mortgage madness

[bathalamus]

http://www.washingtonpost.com/wp-dyn/content/article/2007/12/05/AR2007120501340.html?hpid=topnews

All sub-prime mortgages are now fixed for the next five years.  The banks and mortgages companies are not getting money from the government, and thus have to eat the losses.   Oh, yeah:  the price freeze only applies to the people who can't afford the

Comments

[have_inner_lady]

If mortgage rates skyrocket, prices probably will drop.

The people who stayed out of the market, and who soon will suffer from the conditions you set forth, as you say, will not be able to afford the houses on the market. That will create a huge void. People will still want to sell real estate, but there will be so few able buyers.

Supply and demand are still in effect. I agree that this is a stupid decision, but I don't see it as a reason to lose all hope.

[dwolfe]

Supply and demand are still in effect.

Bingo!

Over the last 6 months many builders have been organically forced out of the market and now Bush is artificially cutting the supply from sub-prime blood letting thus forcing demand to out pace supply and force prices back up.

His policy is simple: natural demand falls, artificially decrease supply so the investors can get out of the market. Guess how long it should take for them to bail? Five Years.

Builders, Buyers, and Bankers eat the losses while the investor class retains their capital. After five years of slow selling, the markets are allowed to correct. The damage will be done. The sub-primes lose their houses, owners lose part of their equity, and the investors got away free and clear.

Housing supply is not elastic, demand is.

[bathalamus]

Exactly. And in five years, his administration will no longer be around, so they will not get blamed for anything.

Don't you love our fearless leader who supports business and screws the people?

[have_inner_lady]

I think I need a map.

So... are you saying that supply is artificially being reduced because the houses that would otherwise be foreclosed upon are now unlikely to be on the market at all?

The people living in those houses would be living somewhere regardless of whether they're foreclosed on or not. It doesn't matter if they rent or buy; someone will own the property. And if the house is taken out of the market as supply, so is the owner/renter taken out of the market for demand.

I see how that would hurt real estate agents (because it means less turnover), but I don't understand how it knocks supply and demand out of equilibrium.

[krasota]

Note to self: make current house work for at least five years. Is tiny, but one now has equity.

We refused to do an ARM when we bought in Dec 04. This means we're in a small house, but we can afford the payments. The ARMs just seemed too risky. And it wasn't easy finding a house we could afford down here. C'ville's housing bubble hasn't quite burst. Oy.

You and Wendi should come visit. :) It might have to be a day trip--our futon is only a full size and neither of you are midgets. I do have an air mattress, but it suffers the same issue. Or we can make a padded cozy nest on the floor custom sized to your gargantuan statures.

[absolutliz]

I'm with you, dude. Tex and I are waiting until this summer to buy...we figured that by then the foreclosures would be rolling full tilt, and we could actually afford something decent.

I'm still hoping that the number of limitations on this little deal are large enough that most of the estimated foreclosures will still take place, and will help keep some downward pressure on the prices.

Meanwhile, no one has done diddly squat about the goddamned AMT. Asshats.