This link has been bookmarked by 170 people . It was first bookmarked on 13 Jun 2006, by J Nale.
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31 Dec 17
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04 Dec 15
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This is why you will
never hear the president or anyone else in power say that we need lower house
prices. They always talk about "affordability" but what they always mean is
debt-slavery. -
Every "affordability" program drives prices
higher by pushing buyers deeper into debt. Increased debt is not affordability,
it's just pushing the reckoning into the future. To really help Americans,
Fannie Mae and Freddie Mac and the FHA should be completely eliminated. Even
more important is eliminating the mortgage-interest deduction, which costs the
government $400 billion per year in tax revenue. The mortgage interest
deduction directly harms all buyers by keeping prices higher than they
would otherwise be, costing buyers more in extra purchase cost than they save
on taxes. The $8,000 buyer tax credit cost each buyer in Massachusetts an extra
$39,000 in purchase price. Subsidies just make the subsidized item more
expensive -
Canada and Australia
have no mortgage-interest deduction for owner-occupied housing. It can be done. -
Because boomers are retiring. There are 70 million Americans born between
1945-1960. One-third have zero retirement savings. The oldest are 66. The
only money they have is equity in a house, so they must sell. This will add yet
another flood of houses to the market, driving prices down even more.
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02 Jan 11
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20 Sep 10
hardy chou1. Because house prices will keep falling in most places. Prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a ma
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08 Sep 10
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22 Aug 10
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12 Aug 10
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nks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet on the coasts, both those safety rules are still being violated. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines.
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Anyone who bought a "bargain" this time last year is already sitting on a very painful loss.
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ecause it's still much cheaper to rent than to own the same size and quality house, in the same school district. On the coasts, annual rents are 3% of purchase price while mortgage rates are 6%, so it costs twice as much to borrow the money as it does to borrow the house.
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The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit.
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n you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purchase price for the house:
annual rent / purchase price = 3% means do not buy annual rent / purchase price = 6% means borderline annual rent / purchase price = 9% means ok to buy
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ince interest rates have nowhere to go but up, prices have nowhere to go but down. The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates.
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- A low price gives lets you pay it all off instead of being a debt-slave for the rest of your life.
- As interest rates rise, house prices must fall.
- Your property taxes will be lower with a low purchase price.
- Paying a high price now may trap you "under water", meaning you'll have a mortgage debt larger than the value of the house. Then you will not be able to refinance because then you'll have no equity, and will not be able to sell without a loss. Even if you get a long-term fixed rate mortgage, when rates inevitably go up the value of your property will go down. Paying a low price minimizes your damage.
It is far better to pay a low price with a high interest rate than a high price with a low interest rate, even if the mortgage payment is the same either way.
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The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage.
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Because the housing bubble was not driven by supply and demand. There is huge supply because of overbuilding, and there is less demand now that the baby boomers are retiring and selling. Prices in the bubble, even now, are entirely a function of how much the banks are willing and able to len
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ouses price increases don't produce wealth, they merely transfer it from the young to the old - from the coming generation of families who have to burden themselves with colossal debts if they want to own, to the baby boomers who are about to retire and live on the cash they make when they downsize."
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10 Aug 10
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22 Jun 10
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10 Jun 10
perhakanssonThe best arguments I've read for not buying. Well explained.
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Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment.
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Because it's still much cheaper to rent than to own the same size and quality house, in the same school district.
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The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates.
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Banks get to keep any profits they make, but bank losses just get passed on to you as inflation, when the Fed prints up money and buys their bad mortgages.
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It is necessary that YOU be forced deeply into debt, and therefore forced into slavery, for the banks to make a profit. If you pay a low price for a house and manage to avoid debt, the banks lose control over you. Unacceptable to them. It's all a filthy battle for control over your labor.
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The simple fact is that the renter - if willing and able to save his money - can buy a house outright in half the time that a conventional buyer can pay off a mortgage.
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Leveraged housing appreciation, usually presented as the "secret" to wealth, cannot be counted on, and can just as easily work against the buyer. In fact, that leverage is the danger that got current buyers into trouble.
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On a $300,000 house, that's $18,000 lost even if prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less.
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Most people will borrow as much as they possibly can, amounts that are completely disconnected from their salaries or from the rental value of the property.
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Canada has no mortgage-interest deduction at all, and has a more affordable and stable housing market because of that.
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The only money they have is equity in a house, so they must sell.
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We were all corrupted by the housing boom, to some extent. People talked endlessly about how their houses were earning more than they did, never asking where all this free money was coming from. Well the truth is that it was being stolen from the next generation. Houses price increases don't produce wealth, they merely transfer it from the young to the old
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Because boomers are retiring. There are 70 million Americans born between 1945-1960. One-third have zero retirement savings. The oldest are 64. The only money they have is equity in a house, so they must sell. This will add yet another flood of houses to the market, driving prices down even more.
