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New A symptom, not a cause.
AIUI, the root cause was deregulation that resulted in letting banks take incredibly risky positions that were hugely over-leveraged. Fun when you're winning, not when you're not.
New I see your point.
But I don't think that "symptom" completely describes it. Mortgages were bundled because no one thought you could lose money investing in home ownership. Both the creators of the mortgage bundles and the saps who purchased them did so because they believed (quite wrongly) that in the worst case, foreclosure and resale would guarantee a positive ROI (here, I ignore the enormous profit taking of the banksters via shorts on the very bundles they were hawking).

There are still a whole lot of people here that are "upside down" with their mortgages. IMO, this is a significant contributing factor to the reluctance of younger folks here to purchase a home. I am by no means suggesting that its the only reason nor the most significant reason. But the idea that "no one loses money on a house in the US" is no longer a valid assumption. If my daughter and her husband hang on to the house they just purchased for 5-10 years, I think they'll be lucky to get their money back. I could, of course, be wrong about that. But how long can an economy support $525+/sq ft of living space in middle class neighborhoods?

The house they bought less than a generation ago went for 1 year of a public school teacher's salary. They bought it for roughly 8 years of a public school teacher's salary. It's not sustainable and if home ownership is something that is going to remain a possibility for anyone with an income below the 90th percentile, there will have to be massive devaluations.
bcnu,
Mikem

It's mourning in America again.
New It's probably more complex over there than it is over here.
New As are most things. We haven't many adults running things here.
bcnu,
Mikem

It's mourning in America again.
New Location, Location, Location.
It remains true.

There's a commenter on B-J who lived in Iowa for decades. Bought her house something like 30 years ago before selling it recently to move to the Chicago suburbs to be close to her kids.

She lost money on the sale. :-/

Yes, housing is a huge problem in much of the USA. But don't count on prices falling to "affordable" levels in areas where people want to live. It may happen, but I wouldn't count on it. There's too much money in the hands of people who are willing to spend it on real estate.

While prices are high, they're not crazy high in most areas. I was going to give the example of Japan, where kids never had any hope of buying a home in Tokyo, but I was remembering examples from the crazy boom years. Now, it's very different. Houses depreciate like cars in Japan - only the land holds value, so it's hard to make comparisons.

Of course, we may end up going back to things like boarding houses for bachelors if things get bad enough. :-( (My MIL lived in a boarding house in DC when she came to the city for a federal job before the war.)

The best hope to fix the housing problem is to tax the top 5% more (and the top 0.1% much, much more) so that wages go up (rather than dumping the benefits into executive compensation) and so that people have a chance to move around. Being stuck in a job with no hope of moving to get a better one, and no pressure on the company to raise wages, means that so many problems fester.

Cheers,
Scott.
New Wait a second. Are you saying that income inequality is the most pressing issue? :0)
bcnu,
Mikem

It's mourning in America again.
New Voting is the most pressing issue. But there are many, many other important ones...
New Re: But don't count on prices falling to "affordable" levels in areas where people want to live.
I'm not counting on that. I'm only pointing out that until/unless that happens, there's going to be huge chunks of our population in those "areas where people want to live" for which home ownership will be completely out of the question indefinitely.

I also think it's worth asking one's self, "Cui bono?" When we bought our first house in 1985, I remember looking at the mortgage papers, specifically the total price we were going to pay for our $29,000 home and nearly fainting. Take a 50 year old home anywhere in the U.S. Think about how many mortgages have been written for that home and how much in payments to banksters that property has generated. Looking at a more recent example, we built our house in 2000 for $225,000 on a raw lakefront lot we'd owned for about ten years. If we hold our tongues right and I remain healthy, we'll have finally paid off that mortgage in the early Spring of next year. I just did a quick estimate of how much we've paid the bank for that $225,000 house and it currently totals more than $350,000. That's already > 50% ROI for the bankster class in 18 years and they literally did nothing for it. Now multiply that by the number of homes on our 170 acre lake. It gets worse for those dwellings in "the places people want to live". My dad's first house in California cost $15,000 in 1964. Some banksters have written mortgages on it for up to $500,000 and collected mortgage payments for that 15K house in the past 54 years.

