Help The Housing Market "Bounce Back" By Buying Overvalued Homes!

USA Today has a front-page weeper today about how some folks are having trouble selling houses for the prices they want:

Colleen Wells heard the housing market was supposed to be picking up, so she felt optimistic when she put her 60-acre farm in Ocala, Fla., up for sale early this year.

When no one bought the farm at its asking price of $894,000, she slashed the price to $699,000.

Now it's been more than 11 months, and she still hasn't found a buyer.

"Nothing seems to be selling right now," Wells says. "There just hasn't been a whole lot of interest."

Housing prices are down 30 percent from 2005, the market's historic high, but a recent increase in sales doesn't mean the market has touched bottom. Or, more precisely, reset to what those houses are currently worth.

Economists caution that a good part of the improvement is tied to government assistance — low interest rates that stem from the Federal Reserve's heavy buying of mortgage securities and a tax credit worth up to $8,000 for first-time home buyers. That credit has been extended and expanded to include some repeat home buyers for 2010.

So in the name of ending a financial crisis that came about in large part due to pumped-up housing prices, the government's response is to…pump up housing prices via various giveaways. We must at all costs not allow the housing market to reflect what underlying assets are actually worth. Because if we did, we might actually start the process of getting on with the rest of our lives.

More here.

Comments

[Paul]

Everything I know about economics I learned from the Lone Biker of the Apocalypse: Price, it's not what you say it is, it's what the market will bear.

[Henry Paulson, Capitalist]

We must at all costs not allow the housing market to reflect what underlying assets are actually worth.

Any reduction in prices is a market failure.

[John Paulson, real capitalist]

Falling housing prices made me billions

[Michael Ejercito]

So the U.S. must have the best health care market in the world.

[briareus]

When you price your consumable far above what the market will bear, you will not have much luck. Nor should you.

[DG]

USA Today's photo caption is atrociously written:

Colleen Wells has been trying to sell the Ocala, Fla. horse farm her and her husband had fixed up and hoped to resell. He has since died and she is also trying to sell the home she currently lives in because both mortgages are cutting a great deal into her savings.

[JW]

It's not so bad if you're a 7th grader.

[SugarFree]

I'd punch a 7th grader that wrote like that.

But, I swear, my wife read me a portion of a project that a classmate in her PhD program wrote that was just as bad, maybe even worse. 5 out of 8 paragraphs that woman wrote began with "But on the other hand,".

[JW]

Good ol' public school system. It failed me well.

I wasn't taught how to write a proper paragraph (topic sentence-body supporting topic sentence-conclusion) until I took a legal writing class in college, taught by an attorney. It was like a light that was turned on for me.

[Zeb]

Interesting. That (along with calculus) is one of the few useful things I actually did learn in public schools. But not in an English class. Then I went to college and learned that no one learns to write well in any English class.

[DWCarkuff]

I once graded a paper that began "Benjamin Franklin, for that was his name..."

[SugarFree]

That's got "first line of dirty limerick" written all over it.

[SugarFree]

Benjamin Franklin, for that was his name,
went down on two sisters until one of them came.
The other was perturbed,
quite thoroughly disturbed...
and demanded that the outcome for her be the same!

[Slut Bunwalla]

+69

[Marc]

I couldn't say where she's coming from
But I just met a lady named Dynah-Mo Hum

[Man from Nantucket]

Benjamin Franklin, for that was his name
Had not a lick of shame
He humped all the ladies,
Got syphilis and rabies,
And that only increased his fame.

[Not To Be A Dick, But]

OK, you took all the -ame rhymes....

Benjamin Franklin, for that is what he was called
Saw Betsy Ross' bush and was appalled
The next time he lays her
He used a razor
And now we have another national bird that is bald.

