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Told You So »

Posted by: populist 2 years, 7 months ago

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I've never been shy about saying "I told you so." Now we're seeing the foreclosures I predicted back during the real-estate boom. A lot of people are going to end up holding paper that isn't worth the price of the ink on it.

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Comments: 51

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tehranchik
March 19, 2007, 4:20 p.m.
I think the articles money figures might be a little off according to where you are. I do agree that there are many people left holding the bag. Greed greed greed.
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1basque1
March 19, 2007, 4:39 p.m.
Don't confuse contractors for friends either...They can easily inflate the price to build a home. Make sure that every single detail to your home is in writing.This inflation of the price stays with it for property taxes, and insurance...
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Openeyes
March 19, 2007, 7:54 p.m.
We saw this same thing in Texas during the late eighties and most of the ninties.In '91 I bought a five acre lot there for about a third the price it was just five years earlier.Vacant buildings,shopping centers,and apartment buildings all built on speculation.Most of them were torn down,never used.It's happened here with housing.High prices and ARM mortgages that inflate prematurely are causing a lot of trouble.But the people that bought these places should have known better.The banks that made the loans are just as much at fault.
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KingOfTruth
March 19, 2007, 8:27 p.m.
Don't worry about the houses. Many investors will be there to buy houses that go down to their real value instead of the inflated one made up by the greedy owners so they could get financing for something they could not afford. If you want people to have less trouble, then lower the interest rates again.....
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JohnGault
March 19, 2007, 8:50 p.m.
One of the problems was or is the non-conventional loans put out there by predatory loan agency.
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Meimei53
March 19, 2007, 9:09 p.m.
It all depends on location. Where I live, there may be a leveling off of sudden rises in the price of houses, but overall, there is a steady increase. This for over 100 years. This idea that it's smart to take out your equity isn't always smart. Each person has to decide what is right for his/her own financial situation. But taking out equity for vacations, paying off credit cards, is a bad idea. The credit card co. can't foreclose on your house. But the bank can. My house in 16 years appreciated over 400%. The taxes are going up, kids moving on, so we searched and found a short-sale house in a nice neighborhood. The man had lived there about 30 years, wife died, 2 yeasr ago, he married a user, from a 5* credit rating, he is bankrupt now. We offered him a fair price so he could walk away with some cash, but he had other debts. As soon as his wallet is empty, he'll lose all. And he's almost 70. He spent all his equity on new cars and cruises.
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Zeitgeist
March 19, 2007, 10:05 p.m.
A fool and his money are soon parted....
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NelsonR
March 19, 2007, 10:35 p.m.
I am not an economist neither but how obvious is the present market. If you think we have peaked with the bubble bursting, this is only the beginning. ARMs will not be the prevailing cause of failures, overextended individuals and a devalued market will lead to many more future defaults. I notice the banking industry finally addressing the issue of its past lending practices, well you know what, a little late.
I am knowledgeable to the fact the banks do not want to foreclose on anyone, but in the end, you reap what you sow.
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CovalentBond
March 19, 2007, 11:30 p.m.
There is also a strong denial of reality among home owners regarding the true value of their homes. A woman I talked with a couple of weeks ago wants $350,000 for her home. She paid $130,000 for the home just 5 or 6 years ago. The home is in a gated community. Not at all upscale. Just average homes with a few exceptions. There are close to 300 homes for sale in this gated community. In the past this was where you bought if you couldn't afford to buy anywhere else. Most people in this community drive at least 20 to 30 miles to work. At over $3.00 a gallon for gas, that can get a bit costly.
Just last year three duplex's in this community were vacated because of the gas prices. The renters could move closer to work, pay a little more rent, and still come out ahead.
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NelsonR
March 20, 2007, 2 a.m.
Yes it was also true that your average buyer did not buy within his comfortable price range. They saw that spending 10 to 20 percent more they could get almost double the house. So inevitably, they borrowed more and consequently had higher payments. I also assume that throughout the years with increasing house prices these same buyers bought more toys by acquiring home equity line of credits. Now with the high morgage and added equity line payment the piper is due.
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kenw
March 20, 2007, 5:18 a.m.
Reading this and past postings regarding PREDATORY lending...I agree with the consensus that only the Rich should be able to borrow money. The poor are so irresponsible and lack sufficient knowledge and understanding that they should NOT engage in home ownership and probably should stay in the projects.
All the lenders that offer no money down, adjustable mortgages with lower market rates are crooks, for they should be like the government and just give the money away. The poor should stay poor and let the rich be rich.
Avg rating: (+6/-0 6)
kriicket
March 20, 2007, 8 a.m.