The amount of money banksters make from these hyperinflated home prices is breathtaking. Houses are almost continuously mortgaged and the banksters like it that way. It is their way, with apologies to Mark Knopfler, to make "Money for Nothin'".

It won't stop until we all stop living for the benefit of the bankster class. And that will never happen in this country.
bcnu,
Mikem

It's mourning in America again.
New Um, do you have any bonds?
Banksters use other people's money. You and your neighbors give them money to get interest. One of the ways the banksters earn money for their depositors is via mortgages.

If it's such a great business, why don't more people cut out the middle man and provide mortgages themselves??

You know this.

The problems with housing and mortgages isn't the S&L banksters giving out 4-5% 30 year mortgages, it's the CDOs and so forth, the PMI scam, and the lack of affordable housing (zoning, NIMBY, etc.).

Cheers,
Scott.
New Re: why don't more people cut out the middle man and provide mortgages themselves?
Seriously? Ever heard of a bank charter? They give those out like candy, do they?
bcnu,
Mikem

It's mourning in America again.
New Re: why don't more people cut out the middle man and provide mortgages themselves?
https://www.nolo.com/legal-encyclopedia/seller-financing-home-sales-30164.html

Seller financing can be a useful tool in a tight credit market. It allows sellers to move a home faster and get a sizable return on the investment. And buyers may benefit from less stringent qualifying and down payment requirements, more flexible rates, and better loan terms on a home that otherwise might be out of reach.

Sellers willing to take on the role of financier represent only a small fraction of all sellers -- typically less than 10%. That's because the deal is not without legal, financial, and logistical hurdles. But by taking the right precautions and getting professional help, sellers can reduce the inherent risks.

[...]


HTH!

:-)

Cheers,
Scott.
New Re: why don't more people cut out the middle man and provide mortgages themselves?
Ah! So, all I have to do is have enough money to purchase several tens of thousands of homes so that I will be the Seller in each case and then I don't have to be a bank to make the outrageous sums that the bankster class does on home mortgages.

I completely understand now and apologize for my lack of imagination.

;0)
bcnu,
Mikem

It's mourning in America again.
     Hey Peter, do you believe Carney's right about property values with no-deal? -NT - (mmoffitt) - (18)
         Sort of. I think there's a bit of exaggeration for effect. - (pwhysall) - (17)
             Never heard of that help-to-buy racket - (drook) - (14)
                 It's not that people lose their homes... - (pwhysall) - (13)
                     Careful with that "appreciates" assumption. Too much of that gave us the 08/09 crisis. -NT - (mmoffitt) - (12)
                         A symptom, not a cause. - (pwhysall) - (11)
                             I see your point. - (mmoffitt) - (10)
                                 It's probably more complex over there than it is over here. -NT - (pwhysall) - (1)
                                     As are most things. We haven't many adults running things here. -NT - (mmoffitt)
                                 Location, Location, Location. - (Another Scott) - (7)
                                     Wait a second. Are you saying that income inequality is the most pressing issue? :0) -NT - (mmoffitt) - (1)
                                         Voting is the most pressing issue. But there are many, many other important ones... -NT - (Another Scott)
                                     Re: But don't count on prices falling to "affordable" levels in areas where people want to live. - (mmoffitt) - (4)
                                         Um, do you have any bonds? - (Another Scott) - (3)
                                             Re: why don't more people cut out the middle man and provide mortgages themselves? - (mmoffitt) - (2)
                                                 Re: why don't more people cut out the middle man and provide mortgages themselves? - (Another Scott) - (1)
                                                     Re: why don't more people cut out the middle man and provide mortgages themselves? - (mmoffitt)
             Thanks! That's inline with what I think about Southern California's prices. - (mmoffitt) - (1)
                 Re: Thanks! That's inline with what I think about Southern California's prices. - (pwhysall)

More aluminum-magnesium batons than you can shake a leg at.
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