[SugarFree]

Not to be a dick, but
found himself in a terrible rut
without a rhyme
time after time
Stuck like a Bunwalla Slut

[SusanM]

OT

Barack Obama, for that was is name
knew how to play well the political game
he called his opponents bitter
and then with a titter
kept all the old policies the same

[Mad Elf]

That's pretty long for a photo caption. It's almost like they are trying to make us feel sorry for her in spite of her terrible financial decision.

[Paul]

But it gets its point across: Family overextends itself in risky attempt to flip real estate for lucrative gains. Wait patiently for Government help.

[John]

Very few of my peers under 40 own houses. The few who do live in places like Oklahoma where the housing prices never boomed. The boomers really did a number on my generation. First, they made it impossible for many to get a decent paying job without a college degree. Then they flooded the college market with cheap credit and ensured that people left college with huge debt and degrees of less and less value. Then as the coup de grace, they inflated housing prices beyond all reason. Thus they ensured that an entire generation or more will live under huge student loan debt and enormous housing prices.

[eb]

+1

[Ike]

I don't blame the boomers.

They didn't make me go to college.
They didn't make me fill out a credit application.
They didn't force a mortgage on me.

But my kids will sure as hell blame me (and my generation) if we stick them with the bills for universal health care and carbon markets.

[tkwelge]

They didn't make me go to college, they just created a tradition based, credentialist system backed up by the Government (who absorbs many college graduates who otherwise would be jobless, thus overinflating the value of a college education (laugh). They didn't make me fill out a credit application, but they did make college impossibly expensive and necessary (unless you're a LOSER!). Nobody is saying that anybody forced a mortgage on anybody, but the way the boomers have a fetish for home living ("only poor people rent"-my dad and white middle class, middle aged person that I've ever met) that hyperinflated the housing market to the point that people didn't live in houses, because they wanted to live in a house like our grandparents did. The boomers bought houses as a TRADE, or an ASSET. My dad never lived in a house for more than six years since adulthood. Not to mention that the laws they put in place treat renters like me as dirt, but home ownership is sacred!

[tkwelge]

sorry, that's difficult to read, but you get the gist.

[John]

And don't forget that owning a home is the only access most people have to any sort of tax break. Yeah you can rent your whole life. But you will pay out the ass in taxes as a result.

[tkwelge]

My apartment complex tried to put an eviction on our record, because me and my roommates were a week late with a third of the rent. Within 20 days, we could have been kicked out on the street. This was just a few months ago, meanwhile you still have people who haven't paid there mortgage in a year who still live in their homes.

[kinnath]

I almost shed a tear . . .

[tkwelge]

lol. I know it sounds like I'm being sappy, but I take it in stride. I might be the kind of person who would become the biggest liberal ever, but i know that it is the government that is ruining my life. Corporations actually provide a lot of what I enjoy in life. I don't enjoy any part of the government. It just sucks that when you're young, nobody gives a fuck. The government gives six times as much money to old people as it does to young people. Not saying that the government should give anybody money, I'm just pointing out generational theft where it exists. This doesn't even count the money the government is stealing from future me right now.

[tkwelge]

Also, the complex had my roommates car towed for having an out of date inspection sticker. Because it costs hundreds to get a car out of impound, and the cost goes up by day, he lost his 3000 dollar car, because he didn't have the government mandated sticker for sixty dollars. If the government wants to help the poor, maybe it should stop sitting on our chests.

[tkwelge]

Yes the government didn't have his car towed, but they put the regulations in place that allowed the complex to tow his car for no reason (it was in the spot that we pay for), and it writes the rules for impoundment. The complex and the government are equally dicks for that one. I don't want to say that it was all the governments fault though.

[kinnath]

It just sucks that when you're young, nobody gives a fuck.

Spoken by every adolescent male born since the beginning of time.

[tkwelge]

Somebody old is underwater in their mortgage! We need to do something! Fuck that stupid kid, though. He needs to pull himself up by his own bootstrap. Who cares that he can't afford college. I need a return on my 300,000 dollar house!

