sois Posted September 9, 2008 Report Share Posted September 9, 2008 I live in Las Vegas. The median household income is $53,000. The median house costs $240,000. As a financial planner, the housing ratio we recommend is 28%. Considering taxes and insurance, that puts the affordability at $130-140,000 available for financing. Good luck finding a trailer for that price. Remember, this is what the AVERAGE house should cost. Why is this gigantic discrepancy being encouraged by Congress? A bail out only says that this behaviour is permitted. Shouldn't housing prices be allowed to tank? To me, there are only two fixes: People need to make more (about twice as much) or housing prices need to fall. Sadly, our Congress backed this bailout, which tells me that they are just as stupid/greedy when it comes to finances. It didn't barely pass, it was a landslide. I guess they ARE listening to the constituents, but the constituents are the ones who created this mess. How is this problem going to get resolved if both parties are digging themselves deeper into the hole? I know I am looking at the problem in a vacuum, but I feel that this sort of thing is in my wheel house. Would our economy really crash if housing prices really sank? I can think of many POSITIVE side effects of this along with the obvious negative side effects. I guess what I want to say is that Conress caters to the stupid general population instead of protecting the "weak", which in this case is responsible people who save for down payments and buy things they can afford. How can you blame Congress? If they do something unpopular, they get fired! Isn't there something wrong with this system? Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 9, 2008 Report Share Posted September 9, 2008 As to why they did this, they actually inflated housing prices for the purpose of making mortgages available to more people. By increasing the price, they have a bigger umbrella to cover for the delinquent mortgages, and also on the assumption that housing prices will keep going up. Of course this means people are stuck with a mortgage for the rest of their lives in some cases because they need people to constantly be putting money into the pool. I am by no means an expert on the situation, but I believe that to be true. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 9, 2008 Report Share Posted September 9, 2008 We had a similar discussion a couple weeks back... Homer and I had an interesting debate. I questioned governments / society's necessity to save "dumbass" people that got themselves into those situations. Homer felt like it was every society's responsibility to protect its "dumbasses"... As you know Homer's rather, hhhmmm, lengthy explanations, I've given a cliff notes version of our discussions. I'm of the mind that if you protect / "safe" this type of behavior then many of these folks will be doing the same thing again and it generates a habit that will continue to happen. They know they'll be saved. Homer is correct in his estimation that there is a small population that really do need to be protected because they can't function on their own. My argument in that instance is that those folks don't need to be mortgage holders... maybe they need to rent. Then the rentor assumes the responsibility of the mortgage itself. Again, cliff notes version of a pretty good discussion. Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 9, 2008 Report Share Posted September 9, 2008 We aren't bailing out the "dumbasses" that took out the loans. We're bailing out the rich "dumbasses" that extended them. The previous conversation was about the need for regulation in the lending industry. Link to comment Share on other sites More sharing options...
steggyD Posted September 9, 2008 Report Share Posted September 9, 2008 Well, in my case, I would like for house pricing to stay up, up until the point that I sell my house. Then, at that point, I'd like to see them crash, so that I can move up into a better house. Or, I sell my house in upstate NY at a ridiculous price, then move to somewhere where the housing market is a bit cheaper. Which is what I am considering right now. I have a lead in Lousville, Ky, for work and help setting my family up and everything else. That puts me a little closer to the Bengals. Maybe I can begin watching home games next year. *side note* ridiculous, derived from the word, ridicule. So often around here, I see it spelled with an e, as in rediculous. This is the one grammar error that sets me off. Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 9, 2008 Report Share Posted September 9, 2008 [quote name='steggyD' post='698785' date='Sep 9 2008, 03:12 PM']*side note* ridiculous, derived from the word, ridicule. So often around here, I see it spelled with an e, as in rediculous. This is the one grammar error that sets me off.[/quote] "Loose" instead of "lose" is my spelling nazi hot button. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 9, 2008 Report Share Posted September 9, 2008 [quote name='CTBengalsFan' post='698783' date='Sep 9 2008, 04:11 PM']We aren't bailing out the "dumbasses" that took out the loans. We're bailing out the rich "dumbasses" that extended them. The previous conversation was about the need for regulation in the lending industry.[/quote] Oh, but we are... Yes, we're bailing out the lenders, which I don't agree with. But, we're bailing out the borrower too. Link to comment Share on other sites More sharing options...
sois Posted September 9, 2008 Author Report Share Posted September 9, 2008 @ CTBengalsFan: How does inflating the housing prices make them available to more people? @ Vol Bengal: How do you protect the dumbasses when they are the majority? Shouldn't it be the other way around? Majority protect minority? Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 9, 2008 Report Share Posted September 9, 2008 [quote name='sois' post='698796' date='Sep 9 2008, 04:41 PM']@ CTBengalsFan: How does inflating the housing prices make them available to more people? @ Vol Bengal: How do you protect the dumbasses when they are the majority? Shouldn't it be the other way around? Majority protect minority?[/quote] that is a very good question. And, one I cannot answer. I guess the better question is why are we protecting anybody in that regard? The person makes a bad decision financially - live with the consequences... It is harsh but the alternative will generate a career "they'll bail me out" mentality. Something akin to the career welfare person that exists now. Unemployment around for the original purpose was a good thing. The problem is when the abuse occurs... Link to comment Share on other sites More sharing options...
