the 10-K filing of Radian Mortgage Insurance:
"Non-prime loans represented 28.1% of our total primary mortgage risk in force (59.4% of which was Alternative-A or “Alt-A”) "
"We define Alt-A loans as loans where the borrower’s FICO score is 620 or higher and where the loan documentation has been reduced or eliminated."
That's the freakin problem right there. Someone, somewhere, should have said "Gee, I think it is fucking retarded that we are handing out mortgages to people with spotty credit who have filled out the EZ app with only thier name and estimated income".
EVERYONE was asleep at the wheel.
That is fucking retarded. I literally can not even begin to verbalize my fuming anger over this situation.
Think of it like this: You own a large company, and in an effort to boost sales, you start looking for new customers. Once you locate them, they say "Gee, you product is great, but we can't afford it". So you say, "hey no problem, just fill out a credit app" and they go "Ooh, we wont pass your standards".
So what do you do? YOU PRETEND NOT TO HEAR THEM AND GIVE THEM CREDIT WITHOUT THE APP.
I have the hardest time trying to explain this market to my clients in Real Estate. Most of us homeowners remember that it was only until about 7 years ago that the common saying was that you had to stay in your home 5 years, just to break even. And yes, that had almost always been consistent.
Now, I have clients in these "down" times, that are still making over 100% appreciation over when they bought 5 years ago, and they're freaking out because it's no longer 150%. The ones that are hurting are those who bought in peak time about a year and a half ago. They HAVE truly lost money. That sucks for them, but that's the danger we play with in any investment.
they actually haven't lost anything yet.....unless they've sold. It's the same as stocks.....you don't lose anything until you dump it.
Or at least do something to crack down on these predatory lenders.
.
I take issue with the predatory lendor statement.
What made them predators as you call them? The fact that they would loan money to people who might have been considered lower income? I have heard time and time again people freaking out because they are two months behind on thier adjustable mortgage that has yet to adjust to the higher rate. When they are asked what the rate will be adjusted to the resoponse is, "I don't know." ARE YOU FREAKING KIDDING? They simply have no clue about finances. Blame that on public schools or whatever else you want but these "predators" had willing accomplices that are just ignorant and signed their name to the document.
The flip side of the coin is before the sub prime debacle, I heard news reports time and time again that so and so bank was racist because it did not make X% of loans to minoritys, women, or low income people. In Chicagoland these banks were being crucified as racist over the airwaves only two years ago.
Funny, I don't see these stories on the news anymore.
__________________
In the market for a shiny new Vette.
These people who can't make mortgage payments on sub-prime loans and are facing eviction are not, and never were, homeowners. They were RENTERS, with no equity - no skin in the game. These renters got a nice ride, and they are learning a valuable life lesson. It's time for these idiot lenders to take a bath.
There's no reason, nor necessity, for the federal government to step in here.
These people who can't make mortgage payments on sub-prime loans and are facing eviction are not, and never were, homeowners. They were RENTERS, with no equity - no skin in the game. These renters got a nice ride, and they are learning a valuable life lesson. It's time for these idiot lenders to take a bath.
There's no reason, nor necessity, for the federal government to step in here.
yes I agree with that. let the market correct itself. The high risk lenders knew what they were getting into and the people taking out the loans should have known the conditions. I am so tired of hearing about people that buy a house and think in two years they can sell it and double thier money.
I would suggest the same goes for the companies who lent the money; all this talk of a "bailout" to these companies doesn't make sense. We've become the "payout" society that expects the government or society to compensate us when we fuck up.
Location: Nothing brings people together more than a mutual hatred
Posts: 2,101
Rep Power: 12
Isn't that what the government is there for? You aren't really suppose to make a decision for yourself or get out and work? Why not just wait long enough for a government program to take care of you? I hear they are even increasing S.S. an extra 24.00 a month so that makes a good retirement plan doesn't it?
What made them predators as you call them? The fact that they would loan money to people who might have been considered lower income? I have heard time and time again people freaking out because they are two months behind on thier adjustable mortgage that has yet to adjust to the higher rate. When they are asked what the rate will be adjusted to the resoponse is, "I don't know." ARE YOU FREAKING KIDDING? They simply have no clue about finances. Blame that on public schools or whatever else you want but these "predators" had willing accomplices that are just ignorant and signed their name to the document.
The flip side of the coin is before the sub prime debacle, I heard news reports time and time again that so and so bank was racist because it did not make X% of loans to minoritys, women, or low income people. In Chicagoland these banks were being crucified as racist over the airwaves only two years ago.
Funny, I don't see these stories on the news anymore.
Remeber the Ditech commercials? "NO PAPERWORK HOMELOANS". Tell me those aren't targeting the pseur crowd trying to plunk down 250K when they are pulling a whole 40-50K per year.
Real Estate transactions are complex. To be done right you should have a competent, experienced realtor and a lawyer. A lot of these places were trying ot be all in ones. They build homes, market homes and get your qualified to own the own.
The kick is that you should never need help getting qualified! If it takes two months, four apps and a broker to find you an ARM with a 3% teaser, you should sit back for another seven years, bank some downpayment money and let your credit reset itself.
Seeking out these people, who will pay fees out the ass to own a home when they are not qualified to do so is PREDATORY.