[JW]

$300,000? What slum is that in? 😉

In the DC metro area, that'll buy you a < 2,000 sq. ft house in a so-so neighborhood.

The missus keeps harping how we "missed our chance to move" into a better house and location, becasue we sat on our hands during the housing bubble and now the market is a buyers market (we'd need to sell our house first and it's not ready to sell). I insisted that we stay put and now we *still* have a cheap mortgage by DC standards, < $1500.

[tkwelge]

In Fort Worth 300,000 gets you a mansion. This is hardly the middle of nowhere either.

[prolefeed]

In Honolulu, that won't even get you a studio.

[The Gobbler]

I own my home but get no tax break.

No mortgage.

[Slut Bunwalla]

John, it's comments like this that make me glad you're around.

[robc]

Almost all my peers under 40 own houses. Then again, KY is much like Oklahoma. We had a boomlet, prices went up about 30% and lost it.

[tkwelge]

Here, fucking here! Oh my God, I feel nothing but seething rage for the boomers myself. I was bamboozled into taking a large private student loan right before the credit crunch. Now i can't get money to go to school to afford to pay off the loan, but i also receive NO bailout. The next twenty years of my life are going to be shit, meanwhile I pay taxes so that my parents (who don't pay for shit) can continue to reap 60 thousand dollars a year in total compensation. When I mention this to them, their eyes glaze over like I don't know what I'm talking about. God I can't wait till everyone over 30 is dead or at least unable to move.

[tkwelge]

Forgot to mention that my parents are public school teachers.

[Slut Bunwalla]

You should probably consider murdering them.

[Citizen Nothing]

Sucker!

[tkwelge]

Yep, no doubt. I'm the world's biggest sucker.

[JW]

Hey, watch it there slick.

The Boom ended in 1957. We Gen X elders under 50 are in the same boat as you.

Fuckin' boomers....excepting kinnath and J sub of course (and any other of the old farts around here).

[The Gobbler]

"The Boom ended in 1957"

No. It peaked in 1957.

[kinnath]

Depends on definitions.

Some people define 45 to 64 as the boom. Some people split this group into two separate groups.

The bastards born from 45 to 52 or so caused all the damage and created the reputation.

[tkwelge]

My parents were born in 58 and 61. I still consider them boomers. I say the boom ended in 65. The older boomers and the Greatest Generation were racist statists, and the younger boomers were simply misguided, but tried to kick the trend, which I give them credit for. The problem is that the problems of racism and war kept them from really trying to improve the economy.

[kinnath]

We'll talk more after you grow up a bit.

[tkwelge]

Ur just mad at me for calling you a baby boomer.

[kinnath]

Actually, I have always said I am a boomer.

But it's no where near as simple as you describe. And you are wrong in many respects as well.

The Greatest Generation served in WWII. My father was born in the 30's during the depression, and he served in the Marines between Korea and Vietnam. So he is neither Greatest Gen or Baby Boomer.

As far as the economy, the Greatest Generation maintained a tight fist on the reins of government for decades after they should have left. Until Bill Clinton in the 90's, the boomers had almost no real impact on government.

You have much to learn young padawan.

[tkwelge]

But they had much influence on the market by then. And most of the programs were for their benefit. They got to enjoy the benefits of programs that are now failing. They are now only trying to prop up the ones that benefit them in old age. I think that their influence began far earlier than that, as politicians from the older generation were at least paying lip service to the boomer generation and at many times directly placated them.

[kinnath]

The boomers have had enormous influence as consumers -- they represent a big market and that's not trivial.

But for all the marching, and singing, and protesting, the older boomers were remarkably inept at getting anything done politically.

[JW]

Right. Peak = boom over.

[JW]

Right. Peak = boom over.

[JW]

Don't make me tell you again!

[kinnath]

Born in '57.

I spent my entire life following behind that horde of locusts known as the boomers. They laid waste to every institution they touched and left the runts from 57 behind in the dirt.