Jamie_B Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Vol_Bengal' post='698780' date='Sep 9 2008, 02:51 PM']We had a similar discussion a couple weeks back... Homer and I had an interesting debate. I questioned governments / society's necessity to save "dumbass" people that got themselves into those situations. Homer felt like it was every society's responsibility to protect its "dumbasses"... As you know Homer's rather, hhhmmm, lengthy explanations, I've given a cliff notes version of our discussions. I'm of the mind that if you protect / "safe" this type of behavior then many of these folks will be doing the same thing again and it generates a habit that will continue to happen. They know they'll be saved. Homer is correct in his estimation that there is a small population that really do need to be protected because they can't function on their own. My argument in that instance is that those folks don't need to be mortgage holders... maybe they need to rent. Then the rentor assumes the responsibility of the mortgage itself. Again, cliff notes version of a pretty good discussion.[/quote] Homer isnt wrong. Think of it this way, if said dumbass getting into trouble effects all the rest of us (and make no mistake, it does) then it isnt just a matter of protecting said dumbass...its a matter of protecting us all. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Jamie_B' post='698900' date='Sep 9 2008, 08:57 PM']Homer isnt wrong. Think of it this way, if said dumbass getting into trouble effects all the rest of us (and make no mistake, it does) then it isnt just a matter of protecting said dumbass...its a matter of protecting us all.[/quote] And, like I said in my original post... that is why it was a discussion. People have differing of opinions. I don't know the perfect solution and I'd venture a guess that you and Homer don't either. It is a complicated issue. What I do know is once you start down a path of "saving" people you automatically will create a certain portion of abusers that game the system. It happens with everything. That is one of the main things I opposed to. Aside from that, your point is more pertinent in the instance of bailing out the lender significantly moreso than the borrower. Lender goes under you have a lot larger issues than if borrower goes under. Be that as it may, you have an opinion, Homer has an opinion, I have an opinion, etc. none of them are wrong, none of them are right at this point. Link to comment Share on other sites More sharing options...
gatorclaws Posted September 10, 2008 Report Share Posted September 10, 2008 I don't really know shit compared to the rest of you on the specifics of this stuff, but I enjoy reading it. Keeps me informed. Link to comment Share on other sites More sharing options...
Jamie_B Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Vol_Bengal' post='698922' date='Sep 9 2008, 08:34 PM']And, like I said in my original post... that is why it was a discussion. People have differing of opinions. I don't know the perfect solution and I'd venture a guess that you and Homer don't either. It is a complicated issue. What I do know is once you start down a path of "saving" people you automatically will create a certain portion of abusers that game the system. It happens with everything. That is one of the main things I opposed to. Aside from that, your point is more pertinent in the instance of bailing out the lender significantly moreso than the borrower. Lender goes under you have a lot larger issues than if borrower goes under. Be that as it may, you have an opinion, Homer has an opinion, I have an opinion, etc. none of them are wrong, none of them are right at this point.[/quote] Its not about saving people, its about making sure the dumbasses cant fuck it up for the rest of us in the first place. Your talking about the effect, Homer and myself to a lesser extent in the enron loopole thread are talking about the cause. Link to comment Share on other sites More sharing options...