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Michael MyersPatrick Killelea's blog on the housing crash (formerly a blog on the housing bubble). A great place to send people that tell you it's a great time to buy. It'll be a great time to buy when interest rates, price-to-income, and price-to-rent ratios are where they should be based on historical norms. And when the backlog of foreclosures is clear, and the federal government isn't propping up the market anymore.
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A safe mortgage is a maximum of 3 times the buyer's yearly income
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Renting is a cash business that reflects what people can really pay, not how much they can borrow
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n to own the same thing.
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It's still much cheaper to rent th
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On the coasts, yearly rents are less than 3% of purchase price and mortgage rates are 6%, so it costs twice as much to borrow money for a mortgage than it does to borrow (ie, rent) the house itself
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but it may make sense to buy in Michigan and some other places where prices have fallen into line with salaries.
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The bottom will be here when buying a house to rent out clearly makes money.
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It's a terrible time to buy when interest rates are low, like now.
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The way to win the game is to have cash on hand to buy outright at a low price when others cannot borrow very much because of high interest rates.
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To buy at a time of very low interest rates is a mistake.
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The US economy will not recover until house prices are allowed to fall to prices buyers can easily pay on a normal salary.
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Unemployment drives housing prices down. It also does not make sense to buy when your own job is in danger.
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Buyers borrowed too much money and cannot pay the interest. Now there are mass foreclosures, and Congress is taking a trillion dollars of your money to pay the mortgage investment losses for banks. The plan is to overpay the banks for bad mortgages, claiming that this will support the housing market. It will not work, since bank profits have nothing to do with housing prices.
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This means that the money available for mortgages is falling, and house prices will keep falling, probably for another five years or more.
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The cost of selling a house is 6% because of the realtor lobby's corruption of US legislators. On a $300,000 house, that's $18,000 lost even if prices just stay flat. So a 4% decline in housing prices bankrupts all those with 10% equity or less.
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o really help Americans, Fannie Mae and Freddie Mac should be completely eliminated, along with the mortgage-interest deduction.
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The actual amount of money created by the Fed lately is a trillion dollars, which sounds huge, but is small compared to the $10 trillion drop in housing "values" and another $10 trillion drop in stock market capitalization.
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The speculator then paid the seller his asking price (much less than the loan amount), and used the extra money to make mortgage payments on the unreasonably large mortgage until he could find a buyer to take the house off his hands for more than he paid.
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Huge glut of empty housing. Builders are being forced to drop prices even faster than owners. Builders have huge excess inventory that they cannot sell, and more houses are completed each day, making the housing slump worse.
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19 Nov 08
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24 Oct 08
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forclosed owners end up far better off: they go reap large savings every month, since it costs less than half as much money in rent as they were paying to "own" the very same thing.
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Americans born between 1946-1964. One-third have zero retirement savings. The oldest are 62. The only money they have is equity in a house, so they must sell.
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a good blog analysis
economics statistics article analysis realestate housing bubble housing_market blog housingbubble crash investing
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30 Sep 08
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20 Sep 08
Housing Crash Continues
It's Still A Terrible Time To Buy
Why?
By Patrick Killelea, last updated Mon Jan 25 2010
1. Because house prices will keep falling in most places. Prices are still dangerously high compared to incomes and rents. Banks say a safe mortgage is a maximum of 3 times the buyer's annual income with 20% downpayment. Landlords say a safe price is a maximum of 15 times the house's annual rent. Yet on the coasts, both those safety rules are still being violated. Buyers are still borrowing 6 times their income and putting only 3% down, and sellers are still asking 30 times annual rent, even after recent price declines. Renting is a cash business that proves what people can really pay based on their salary, not how much they can borrow. Salaries and rents prove that prices will keep falling for a long time. Anyone who bought a "bargain" this time last year is already sitting on a very painful loss.
2. Because it's still much cheaper to rent than to own the same size and quality house, in the same school district. On the coasts, annual rents are 3% of purchase price while mortgage rates are 6%, so it costs twice as much to borrow the money than it does to borrow the house. Renters win and owners lose! Worse, total owner costs including taxes, maintenance, and insurance come to about 9% of purchase price, which is three times the cost of renting and wipes out any income tax benefit. Buying a house is still a very bad deal in the richer neighborhoods, but it does make sense to buy in some relatively poor neighborhoods where prices have already fallen into line with salaries and rents. Check whether you should rent or buy in your own area with this NY Times calculator.
The only true sign of a bottom is a price low enough so that you could rent out the house and make a profit. Then you'll know it's safe to buy for yourself because then rent could cover the mortgage and all expenses if necessary, eliminating most of your risk. The basic buying safety rule is to divide annual rent by the purch -
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Jakob ErikssonExhaustive list of arguments in favor of an ongoing or impending housing crash. A bit feverish, but there's bits of good info in there.
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nathan arnoldThis guy's obviously biased, but some good points in there.
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SF Bay Area Housing Crash Continues
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