I look forward to watching them destroying Social Security and Medicare as I enjoy my 60's.

[JW]

I'm not too far behind you. '61 here.

To those youngins' dissing us who came before them, I say: You try growing up in the 70's, following the societal and economic carnage left by the Lamest Generaration. It'll toughen your nipples and sharpen your cynicism faster than anything else you could imagine.

[Citizen Nothing]

I'm in my late 40s, but I maintain that since both my parents were born during WWII there's no way I can be considered a boomer.

[kinnath]

By straigh demographics, '45 to '64 is the baby boom (or maybe '65).

But the boomers born from '45 to '52 are absolutetly different socially, culturally, and politically from the boomers born '60 to '64.

And use poor bastards born in the middle are just schizophrenic.

[kinnath]

Surprisingly, the baby boom ended at roughly the time of the introduction of oral contraceptives.

[JW]

I've heard the same thing, that the boom ended in 64 or so, but the birth rate peaked in 57, with a slight slide until 60, whereafter, the birthrate dropped off precipitiously.

I don't know what definition is being used to extend the boom until 64, but I consider any stiistical boom over at the peak. We don't still call it a stock market boom after the market has lost 20% off of its peak value and is still declining.

[kinnath]

You are using a different definition of boom than is used to define the baby boom.

As best I can recollect (and without taking the time to google it) -- birth rates seem to be relatively stable as a percentage of the adults in the peak childbearing ages. The baby boom was well above the baseline for the years from '45 to the mid 60's when it returned to the expected value.

So while '57 to '64 was a "bust" using your stock market analogy, it was above the baseline -- so it was part of the boom.

[JW]

OK, but I like my definition better. ;).

I've got zero in common with what would typically be associated with Boomers and it can reasonably be argued that at best, the boom was over in 60.

The Census Bureau says it's 64, the book Generations calls it at 60. I'll go with the private market solution.

[Johnny Longtorso]

That's no way to talk about the best educated, most politically aware, and selfless generation ever. Didn't they protest against War (up until the point the draft ended and there was no threat of them having to go)?

[tkwelge]

It wouldn't be so bad if I didn't have to sit through so much propaganda growing up. I got an assfull of liberalonomics (I hate watching fern gully (sp?)) including: Lessons on how FDR saved us from the great depression.

Also, they treated us like little sociological experiments. The television I watched was subject to extreme debate amongst the older generation, as they all feared we would become a swarm of illiterate, hyper-violent, sexually deranged drug addicts if we watched the wrong thing. Luckily, the internet came around and made them realize just how pointless their attempts at mind control were. And guess what! It turns out that we weren't all demon seeds or ticking time bombs.

[kinnath]

Yeah right. The boomers fucked everything up.

Get over it John. Lot's of us boomers didn't buy into the bullshit. I went to a public university and made sure I didn't borrow more than I could pay back. Lot's of boomers did the same thing.

No one made you or your generation do anything. You may have fallen for the bullshit, but you must bear a lot of the responsibility for that.

[tkwelge]

But you got to get in on the ground floor when college was cheap. My grandparents paid half of my father's college expenses. Half of my college expenses amounts to 13 grand a year, and I go to a crappy public university! Oh, don't worry, I'm baring the responsibility. I'm baring it in the form of a 9 percent interest rate on thousands of dollars of debt for the next twenty years.

[kinnath]

And unless you got the right degree, you're fucked.

You would have been better off learning a trade.

[tkwelge]

Hindsight is 20 20.

[kinnath]

If you're that young, there is nothing to prevent you from learning one now. You're going to be working till your 70's before you collect any retirement benefits from the Feds (if you get any at all).

[tkwelge]

I know, I know. I was joking. I'm working on starting a real life right now.

[John]

I went to a public school to and had scholarships to gover the private grad school I went to. But I was lucky. In many ways I am much luckier than many of my generation. But, despite making more money than my parents ever dreamed of, I still can't afford a house or if I do get one I will spend well over 40% of my disposable income on one.

