Posted on 08/07/2007 6:49:22 PM PDT by Kaslin
Amid all the hand-wringing and finger-pointing as housing markets collapse, mortgage foreclosures skyrocket and financial markets panic, very little attention is being paid to the fundamental economic and political decisions that led to this mess.
The growth in risky "subprime" mortgage loans by people buying homes they could not really afford has been a key factor in the collapse of housing markets, when the risks caught up with borrowers and lenders.
But why were homebuyers suddenly taking out so many risky loans and lenders suddenly arranging so much "creative" financing for these borrowers?
One clue is the concentration of such risky behavior in particular places and times.
(Excerpt) Read more at ibdeditorials.com ...
Looking to blame someone...OK, I’ll give it a shot.
How ‘bout them damn speculators buyin’ vacation homes and properties they are trying to flip quickly. And then, what about them naive suckers buyin’ their “family home” at an outrageous price, just positive that nothin’ could go wrong.
Thas why dis’ bird nests with a slum lord. :<))-*
Perhaps that's the only reason we have a private sector, so the politicians will have somebody to blame.
One other reason for the private sector to exist: being the parasites that they are, politicians need a tax base for survival
So keep your eyes on the classified ads. Not only might you be able to pick up a newer home for less than it was originally bought for but you will be able to pick up new-ish jet skis, big screens, pool tables, RVs, etc.
lol
How did slick Willy force lenders to give loans to those who could not afford them? I don’t doubt that he would like to have such power but I am not aware of the circumstances.
PING to Thomas Sowell...
If nobody explained that they were subject to large variation in their future monthly payments, they should sue their G-Damned lawyer for bad representation!
First let me state that I dislike all lawyers.
That being said you do not know what you are talking about. Lawyers are paid at closing to state condition of title and to make sure the lender has first lien and that is all. If you hire an out side lawyer to represent you at closing that is a different matter, but it is not the normal course of business.
bookmark
Doesn’t Warren Buffett live in a $200,000.00 house?
While it is very true costs have increased substantially due to government decree (permits, environmental reports/requirements, materials, water meters and structural design) I believe something else more significant has quietly happened.
Inflation.
I just completed the building of a large home that took three years to build. During that three years, virtually everything went up in cost substantially. Copper, concrete, wood, you name it. Here in California, today, it is hard to build a basic home for less than $175 a square foot. At the time we applied for a permit it was less than $100 a sqft for a basic home. The permit and school fees run about $5 to $6 a square foot. So a 3,000 sqft basic home costs about $525,000 to build here without the land. Add the land and the cost to build and homes are not selling for that much more above those costs.
While there are tons of government regulations and related costs, the regulations didn’t change very much during that few years of run up in costs. Its definitely a factor, but not the prime factor.
And the bottom line, I don’t see how housing prices can drop very much lower than the cost to build. People have to live somewhere and the number of people to house is expanding. Obviously it can but only as a result of a major economic collapse...
My guess is that the true inflation (or depreciation of the dollar) has been mostly hidden by low cost imports from China and other places. As the dollar declined the costs (in dollars) of hard assets shot up, like gold, land, etc. Only technology items, food (until recently) and clothes have gone down in cost and China has been a major reason for that. When you average all those things together it makes inflation not look so bad. But I believe it has been misleading. In addition I don't believe incomes have kept up with the true inflation rate.
We'll see. That's my take...
Here in California normally there are no lawyers directly involved. Obviously lawyers write the various forms used in the transaction but no laywers are used normally. At least in normal home transactions.
a scrutiny of the times and places where housing prices doubled, tripled or quadrupled within a decade shows that restrictions on building have been the key.PING to Thomas Sowell...Attractive and heady phrases like "open space," "smart growth" and the like have accompanied land use restrictions that made the cost of land rise in many places to the point where it greatly exceeded the cost of the homes built on the land.
Just what I was thinking.Certainly does put one in mind of Professor Sowell's brief against the "open space" policies driving real estate valuations through the roof.
I am sure Jessie and Al will be calling for the "Unfair Foreclosure Act" soon when all those mortgage payments come due and people lose their homes because they had no business obtaining the loans they did.
.............If you hire an out side lawyer to represent you at closing that is a different matter, but it is not the normal course of business................
Well, every time that I have an inch + thick stack of papers on a desk, putting me on the hook for hundreds of thousands of $$$, I have always paid the $100 to $150 to have my RE attorney go through the stack, papers that he sees each day, every day, to be sure everything is in order with the loan approval and P&S docs.
Call me stupid to waste my money!
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