How low will the Market go before Bush acts?

[Conan71]

quote:Originally posted by tim huntzinger

I think home ownership should be a national priority, it is good for neighborhoods and good for families.  Rental properties degrade the quality of life and reduce the sense of community in the neighborhood.  If I am a big fan of Mae, FDIC, CRA and what not one can imagine the Maoist dreams that stir in this fervid mind.

All one has to do to see that it's not as much of a priority is look at the tax code these days.  With the standard deduction going up, the tax break on mortgage interest deduction is becoming irrelevant to many families who make less than $100K per year, based on how much house lenders will allow them to buy at what the "average" NDI range is.  I believe standard deduction for married/file joint this last year was, what, $10,200?.

With the earned income credit, along with standard deduction, it makes home ownership even less relevant to families at the lower end of the income spectrum.

When I bought my first house in 1989 for $55K, on a 8.75% bond money loan, I had enough interest to make it worthwhile to itemize.  If I would have bought that same house today, there would be no tax incentive.  Using rough math, a couple needs to finance somewhere around $180,000 at prevailing 30 year rates to outrun the standard deduction.

It's kept it as a priveledge for those who have more of a tendency for homeownership anyhow in upper income brackets.

All that aside, there are still programs like FHA and municipal and county bond programs which are incentives for first time buyers and low-income families to buy with low down payment requirements.  However, many low-income people either come to the table with no credit or poor credit, or no down payment money.

I'll agree to an extent that some incentives have disappeared for the average work-a-day family.  However, there are a lot of people who through poor decisions of their own have made it harder for themselves to be able to buy a home.  You can't protect people entirely from their own poor decisions.  I really don't think that should be a function of government.

[shadows]

quote:Originally posted by iplaw

Hey Timmy.  I found you a new avatar.  Feel free to use it at any time...

Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.

I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.  

[cannon_fodder]

quote:Originally posted by shadows


Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.

I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.

Russian Flag:

[iplaw]

quote:Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.

See that's where your assumption went wrong.  Of course what would I know, I can't speak Sphynxian like you either...

"You must lash out with every limb, like the octopus who plays the drums."

[tim huntzinger]

At least no one has caused another a Nazi yet, although . . .

Ultimately, predatory borrowers are a risk to the health of our economy, but predatory lenders must exist, as well.  Fact is we have moved to an economy that is based on spending and not on saving.  If the gubmint raises its down payment requirements for first time home buyers or for that matter any loan, will it be at the cost of retail spending in general?

[shadows]

quote:Originally posted by tim huntzinger

At least no one has caused another a Nazi yet, although . . .

Ultimately, predatory borrowers are a risk to the health of our economy, but predatory lenders must exist, as well.  Fact is we have moved to an economy that is based on spending and not on saving.  If the gubmint raises its down payment requirements for first time home buyers or for that matter any loan, will it be at the cost of retail spending in general?

I believe the requirement of a down payment would curb excessive spending and slow the spiraling inflation that has devaluated the dollar where the savings of money is no longer feasible.  When a 50 cent gallon of milk was delivered to one's door that now cost $4 and you pick it up, the time for change of the monetary system is ready for adjustment.  

The large corporations just love the present status quo because they will be able to pay off their retirement debts with devaluated money of spending values at less than a third of when it was installed in their retirement.   The same it true with money invested at present that will pay for  only one third of what it will purchase today.

The value of the product does not change it is the value of the barter of exchange that changes.    

[cannon_fodder]

1) If they instituted a down payment requirement you would be complaining that the evil government has taken away the "right" of homeownership from the poor.

2) How much would milk cost in Gold?  Lay off the tired currency debate... milk used to cost 50 cents and computers used to cost hundreds of millions.  What does that have to do with the housing market?

3) Inflation helps manufacturing and debtors and hurts financiers and return investors.  Just as many corporations are hurt by inflation as helped.  The "poor" who have no money to lose value are rewarded with easier debt repayment.

4) Presumably money invested today will pay for MORE than what it will purchase today because it is INVESTED.  If it was buried, it would likely pay for 3-5% less each year as a historical average.  Investment returns have averaged 8-13% per year... so you should come out ahead.

[shadows]

quote:Originally posted by cannon_fodder

quote:Originally posted by shadows


Seems one would find it irresponsible for a supposedly grown intelligent person to start to flame as is indicated in the above posts.

I don't believe there are indications that because of tim's beliefs, that he should be degraded to the extent as indicating that they deserve to be connected with the Russian flag.

Russian Flag:

The houses that sold new for $3,700 dollars now are selling for $100,000 dollars.  The house have sustain deterioration over the past 70 years but unlike good wine there can be only one explanation of why such an increase to the present value.

Could it have anything to with the value we place on our barter of exchange?  

Being that Russia has endured the ages of time and has survived under many standards (6&7) thus the red flag used under the USSR of the Sickle and Hammer denoted expansion in agriculture and in industrial areas under a communist system.  It is still used by other communist countries having been incorporated in their flags.

The star of Russia communist flag is available as a Russian flag from e-bay.

[tim huntzinger]

Responding to the wild-eyed, leftist musings of Bush haters around the globe, Bush outlines steps to aid besieged mortgage holders.

Hope this helps build confidence in the markets.

[iplaw]

Don't worry.  It won't.

[cannon_fodder]

It will have next to no effect, it is exactly what was expected.

quote:He rejected any direct government aid to homeowners losing their houses to foreclosures, saying he only supported federal government help that would encourage refinancing and educate prospective home buyers about risky mortgage terms

I agree with this position.  There are consequences to borrowing more than you can afford, and I'm afraid those include the loss of your home.  I hope the number of people that suffer this fate is as low as possible, but teaching them poor decisions have no consequences will just lead to a repeated cycle of over borrowing.

[bokworker]

Tim , you are right that the measures outlined today are more fuluff (confidence) than real...

1) allow individuals that are more than 90 days delinquent to refinance into and FHA loan. The loan is not forgiven and subject to borrowing limitations for FHA loans. Rates may be lower but not neccasarily. Taxpayers are on the hook for those borrowers that do refinance to an FHA loan and then subsequently default. Administrative estimates are that 80,000 homeowners can refi this way with a potential total of 240,000 by the end of 2008

2) Tax relief for foreclosured properties. Currently if you owe $200,000 and your house is worth only $180,00 you get a tax bill on $20,000 of taxable income upon foreclosure. This may in fact require an act of Congress but if so it appears that support is broad based.

And saving the best for last 3) Bush ordered a STUDY by the Treasury and HUD into the reasons behind rising delinquencies so additional policies can be drafted.


The bottom line is these proposals will have limited impact and will not materially change the cycle of higher delinquencies, tighter credit conditions, and lower home prices. Dealing with these issues in a manner that does not involve a fair amount of pain would require a willingness to lend even more money at easier terms that would only make the eventual problem even bigger. The party is over and there are some serious hangovers....