The housing boom was the coup de grace on my generation. Even people like me who have done well and avoided the student loan trap are completely fucked by the housing boom. This is especially true if you were an honest person. While I was living responsibly getting rid of what few loans I had renting a cheap apartment I missed my only chance at owning an affordable home.

[kinnath]

Believe it or not, most of the country was not fucked by the housing boom.

Only the pricks in the urban environment got what they really deserved 😉

[robc]

"despite making more money than my parents ever dreamed of, I still can't afford a house "

Two words of advice: move.

[John]

That is one word. And I would move in a minute. But, you go where your job is. Thanks to economy destroying credit crisis that was created by the housing bubble, jobs are a bit harder to find than they once were.

[robc]

That is one word.

Woosh.

[briareus]

"Thanks to economy destroying credit crisis that was created by the housing bubble" --HOLD IT RIGHT THERE, John. The crisis was brought on by massive credit availability worldwide and the pooling of 70T that was looking for any place to pour itself into. The resultant housing crisis was just symptomatic.

As to the rest of your point, oh yes, the crisis has made jobs harder to find. This was of course to be expected (for example as early as 1912 in the writings of Ludwig von Mises).

It is indeed rough out there... I know people who haven't worked in any substantial capacity for a year. Of course, a lot of that might be their own fault. You can still make good money at the porn store--with full health bennies--if you are willing to mop cum.

[tkwelge]

No, the housing crisis was caused by an insanity that created a culture of home ownership combined with direct government action which tried to put more people in houses that they "own." The record low interest rates after the dot com crash added to this perfect storm.

[John]

My older brother is a high end welder and industrial repair guy. He actually does things of value and makes shit. Wow what a concept. He has been out since May. He has never had a problem finding work until now.

[kinnath]

I may not have a Whole Foods within a three hour drive of my house, but I have just over an acre and 2,700 sq ft of finished floor space and only for a mere $330k.

[John]

The irony is that all the cities are the same anyway. I would gladly move if and when the option becomes available. But I should have to leave like a fucking economic refugee because of this madness.

[kinnath]

posted down below, but reiterated here.

You have a law degree right? Why can't you work anywhere?

[Lamar]

Bar exams and bar entry requirements are designed to keep lawyers out. They have very little to do with competence, and everything to do with protectionism.

[Lamar]

Sorry, John, I'm pretty sure my city is the only one with a Pottery Barn.

[John]

I thought mine was. Next you are going to tell me that we don't have the only Best Buy.

[JW]

I'll just be happy if they stop sucking their own dicks over how great they are/were.

Seriously. Be happy with what you accomplished and shut the fuck up about it already. You're the only people who still give a shit about Woodstock. The rest of us have moved on.

[creech]

Interesting analysis. Pre-boomers put the U.S. into Vietnam, not the boomers. Boomers responded by hiding from the draft in college. Crappy economy in the early 70s, combined with tons of newly bachelor degrees allowed employers to require college degrees for jobs that previously did not require them. Then as elder boomers went to college, parents expected their younger siblings to go too. More government loans available, colleges expanded, yada yada.

[tkwelge]

Basically, it was "The Greatest Generation" that dropped the ball, is what you are saying. In defeat, malice. In victory, suicide!

[John]

There is another factor to; discrimination laws. It used to be that employers gave IQ and aptitude tests. They didn't care too much about college degrees because they could test you to see if you could do anything or had any brains. But dissparate impact test ended those. Deprived of the ability to test for aptitude, employers started demanding college degrees.

[Sean W. Malone]

Oddly enough, for the last real "job" I had working as a music editor for a software company, I was required to take a test like that - personality, moral questions, even had a math aptitude section.

[Barney Frank]

I say we keep on rolling the dice. Let's say we take a little bit of that TARP money and put it on the table.

