Posted on 09/23/2010 9:46:19 AM PDT by Kaslin
Just a few years back there were comments by some on FR to the effect that it was “normal” to spend five years income on a house. I still remember when two years income was considered the limit.
You weren’t poor, I grew up with Mom, Dad and three brothers in a house considerably smaller than that and NO bathrooms! We had a big lot though, forty acres.
I once told a professional real estate salesperson that she was wrong in saying that houses appreciate. At first she had a very condescending attitude, she was certain that I was a fool but I proceeded to prove to her that any increase in the value of a house and lot that was in excess of inflation ALWAYS represents an increase in the lot value, not the house itself. She wound up agreeing with me. Actually I could come up with a rare instance in which that would not be true but it would be a reach.
She was also dead set on the idea that buying a double wide mobile home was NEVER a good idea because the double wide depreciates while the site built house appreciates. I told her that if you bought and sold a site built house the way she was talking about buying and selling a double wide mobile home the double wide would come out being a far better investment. She wound up agreeing with me on that too.
Anyone who reads this report will understand exactly how this could happen and how Obama could get elected.
Americans’ Financial Capability by Annamarie Lusardi, February 2010
http://www.fcic.gov/hearings/pdfs/2010-0226-Lusardi.pdf
Basically, a country that is completely illiterate when it comes to finances and credit was given an unlimited amount of money to spend in the form of credit... and we did.
America went from $2.1 trillion in residential mortgage debt in 1990 to $11 trillion in 2007. That number increased BY $6 trillion in just 7 years from 2000 - 2007!
This doesn’t even start to take into account all of the unfunded retirements (at least $6 trillion too little saved), the unfunded pensions (trillions), bad commercial debt (trillions), bad municipal debt (trillions), public debt ($14 trillion) and the biggest monsters of all, unfunded liabilities for Social Security, Medicaid and Medicare (estimates of up to $200 trillion!!!).
We inherited a golden nation with a golden goose (industry) and we killed it.
We deserve the gov’t we’ve got and we deserve the economy we’ve got.
If anyone wanted to free market avail affordable houses, they’d make the local and state building codes illegal. Then we would have auto car size companies prefabbing houses. You would get a double wide, manufactured house, dropped on your foundation for 20K.
But then that would begin to cut out the Welfare State Plantation Corporation, so forget it.
>>Right. I hear you. Unemployment is our fault. Gee thanks.<<
Wrong crisis. I was writing of the so-called “housing” crisis — much of it could have been avoided or the pain reduced had people just used reasonable judgment.
>>I can’t hire myself, can I? Where on earth do you work that you can make such statements?<<
Actually, you can. It is called a “small business” and there are millions of them across America.
>>I bought my second house in 2000 (a modest, 1800 sq ft colonial), with about 10% down and have been paying a little extra on it for 10 years. I’m still easily $50000 underwater.<<
But does it matter? Your house provides the shelter you purchased, irrespective of the price of the next door neighbor’s house. The “underwater” is imaginary.
It matters to the extent that I’m stuck in a failing school district so I have to spend 9 grand a year on private school for my kids. And I’m stuck watching the local HS dropouts sell prescription drugs in the street in front of my house. And demographically there are people who are buying houses for 40 or 50 thousand dollars in my neighborhood that frankly are not in my social class and trash up the neighborhood. And any job opportunity that might require a move would force me into a short sale situation, or worse a foreclosure and all the hassle that goes with that. I get what you are saying, it’s a place to live with a payment I can afford and that it is just a loss on paper but it also restricts my mobility and freedom. And knowing it will stay like this for another 10 years or more is really frustrating.
I’ve owned my own tutoring business for some time now.
Anyways, sorry for misunderstanding you.
>>I get what you are saying, it’s a place to live with a payment I can afford and that it is just a loss on paper but it also restricts my mobility and freedom.<<
I don’t know why I am doing such a bad job of getting my point across.
Yes, wanting to move and not being able to sucks. So does losing your job. There are many individuals who are adversely affected by being underwater.
But that isn’t a “crisis.” There are always things like this happening. During good times, there was unemployment too — ask the employees of Enron. And when housing prices were high and rising, people had to buy houses (or even rant) far away from their work and put up with lengthy commutes, sometimes not spending any time with their families at all. Sucky things happen to good and responsible people all the time.
The point is the so-called “crisis” 1) is not a crisis if people just pay their mortgage as agreed and not worry about the house value; and 2) the “crisis” as defined in the OP was created by a large number of people making stupid decisions, egged on by the liberal legislators.
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