May 6, 2012

Housing Is Good Because…

Readers suggested a topic on buying a house. “As the bubble drags out and fails to unfold in a logical financially sane manner some hostility has arisen on this board between those who have chose to buy and those who have chose to rent. As the life of the bubble continues the shift has gone from those eager to enter the housing market to those renters chiding those who entered the market while wishing to see them go underwater. What forces are at work here? Is it sour grapes? Is it frustration that they have taken action? Is it that they have now become part of the problem of keeping prices elevated? What would be helpful is the reasoning both sides can offer to those setting on either side of the fence.”

A reply, “I wonder how many potential buyers, like myself, have watched this protracted debacle, seen how, by some dark magic, asking prices have been made so sticky, and changed their target in terms of what they are looking for in a property. When I started ‘looking’ in 2001 I wanted to buy a ‘home’ to raise my then 3 year old son. I was clueless. I sought out an RE agent and really believed they had my best interests in mind. They quickly connected me with a loan person who told me I could ‘afford’ to borrow $X. The agent then showed me a handful of properties valued at $X + $100k. She explained the increase by voodoo financing.”

“There were a number of disconnects in this process that made me stop and review what the heck was going on. I felt that the $X amount was far higher than I was willing to borrow. I was simply not going to use voodoo financing. And even back then I felt that the wishing prices were inflated. So, now, after watching this thing play out, I no longer want to buy a still overpriced property. Instead I am considering buying something I can afford to actually payoff in less than 5-10 years in an area I go to for recreation often with the hope that I can create a place to move to once my son goes off to college. A place I can leave to him free and clear. And a place we can enjoy as we make it our own while not burdened with enormous debt slavery.”

“I wonder how many folks out there in the world have actually changed how they think of housing and personal debt as a result of being exposed to the Housing Bubble and it’s failure as well as the bizarre price manipulations?”

“I think the number is not that high. I think most folks just did not get it. And much of that is because of the forces allied to artificially maintain property prices. First we have the ‘Save the borrowers’ who reward foolish choices. next we have the ‘Save the bankers and hedgies’ who cry end of the world if they are not bailed out for their foolish and greedy choices. The regulators and politicians are playing a nice game of keeping their contributors and voters happy by holding hearings and making loophole filled laws. And the REIC is a consistent soundtrack cheering on the ‘value’ of going in debt to exorbitant levels for the ‘pride of ownership’, tweeking statistics, and passing out the kool-aid.”

“Tough to be a normal Joe or Jane and see behind the curtain with so much noise and fanfare distracting you.”

Another said, “You just described us. It’s easy to get giddy when you are told you can get $$$___ priced house for $$$___ a month. Mortgage brokers and realtors will always try and get you to spend more.”

“Having been outbid again on a larger house, just last night we stepped back and took another good long look at our finances, retirement plans, and overall life priorities. We could easily and happily live in an 850-1000 sq. ft. house. And we could pay it off in 15 years. Buying something at the upper limits of what we can afford means debt slavery until the day we die.”

“Today am feeling great relief that none of our offers on overpriced homes got accepted. I still want my view of Twin Peaks, though. Nothing makes me happier than sitting and watching the fog roll in. The view will be just as good from a smaller house.”

One had this, “The roles of federal institutions in fostering, abetting, and attempting to revive the housing bubble, and the grotesque behaviors associated with the bubble, have changed how I view the federal government. Responsibility doesn’t matter, the rule of law doesn’t matter, and ethics don’t matter.”

“Everything has been traded for a recovery that will not be coming, in no small part because our leaders have mis-identified who is important, and condone an economic philosophy where greed has a higher value than honesty, community and trust.”

And another, “There is so much exposure to ‘housing is good because…’ propaganda it’s small wonder the majority still covet a house at all costs. And the negativity of debt has been minimized. Now it’s called leverage, which sounds so much better, although few understand the risks of leveraging an investment. As we’ve learned throught the collapse of the bubble, few are capable of surviving leverage in a downturn. We’re encouraged to ignore the growing debt because equity is (was anyway) growing too. It will take a long time for the general public to unlearn this crap, if ever.”

Finally, “My perspective has changed dramatically regarding debt. Not that I ever thought it was a good thing, but even thinking about taking on a 15-year mortgage makes me very, very nervous. We should all be able to buy houses for cash.”

The Daily Progress. “After a lackluster 2011, Central Virginia’s housing market appears to be on the cusp of a post-recession rebound, according to figures released recently from the Charlottesville Area Association of Realtors and local agents. ‘We’re not really back. We’ve still got a lot of room to make up from where we were … but the positive thing I would probably tell people is that now we’ve hit bottom,’ said Brad Conner, president of CAAR. Although the responsibility for making a good home sale or purchase decision still rests with the individual, right now, ‘You can buy something now and feel confident,’ he added.”

“Jim Duncan, a partner in Charlottesville-based Nest Realty, agreed that although there are some inconsistencies when looking at the numbers alone, there are also modest but clear and favorable indicators that the market overall is improving. ‘[What] we’re seeing in the trenches … is that a lot of homes are going under contract swiftly with multiple offers, and you’re also seeing homes that should be selling swiftly and are not. [But] for the most part, we’re seeing increased buyer activity.’”

“And for the time being, all three unequivocally agreed that it’ll remain a buyer’s market. ‘The affordability of homes is at an all-time high,’ said CAAR VP Denise Ramey. ‘There’s definitely incentive for buyers to not rent and to buy … On the selling side, I’m still of the opinion that if you don’t have to sell, my advice to my sellers is wait until we continue to see price appreciation.’”

The Baker County Press. “Wells Fargo Bank recently foreclosed on Baxter resident Mary Bowlin’s former home in north Macclenny, one of 46 properties in Baker County that received foreclosure notices in the first quarter of this year. The 79-year-old widow fell behind on the $1500-a-month mortgage payments for her two bedroom home on Linda Street after her husband died in 2010.”

“Ms. Bowlin said the payments to Wells Fargo jumped ‘a few hundred dollars’ sometime before her husband’s death. ‘They kept calling and I told them I couldn’t make the payments and to just go ahead and put in the foreclosure, so I just moved out,’ she said. Ms. Bowlin has now moved back to the north county, where she grew up, to be closer to family.”




Bits Bucket for May 6, 2012

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