[Fannie Mae]

Throw some of that fat cat banker money over my way.

[T]

Any reduction in prices is a market failure.

All kidding aside, a market failure is not when the market delivers a result you don't like.

[JW]

Actually, it is a market failure, but it's a reeeeally small market.

[Paul]

No, it's an investment failure.

[Pro Libertate]

But I thought the government wanted houses to be affordable!

[tkwelge]

That's the problem. Are houses assets or necessities? As a necessity, the government wants housing to be affordable, but cheaper housing would lower the viability of housing as an asset. Really, there are much better returns to be made elsewhere in the market (unless you were one of those house flippers, and that only works during an up market). Hopefully, after this crash, people will start to INVEST their money elsewhere, and we can make affordable housing our goal. Not inflated asset prices.

[briareus]

"That's the problem. Are houses assets or necessities?"

Neither.

Houses are consumables.

[Paul]

But I thought the government wanted houses to be affordable!

Silly Pro L.

The government does not want houses to be affordable without their help. If people could suddenly buy houses under straight-forward circumstances without tax incentives, government lending agencies etc., that would be a market solution. And that's not allowed.

Housing prices must remain high, and housing subsidies must become a way of life.

[Pro Libertate]

Pro Libertate make joke.

[J sub D]

We must at all costs not allow the housing market to reflect what underlying assets are actually worth. Because if we did, we might actually start the process of getting on with the rest of our lives.

QFT.

[SugarFree]

Threadjack:

Fake press release commits Canada to pay reparations for climate change.

[Pro Libertate]

Let's face it--we all know where Canada really is on global warming. They're all for it. I understand that Nunavut has plans within plans within plans to open some lovely Arctic Circle beachfront.

[Zeb]

Seriously. If global warming turns out as bad as the worst predictions, Canada will be the richest country on earth.

[Pro Libertate]

You think the Canadian government isn't planning for this? Bet they're secretly producing excess water vapor--excuse me, vapour--in the Yukon.

[robc]

That is why I cant move to Canadia. I dont own enough "u"s.

[Paul]

"It's scandalous," said Guilbeault. "It seems like we've lost freedom of speech in Canada."

Newsflash, you never had it.

[Lamar]

"Housing prices are down 30 percent from 2005, the market's historic high, but a recent increase in sales doesn't mean the market has touched bottom."

The "down 30%" figure is a bit misleading. In Orlando, the cheap shit houses that sprung out of the swamps during the boom (you know, the ones made from toothpicks and spit, in some stupid planned community) are worth absolutely nothing. However, a quality house with any desirable feature has not dropped. In fact, I know of numerous houses that have not gone down, and some sellers still expect a profit. My theory is that richer people bought nicer houses, and were likely to have more of a cushion for when they lost their jobs. Nevertheless, I've been looking for a house for a year now, and the only price drops I've seen are absolute dumps you wouldn't even put one of Tiger's sluts in.

[briareus]

Be patient. That typical homeowner has lost only about 1$ of the 3$ they will lose on their home value, and at the current rate of price decline, it will be about four years before house price intersects with the historical trendline of steady price rise since the early 1950s.

Be patient, and you'll be able to snap up houses for cheap. That is, assuming you still have an income at that time.

[John]

That is true in Washington DC to. The cheap shit houses that they built two hours from anything have totally dropped in value. The houses in neighborhoods you would like to live in and that have a commute under two hours have only grown from insanly expensive to outragously expensive.

There is a real estate website called Redfin.com. There you can see homes for sale and the prices that they sold for in the last ten years. In DC at least, you see houses routinely that were bought for say $350 in 04 or 05 and are on the market for $650 or $700 now. Even if you figure that they had some upgrading (say 100K) that is still damn near doubling the price in less than ten years. No other asset does that. No asset can do that. When you consider the growth income and population and inflation and the reasonable return on investment, those houses ought not to be valued more than 20% above what they were bought for at most. At some point that has to come home to roost. I don't see how you can have an asset that artificially inflated.

