Apr302013
Large down payments provide stability to the housing market
Down payments are the bedrock of the housing market. Large down payments preserve home ownership, reduce volatility in the market, and reduce the risk to our financial system. The only people who oppose them are realtors and originate-to-sell lenders who see down payments as an impediment to profits and left-wing housing advocates who see down payments as a barrier to putting unqualified borrowers into houses.
Down payments preserve home ownership because people who’ve put down large down payments rarely default. In purely economics terms, people shouldn’t consider sunk costs like down payments in their decision making. However, homeowners do. People simply don’t walk away from properties where they’ve put a lot down, even if they’re deeply underwater. The decision is more emotional than logical, but coupled with the emotional desire to “own” these two forces prevent most people from strategic default even when that option is the best available to them.
Down payments clearly have a strong impact on delinquency that cannot be ignored. Delinquency rates on high down payment loans are a small fraction of what delinquency rates are on low down payment loans.
Down payment reduce market volatility in two ways. First, as mentioned previously, large down payments reduce strategic default. Fewer foreclosures in a time of financial crisis means less pressure on house prices. Plus, large down payments serve to limit the inflation of prices during a rally. Large down payments reduces the size of the buyer pool (which is why lenders and realtors want down payments reduced or eliminated). A thinner buyer pool puts less upward pressure on prices. It takes people time to save for larger down payments, and this serves to limit price increases by the rate of savings of potential buyers.
Ultimately, down payments limit the risk to our financial system because they reduce the volatility in the housing market. Our financial system nearly crashed in 2008, which was triggered by the collapse of the housing bubble.The destabilizing impact of low down payments is far reaching. That’s why it’s particularly dangerous that a small group of self-interested parties is lobbying to reduce or eliminate down payment requirements from the new qualified residential mortgage standards.
Down Payment Rules Are at Heart of Mortgage Debate
By PETER EAVIS — April 24, 2013, 2:15 pm
It seemed an easy fix to prevent the excesses of the housing market: make home buyers put more money down.
It really is that easy. Large down payment stabilize the market because borrowers have equity. An equity cushion makes strategic default less common, and provides a buffer against loss for lenders if they must foreclose on a property.
But as the housing market starts to return and the subprime mess fades from memory, the issue is up for debate.
Lenders and consumer advocates — rarely on the same side of the issue — are now cautioning against down payment requirements. They argue that such restrictions could limit lending, and prevent lower-income borrowers from buying homes.
Down payments do limit lending because it prevents people without the fiscal discipline to save and consistently make payments from getting loans. Down payment requirements weed out the people lenders should least want to loan money to. And who said home ownership is an entitlement that lower-income borrowers should have? Lower income borrowers who can save 3.5% can buy a property that their income can support. The FHA down payment hurdle is hardly onerous.
They also contend that the new mortgage rules put in place this year will do enough to limit foreclosures, making down payment requirements somewhat superfluous.
That argument is complete bullshit. While the new mortgage regulations will prevent future housing bubbles, these regulations leave out the lynchpin of the whole system, down payments. This arguement is the kind of weak crap put out by people hiding their real agenda — making more money from originations and sales.
The arguments seem to run contrary to long-standing beliefs about homeownership. For decades, experts have emphasized the need for a sizable down payment — a rule of thumb being 20 percent — on the premise that borrowers with a sizable chunk of equity in a home are less likely to walk away when things get bad.
“If our goal is to prevent foreclosures, I can’t think of anything more effective than requiring a down payment,” said Paul S. Willen, a senior economist and policy adviser at the Federal Reserve Bank of Boston. …
As I noted, large down payments prevents many from submerging beneath their debts which causes a reduction in strategic default. Fewer defaults means fewer foreclosures. However, it isn’t just the number of foreclosures that’s the problem. The losses lenders must absorb if they do foreclose is what imperils our banking and financial system. If the bubble-era borrowers all put 20% down, banks wouldn’t be sitting on a $1 trillion in unsecured debt today.
And the subprime debacle has only distorted the debate, say some analysts. “The problem with this conversation is that it’s like discussing the future of shipbuilding from the deck of the Titanic,” said Roberto G. Quercia, director of the Center for Community Capital at the University of North Carolina at Chapel Hill. “There’s a lack of perspective.” …
WTF? I think having a conversation on shipbuilding from the deck of the Titanic is the best possible perspective. We must learn from our mistakes. The subprime debacle emphasized the need for down payments and higher lending standards. The best possible time to establish these standards is in the aftermath of a disaster.
