Quote of the Day
We have to stop fetishing home ownership. If you can’t afford your home/your mortgage — a liability – you need to sell. I don’t care why. Job loss, medical, dumb moves. It doesn’t matter. If you can’t afford it today, you won’t be able to afford it next year either. This economy isn’t going to…
We have to stop fetishing home ownership. If you can’t afford your home/your mortgage — a liability – you need to sell. I don’t care why. Job loss, medical, dumb moves. It doesn’t matter. If you can’t afford it today, you won’t be able to afford it next year either. This economy isn’t going to turn around that quickly. Sell. Pay off your credit cards. Move on. The question, “How can we help them keep their home?” is not the right question. How can we get them back on their feet? That’s the real question and the answer is to sell their home. Sellers need buyers and that’s why we need a mortgage plan for credit-worthy people. The best possible solution would be to get back to the olden days when people might own a home and own one rental property as a nest egg. And other people rent until they can afford a home. Really afford a home.
— by Ringo in Housing Rescue Plan: For Some or For All?
“If you bought your house in Brooklyn prior to around 2001-2002 you would have most likely fit this rule as there were houses all over the borough (and all over America) people were buying and selling at those 3X income prices and life was good.”
What 2002-2002? Valuations were not 3 times income in NYC. In 2002 there were already 5 times. If one has bought in 2001-02 needs to sell immediately (if he/she cans) and rent.
Also haven’t you heard? NYC income is way down (layoffs+unemployment). To have a correction we need to return to mid 90s prices. But before that happens we will visit lower prices.
“Am I just daft or do I have a hard time finding many 3 family houses in Brooklyn for 600K? ”
Just wait dear. You will find many for that price really soon. Problem is
-you won’t have the money to buy it
-it will be cheaper to rent
-you will be afraid to buy it
-you will thing that the prices will get lower
The above is what called market crash
“if they are given the opportunity to modify to a low fixed rate they would be able to afford to keep their homes.”
you must be kidding right. There is no incentive for someone to keep paying a mortgage 600K mortgage on a house that can be bought for $300K after the market returns to fair valuations. Even if the rate adjusts. The lower the market goes the more people will default. You ain’t seen nothing yet.
Am I just daft or do I have a hard time finding many 3 family houses in Brooklyn for 600K?
brooklynguy, many people who bought houses with ARMs did not know about the ARMs. For example, this happened to a friend of my mother’s in California, where lawyers are not required. They could pay the regular monthly mortgage just fine and did, responsibly, for two or three years until the ARM reset. Then they were in fact homeless and staying with relatives for a few months. Now the family is renting from a relative. I don’t know if they lost a down payment or closing costs, but I would bet they did.
williamsburgguy, you are right, but please keep in mind the $500,000 houses are usually two-families, which means the monthly costs are more like what they would be on a $300,000 or $250,000 house when you factor in the rent. If you buy a three-family for about $600,000 your monthly costs are even lower, about $600.
Great words and how about some clawback rules on bankers who profited from all that money during the bubble years? and some pub;ic hangings or real estate brokers who inflated prices at will?
We have to stop fetishing [current] home [prices].
***Bid half off peak comps***
Lending standards are going back to requiring good credit, and as a rule of thumb you won’t be able to buy a house that costs any more than 3X your income. Those were the rules for all the decades since the last depression up until this last one. (the requirements of the 28%-36% DTI provide this rough 3X rule of thumb) How many Brooklyn houses/buyers would currently fit that price range? Given the cheapest piece of trash house in the worst neighborhoods in Brooklyn right now are about 500K, that means someone looking to buy even the worst houses in Brooklyn would need total household income to be $167K. Is that going to be sustainable? Doubtful. What is the average household income in this borough? 45k? 60K? Lower? Are there any houses people can buy for 135-180K? Nope. Soon there will be after everyone who paid more than 3X their income go into bankruptcy, and at that time society will recover from this mess, but not until then. If you bought your house in Brooklyn prior to around 2001-2002 you would have most likely fit this rule as there were houses all over the borough (and all over America) people were buying and selling at those 3X income prices and life was good.
“Montrose Morris made that point before, but there should be a difference between blatant over-consumption and predatory lending, and there should be a difference between people who have paid 15 years of interest and people who have paid nothing…”
Maybe there should be, but how can there be? And how much of your money do you want to spend figuring it out who it should go to? 20 cents out of every dollar? 30? I personally dont want any money spent on making these often-subjective decisions.
” just because you lost your job or made a ‘dumb move’ doesn’t mean you deserve to loose your home. ”
But it might mean that. It might mean you can’t spend money eating out, getting cable tv, or having a higher mortgage than you can swing. It might! Deserve had nothing to do with it. This entitlement society has got to come to an end.