[John Paulson]

No other asset does that. No asset can do that.

Clearly you didnt invest in my hedge fund.

[briareus]

Houses aren't assets, they are consumables. Sure, some might be seen as assets (like a castle or an old stone mansion built like a fortress), but the newer cheap shit houses are on par with the automobile as consumables.

650-700K$ for a shoddily built consumable is ludicrous.

[John]

If you pay the upkeep, a house should last forever. A car is an asset even though it only lasts for a few years most of the time. But if you pay the upkeep, it can last as long as you want it to.

[robc]

Thats pretty much the definition of a consumable. Its value drops to zero unless you pump upkeep into it.

[briareus]

Thanks for the point-in-fact.

And no, John, a car is not an asset. A car is a consumable. SOME cars can act like assets (like a classic), but what the market will view in the future as a classic is not always apparent at the time of new purchase.

[robc]

A consumable is an asset too, while it still has value. It goes on the asset side of the balance sheet. Just like a piece of equipment you have to write down over 15 years.

[John]

A car in running condition is always an asset. Further, even if it is not, it still has value as scrap. I think of a consumable as something like food or copy paper or ink. Something that by the act of using is consumed and leaves no residual value.

[eb]

a car would be known as a "consumer durable" opposed to food which is a "consumer nondurable." A home should be considered a consumer durable good just as a car or an appliance but instead we look at it as an "investment" like factory equipment or an education that actually increas ouput.

[kinnath]

A durable consumer good with a market value greater than $0 goes into the asset side of the ledger.

[kinnath]

I suppose I should read the whole damn thread before posting.

[John]

By your definition it is hard to how anything is an asset beyond precious metals and land. We are argueing semantics, but I think that is a pretty restrictive definition.

[kinnath]

You got your assets and you got your liabilities. That's it, only two choices.

[briareus]

If your house and your car aren't paid for (as they often aren't), which are they? 😉

[kinnath]

basic accouting. The market value of the asset goes in one column. The liability in another column. The difference is your net worth (positive or negative).

[robc]

Its about 100k for the house and 500k for the land the house sits on. Unlike the house, the land is well constructed.

[Lamar]

I was taught that real estate is land, or gets its value from the land. The building on top of it is beside the point. Then when the boom came, people were buying houses that were really big for the amount of land. They were bragging about getting a 2,500 square foot house, but never mentioning that they could pick their neighbor's nose if they wanted. Maybe that is another reason that there was such a precipitous drop in the crappy house market. There was no land to prop up the value.

[Kaitain]

If you were paying mainly for the house, I would agree with you. But you're paying mainly for the land.

[Paul]

Lamar, possible. It's also possible that wealthier homeowners in established homes and neighborhoods are simply not willing to take a beating on their price. So they hold fast. The only ones who will finally sell are the ones who are forced to sell because of a job relocation or some other issue which doesn't allow them to hang on to their house through the financial storm.

[Lamar]

Paul, that's actually what I think. People who bought nicer houses are more able to hold fast and not take such a hit. Maybe that's why they are wealthy.

[kinnath]

That is true in Washington DC to.

I think I've spotted your problem there John.

You got a law degree right. You can work anywhere. The midwest is lovely even under 16 inches of fresh snow 😉

[John]

I am from the midest. I would move out of here in a minute. But I married a woman from the Northeast. They take your passport for that.

[kinnath]

That explains a lot.

Your only choice may be a forcible relocation. She will eventually forgive you, maybe . . .

[Mad Elf]

Is Martinsburg, WV too far away in your opinion?

[John]

WV is pretty. Motorcycle heaven. I would actually love to go to one of the big old midwestern industrial cities like Pittsburg or Cincinatti. They are very affordable and have a ton of beautiful old buildings and houses.