I work with a mortgage company...it's amazing how many low income people come in looking for a house around 150,000 and want a house payment of $350 or less. It's just not gonna happen. I have noticed more and more lenders are requiring the borrower to have a credit score of at least 620 before they will even consider lending money. They look hard at public records also. We also have clients who have excellent credit and a very good income. They just don't want to go to borrow money from the bank.
Avg rating: (+1/-0 1)
vrlaphia
March 20, 2007, 8:17 a.m.
This idea that if interest rates would just stay low is just people seeking a never ending buyers market. As long as rates stay low people have no incentive to exercise discipline in their buying habits. People will get half a mil for 5% and bid up a foreclosed shack because they think there will be someone else behind them to take it off their hands. Interest rates need to stay sane or these cycles will become more and more severe.
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Amazing1
March 20, 2007, 8:28 a.m.
The handwriting is on the wall. We will watch as the economy goes from bubble burst to bubble burst. The real estate bubble will continue to slide. The 800 pound gorilla in the room is our fiat currency. Never in the history of the world as a fiat currency NOT failed. And the Federal Reserve just keeps cranking it out, making it worth less and less all the time.
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Nowalive
March 20, 2007, 8:48 a.m.
This an excellent example of the result of OVER-speculation. As with anything too much of a good thing is bad. In my area there are several new developments sporting 5000-7000 sq. ft. "McMansions" with no yard to speak of, 3 car garages, mother in-law quarters, multiple decks, and they start at a mere $899,900. I deliver flowers part-time, and in one particular development (Whitehorse), of 57 "semi-custom homes" 3 are occupied. In another development (Mill Creek), all 33 sit empty, and have for over a year. It's all about personal responsibility. Don't buy what you don't need. Personally I think the rush to put on airs, has resulted in the recent doubling of consumer debt. Anyone who falls for an interest only mortgage, or an ARM doesn't deserve to keep their house.
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evelyna
March 20, 2007, 9:09 a.m.
This real estate bust runs in the family. Bush's father was responsible for the savings and loan scandal too.
The banks and morgage companies made the loans. Companies and corps are so used to calling prices they now have gotten the call-people only make so much and will only pay for things of value.
Cut out all of the middle men. Who doesn't want to make millions of dollars sitting on their duff.
This kind of greed needs legislation.
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MajJohn
March 20, 2007, 11:02 a.m.
An article about the recent, last 20 years,inflation in the housing market, that's nice. Coupled with the depression, so???. There is no nexus, and further nothing in the post not already well known, unless you were living under a rock!
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ballbuster2
March 20, 2007, 11:40 a.m.
i don't see how it's possible to buy a home these day's. job's are disspearing and the one's that can be found pay veraly enough to feed ones self. tax's, maintance, insurance are out of sight and are only getting worse, how can it be done??????
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NelsonR
March 20, 2007, 12:50 p.m.
Wouldn't we all love to be Bankers? Low interet money printed exhaustively, around the clock, by Fed. Fed gives low interest money to Bank. Then you as a banker charge a higher rate for that money. Excuse me, give me that opportunity. I will make lots of money. No sweat involved.
Bankers line their pockets with high salaries, bonus's and eventually bank goes under for an inordinate amount of bad loans. The middleman, banker does not go to jail.
Great jobs are out their if you constructivly use the system.
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jumpmaster
March 20, 2007, 1:02 p.m.
If a banker charged the same interest rate that the Fed charged them, then cost=sell=no profit=no bank=no home sales=no home construction=no construction jobs=no place for people to live, etc, etc.
If a bank makes bad loans and goes out of business then that is the price for bad business decisions. The person who signed up for the bad loan is not affected. He still gets to pay the loan per the terms of the contract.
I knew some people that opened a store for baby clothes and accessories. They put the store in a bad location and had poor penetration into the market. The store went out of business. Should the owners of the baby clothes store be put in jail?
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DoseASpinoza
March 20, 2007, 1:03 p.m.
I blame "The Real Housewives of Orange County" and everyone who wants to be them. Like Jump's examples, people have bought the idea. The houses and toys are trappings. They've lost sight of what's important.
I left the land of the $500K starter condo. Moved way out on the fringe (of another state) and bought a house for less than 1/4 the price of the old area. I just spent 3 days scraping a couple of layers of paint and wallpaper off a wall...and I'm renovating gradually...but things I've redone look great. I have a big yard. My payments are less than my rent used to be, and I will be paid off by retirement age.
I encourge information workers to get off the hamster wheel, move someplace cheaper and work remotely. Life is better and I only need a tank of $3-a-gallon gas every six or eight weeks.
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gasoholic
March 20, 2007, 1:10 p.m.
There are a lot of people who borrow money who actually believe they never have to pay it back.
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tugtogaok
May 2, 2007, 5:13 a.m.
"Banks don't want to forclose...They offer products. No one is forced to refinance with an ARM. "
And that is often the greed in the way they operate. They love gourmet food but can't take the heat when the kitchen gets hot.
I remember buying a house from a bank. They were bitching and complaining 'cause I got a great deal...but they make the bad choice on who they loaned to.
http://www.competinglenders.co.uk/
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corliss93
June 3, 2007, 6:39 p.m.
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