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2008-09-27 Home Front Economy

Ending the Credit Crunch: Four Benchmarks to Watch

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Posted by JohnQC 2008-09-27 00:00|| || Front Page|| [2 views ] Top

#1 3. Credit conditions are the key thing to follow. 4. Crude oil prices vary with the value of the dollar plus worldwide supply & demand. I don't see how federal policies will change this in the next 1-2 years. #1 & #2 are almost the same thing. As I have posted before, housing prices have gone far beyond an affordable range in much of the USA & must fall far enough so that credit-worthy buyers can afford them. The rate of house sales depends on affordability, credit availability & household income.

Posted by Anguper Hupomosing9418 2008-09-27 00:27|| 2008-09-27 00:27|| Front Page Top

#2 Low Property Affordability is NOT a good thing.

I personally favour an LVT so interest rates can be lower without causing a house affordability to fall. As the Land Value Tax acts like a whole market higher interest rate.

Posted by Bright Pebbles 2008-09-27 06:43|| 2008-09-27 06:43|| Front Page Top

#3 One thing to watch for is fewer buyers buying up multiple homes and turning them into rental units. I suspect that there will be a lot of this happening as housing prices bottom out, investors look for places to put their money, and the notion that everyone MUST live in a house they own instead of rent remains one worthy of derision.

Posted by no mo uro 2008-09-27 07:01|| 2008-09-27 07:01|| Front Page Top

#4 One real and usually overlooked value in renting is job mobility. Renters have a much easier time pulling up stakes & moving to another location for work, i.e., they don't have to worry about selling house #1 to move into house #2.

Posted by Anguper Hupomosing9418 2008-09-27 07:53|| 2008-09-27 07:53|| Front Page Top

#5 The argument about housing prices is a hot one. Many stakeholders to consider in the mix. People who have paid for overpriced houses don't want to see the market prices to go down, their wealth dribbling away the whole time, and I can't blame them for that. But remember way back (80's) when a responsible mortgage was 3-4 years salary? Well that's still the responsible thing to do. But in places like California you can't touch a house for less than 350K. So, unless you make 115K a year, you shouldn't really be a homeowner in CA.
Does that sound realistic? Does that sound like the American Dream? Real Estate values need to come down, a lot, in my opinion.

Posted by bigjim-ky 2008-09-27 10:42|| 2008-09-27 10:42|| Front Page Top

#6 So, unless you make 115K a year, you shouldn't really be a homeowner in CA.
Does that sound realistic? Does that sound like the American Dream? That cutoff sounds quite realistic for would-be homeowners in CA. I think a big chunk of all losses in mortgage loans will materialize in that state, over & above its population & income levels. Florida will be another major contributor (As Groucho Marx once said, you can get stucco there. Oh, can you get stucco!) The American Dream is what individual Americans make of it, there's nothing written in stone saying any given percentage of Americans must be homeowners.

Posted by Anguper Hupomosing9418 2008-09-27 11:40|| 2008-09-27 11:40|| Front Page Top

#7 Does that sound like the American Dream?

"Annual income twenty pounds, annual expenditure nineteen nineteen and six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery." - Charles Dickens, from David Copperfield.

The banks and lenders drove the price up by making the 'paper' available. If they wouldn't finance at 350K but at 150K, the builders and developers would make 150K homes. They wouldn't be fancy HGTV spotlights, but they'd be practical and functional. Overprice housing is the market's way of saying time to move on to over there ->, not 'let's dream up a financial ponzi scheme'. There's still a lot of affordable housing out there, just not in the spots where a million or more people want to live. If your 'dream' is to own a home, then you need to adjust where you want your dream to be. If your dream is to be 'someplace' then it many not be to own a home. It's an old story.

Posted by Procopius2k 2008-09-27 12:09|| 2008-09-27 12:09|| Front Page Top

#8 The dog and the bone story. The dog saw his reflection in the water and wanted the bone he saw in the water as well as his own. There is an aspect of illusion in that story as well as the fiscal mess in D.C. Yup, and if Washington doesn't listen to voter and taxpayer anger, we will end up getting "boned. again in this bailout.

After the debates last night, the talking heads were saying they thought BO won. I'm not so sure he won. Drudge had a different take this morning. I heard a typical old style big spending, big government Democrat talking about his big give-away programs he is going to have when he is elected.

I listened to the Fox panel of non-committed voters late night after the debate express how they were influenced by the debates. One women said she would not vote for McCain because he's so old and so rooted in the past. So much for the experiences that shape a person's life and character. There were a few others that expressed similar views. If I were running for office, I seriously would not curry the favor of these voters who don't have an opinion prior to the debate; haven't researched the candidates in any serious way, and vote on the basis of superficial appearances.

Posted by JohnQC 2008-09-27 16:00|| 2008-09-27 16:00|| Front Page Top

#9 Oh Procopius - God bless Wilkins Micawber! - Of course he fled debtors prison to lead a successful life as a respected politician in Australia! Would that we could reverse the process with some of our "leaders".

Posted by Halliburton - Asymmetrical Reply Division 2008-09-27 20:37|| 2008-09-27 20:37|| Front Page Top

#10 I totally agree 100%, the market would compensate if it weren't impaired by bad legislation, greedy real estate agents, predatory lenders and ignorant buyers. I just think its unfortunate that what was once the achievable for the average worker is now out of reach for all but the best paid. Like I quoted above, 350K is nothing for a house in CA, the average house in Alameda county is $515,000. If you were a responsible buyer, you would have 20% down and no more than 4 years salary. That means you'd have to have $103,000 down and make 104,000 a year, or preferably $137,300 a year. Thats for the AVERAGE house in Alameda county, and thats nothing compared to Marin County. So you're right, but I think its a shameful state.

Posted by bigjim-ky 2008-09-27 21:27|| 2008-09-27 21:27|| Front Page Top

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