[tkwelge]

Come to Texas. Good economy, low prices. U just have to be able to stand the heat. I don't know quite how old you are, but for the under thirties, fort worth is very bohemian. If you move to dallas or austin, you'll be stuck in the rat race.

[John]

I lived in Central Texas for several years when I was in the military. I miss it every day. The summers are hell and the climate kind of sucks. But it is extremly livable.

[Mad Elf]

Martinsburg has MARC service, and is about an hour and half drive from Washington (though probably not during rush hour). I'm not sure if you consider that a reasonable commute, though. There are lots of people that live there that work in the D.C. area, though.

You can get a nice house for pretty reasonable like this one:

http://homes.longandfoster.com.....g,WV-25401

[T]

I laugh at your problems. I married a Texan. I'm stuck for life and beyond.

[EscapedWestOfTheBigMuddy]

I bought a little place in some Alabama college town in 2005 for US$92k. It looks like it will finally sell for US$88k and it sat empty for six months which hurt almost as much.

But similar rentals around town were considerably more than my mortgage, so I come out about even.

Not what I'd hoped for, but no big loss.

But when I started thinking about buying in 2005 my first question was "Is this market inflated?" because anyone could see that the crash would come sooner or later. When the answer seemed to be "Not very much." I decided I could take the risk---as long as I lived in a very plain, very simple house and got a fix rate (and that took considerable insistence).

I've little sympathy for people who didn't think about the future and took out loans they couldn't afford. It would be none at all, except that I wouldn't wish financial hardship on anybody: that shit is no fun.

[T]

I decided I could take the risk---as long as I lived in a very plain, very simple house and got a fix rate (and that took considerable insistence).

I've little sympathy for people who didn't think about the future and took out loans they couldn't afford.

I know reasonably bright, supposedly well-educated people who took out ARMs with absolutely ruinous back-ends on them. I can't tell you how many people told me I could buy a lot more house with an ARM. WTF? How big a house do I need?

[John]

What really sucks about that is that you have to compete in the market with the jackass who is taking out ARMS. That drives the prices of all houses up. The whole thing was like some orchastrated plot to screw honest, reasonable people.

[kinnath]

The whole thing was like some orchastrated plot to screw honest, reasonable people.

Duh!

[T]

I bought at a pretty good time (this time last year) and had a house built, so I wasn't competing against much. The inventory homes that were available when I moved in are still mostly available.

[P Brooks]

I was taught that real estate is land, or gets its value from the land. The building on top of it is beside the point.

I always get a big laugh when some guy in Malibu shows up on the teevee, boohooing about his "five million dollar house" burned down, when in fact, it was a hundred thousand dollar house on a 4.9 million dollar lot.

Letting the house burn down eliminates the expense of demolishing it.

[Lamar]

Hadn't thought of it that way. But you're goddam right.

[P Brooks]

The real problem with letting houses go to their "true" market value is that the evil fat cat bankers will have to actually adjust their balance sheets accordingly.

"Save us, TIMMAY!"

[Michael Ejercito]

And President Obama expects us to believe that he can run a public option better than the states of Maine, Massachussetts, or Tennessee?

[D Mckee]

Right on, about the cheap house on expensive land. Notice the FHA was OK with ARM loans durring the runup...and they knew the bubble would eventualy burst. The banks knew too, but with Gov. guarantees, they were OK too.
THIS IS WHY GOVERNMENT IS NOT A SOLUTION TO CHEAP OR UNIVERSAL HEALTH CARE OR HOUSING. They only know how to throw someone elses money at it and take credit for their "solution"! Notice how proud Charlie Wrangel is of his laws that "Required" lenders to lower credit standards so low income people could qualify for 100% mortgages on CHEAP HOUSES sold at full retail?
Actualy, now is a good time to buy WELL priced Quality homes in good areas, with fixed rate mortgages. Interest rates WILL go up just as soon as the economy shows ANY sign of strength...in my opinion.

[kiramatalishah]

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