sois Posted September 10, 2008 Author Report Share Posted September 10, 2008 The thing that most strikes me is how smart people get sucked into paying more than what a house is worth. Las Vegas is no different geographically than my old town, Lubbock TX. A house is built of basically the same materials. Lowes and Home Depot stock everything needed. Sheetrock isn't four times more expensive here than there. There are equivalent neighborhoods. Price of living is close, but Vegas is a little more expensive for a few reasons. Both are going to suffer from a lack of drinking water in the not so distant future. Both are dusty deserts. How on earth does a house cost so much more to build here than there? I can't believe that so many honestly believe their house has such great value when really its a cruddy cookie cutter house just like they build 1000 miles east. Thats like paying 1000 for an Xbox here and 300 in Texas. What makes things worse is taxes are HIGHER here!!! Also, if you feel that the economics of the city factor into the price, explain how Dallas, Houston and San Antonio all have MUCH lower prices than Vegas. These are just examples showing how people don't know how to properly value things and it really f's everything up. Home prices are all hype. It's crazy to see how many buy into it. Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 10, 2008 Report Share Posted September 10, 2008 Location. Who wants to live in Lubbock? A lot fewer people than Vegas. Supply, demand, all that. Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 10, 2008 Report Share Posted September 10, 2008 Let me just reinforce the suggestion that folks read the Hudson piece I linked to the other day. It's long, it's detailed, and for many folks who haven't studied economics--it's a little arcane. BUT, it's probably the most on-target assessment of what is happening and why a "conservatorship" was chosen as the means to shape the future of these two GSEs (and 12 Federal Home Loan Banks, btw--though that rarely gets mentioned by the press.) Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Jamie_B' post='698936' date='Sep 9 2008, 09:50 PM']Its not about saving people, its about making sure the dumbasses cant fuck it up for the rest of us in the first place. Your talking about the effect, Homer and myself to a lesser extent in the enron loopole thread are talking about the cause.[/quote] I wasn't referring to the Enron Loophole topic when I was referring to a previous thread... if that is what you thought. And, like I said in the thread from several weeks ago... I agree with regulation to keep the lender honest, etc. as long as there are consequences, etc. on the borrower as well. I don't want a one-sided recourse, if that makes sense. I'm not placing all the blame on either party - just want both parties of the lending decision to face the consequences (whether that is regulation, etc.) of a bad loan. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='sois' post='698967' date='Sep 9 2008, 11:11 PM']The thing that most strikes me is how smart people get sucked into paying more than what a house is worth. Las Vegas is no different geographically than my old town, Lubbock TX. A house is built of basically the same materials. Lowes and Home Depot stock everything needed. Sheetrock isn't four times more expensive here than there. There are equivalent neighborhoods. Price of living is close, but Vegas is a little more expensive for a few reasons. Both are going to suffer from a lack of drinking water in the not so distant future. Both are dusty deserts. How on earth does a house cost so much more to build here than there? I can't believe that so many honestly believe their house has such great value when really its a cruddy cookie cutter house just like they build 1000 miles east. Thats like paying 1000 for an Xbox here and 300 in Texas. What makes things worse is taxes are HIGHER here!!! Also, if you feel that the economics of the city factor into the price, explain how Dallas, Houston and San Antonio all have MUCH lower prices than Vegas. These are just examples showing how people don't know how to properly value things and it really f's everything up. Home prices are all hype. It's crazy to see how many buy into it.[/quote] And, CT is correct. Supply, demand, which makes the cost of real estate (the piece of ground) worth more. Link to comment Share on other sites More sharing options...
sois Posted September 10, 2008 Author Report Share Posted September 10, 2008 [quote name='Vol_Bengal' post='699028' date='Sep 10 2008, 07:01 AM']And, CT is correct. Supply, demand, which makes the cost of real estate (the piece of ground) worth more.[/quote] That doesn't explain why houses are drastically cheaper in Houston, Dallas, San Antonio than in Las Vegas. Link to comment Share on other sites More sharing options...
Jamie_B Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Vol_Bengal' post='699027' date='Sep 10 2008, 07:00 AM']I wasn't referring to the Enron Loophole topic when I was referring to a previous thread... if that is what you thought. And, like I said in the thread from several weeks ago... I agree with regulation to keep the lender honest, etc. as long as there are consequences, etc. on the borrower as well. I don't want a one-sided recourse, if that makes sense. I'm not placing all the blame on either party - just want both parties of the lending decision to face the consequences (whether that is regulation, etc.) of a bad loan.[/quote] right but how do you prove the borrower wasnt taken advantage of? Link to comment Share on other sites More sharing options...
Jamie_B Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='sois' post='699066' date='Sep 10 2008, 09:47 AM']That doesn't explain why houses are drastically cheaper in Houston, Dallas, San Antonio than in Las Vegas.[/quote] Sure it does, LV is a "hot spot" people come in and out of there all the time, that alone is going to push up the prices. Link to comment Share on other sites More sharing options...
Vol_Bengal Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Jamie_B' post='699085' date='Sep 10 2008, 11:25 AM']right but how do you prove the borrower wasnt taken advantage of?[/quote] Didn't the borrower sign the paperwork? Link to comment Share on other sites More sharing options...
Jamie_B Posted September 10, 2008 Report Share Posted September 10, 2008 [quote name='Vol_Bengal' post='699171' date='Sep 10 2008, 01:04 PM']Didn't the borrower sign the paperwork?[/quote] that doesnt mean that they always understood what they signed, remember were both agreeing they are dumbasses here. My contention is that the jackels who would take advantage in order to make money because they thought the prices were going to contiue to go up (and they could make some money) should be punished much more because they were the ones who know and understand this stuff as that is their job. The problem is this effect much more than just said dumbasses and said jackels, it effects us all. Thats why we cant have de-regulation of the vitals of the ecnomy. Lennon was right. Link to comment Share on other sites More sharing options...
Homer_Rice Posted September 10, 2008 Report Share Posted September 10, 2008 This has nothing to do with the borrower. Nothing. Nothing. Link to comment Share on other sites More sharing options...
CTBengalsFan Posted September 11, 2008 Report Share Posted September 11, 2008 Trying to make it about the borrowers only serves to divert attention away from the true perpetrators of this mess. Link to comment Share on other sites More sharing options...
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