It’s a critical issue for Washington. Currently, taxpayers, through the Federal Housing Administration, backstop most of the low-down-payment mortgages. But the aim is to curb the government’s involvement in mortgages.
As that happens, policy makers are hoping a major part of the mortgage market will come back. Specifically, they need the return of private bond investors, who once bought trillions of dollars’ worth of mortgage-backed bonds with no government backing.
Other than some small bond deals, that market remains dormant. A major reason is that the banks that sell the mortgage-backed bonds are waiting for regulators to complete rules aimed at strengthening this market.
The real reason investors are staying away from the mortgage bond market is because the federal reserve has driven yields so low with it’s manipulation of interest rates that investors can’t make a good risk-adjusted return. If officials really wanted to attract private capital back to this market, they would let interest rates rise. That would take care of the problem. Perhaps finalizing the rules might reduce the risk premium a little, but the real problem with the private bond market is that yields are far too low.
This is where down payments could play a crucial role. The proposed rules require banks to hold a slice of the mortgage-backed bonds they sell to investors. Banks do not like those types of restrictions.
Banks don’t like any types of restrictions. That’s exactly why the Dodd-Frank legislation put those restrictions in. If lenders want to originate dodgy loans, they are going to have to retain some of that risk on their own balance sheets. It’s the best and only way to ensure underwriting standards won’t get compromised. Forced buy-backs only go so far.
But lenders would not have to keep a piece of the bonds if the underlying loans included features that made them less likely to default. These exempt loans would be called qualified residential mortgages. Regulators effectively proposed that these loans should have a 20 percent down payment.
The proposal prompted widespread objections from consumer advocates, bankers and home builders, who said the plan could shut many borrowers out of the housing market.
Large down payments will shut many borrowers out of the housing market — many unreliable ones.
Banks, they argued, are likely to focus heavily on making qualified residential mortgages. And if those mortgages require high down payments, lenders will be hesitant to make loans with little money down.
Good.
Consumer advocates make a nuanced case. They do not deny that down payments reduce the risk of default. But they say defaults can be reduced almost as much by applying other rules that curb lending to certain types of borrowers. …
Bullshit. If this were true, they wouldn’t object to large down payments because it wouldn’t have any impact. Obviously, large down payments will weed out the bad borrowers more than the other rules will.
Borrowers who saved up for down payments may have budgeting skills that later help them make their payments … and borrowers with equity in their homes are less likely to walk away altogether, rather than try to find a solution.
Supporters of a down payment requirement also make a broader argument. They point out that the financial sector overhaul was not just meant to protect borrowers. It was also intended to make banks and financial markets more resilient to shocks like housing busts. In other words, the legislation always envisioned a trade-off between homeownership and the stability of the financial system.
There is no reasonable argument to be made in favor of small down payments. The only people trying to obfuscate the issue are left-wing housing advocates, realtors, and originate-to-sell lenders who have their own self-serving agendas. The reality is that large down payments provide stability to housing markets and our financial system. It only remains to be seen if politicians have the courage to stand up to the special interests and do the right thing for the country.
Ironically, in the last few weeks down payments have made a comeback. However, it’s just due to the low supply of homes. Even conforming limits are temporary not discussed right now. I think QRM will come out and you won’t see requirement greater than 10%.
I keep hearing that you can down payment for “better returns” instead . However, that is only because your mortgage rate isn’t 8.5%.
Investors Losing Interest in Single-Family Housing
In March, investors accounted for 13.3 percent of the market share for non-distressed properties, while current homeowners represented 50 percent of the market. First-time homebuyers also made up a significant portion at 36.8 percent.
For purchase activity overall, the HousingPulse survey found current homeowners accounted for 42.2 percent of the market share. Activity from first-time homebuyers picked up and reached an eight-month high after accounting for 36.1 percent of market share. At the same time, investor activity represented just 21.8 percent of market share in March. HousingPulse results also revealed investor market share nationwide has been ranging between 19 and 23 percent for much of the past year.
As non-investor activity strengthens, the survey showed the non-distressed market is benefitting as well. Offers for non-distressed properties heated up in March, with the three-month moving average hitting a three-and-a-half year high at 2.2, according to the survey. In California, non-distressed properties received four offers on average.
Non-distressed properties also stayed on the market for a shorter period of time, averaging 10.9 weeks, which is the lowest level the survey has recorded in three-and-a-half years. The average sales-to-list-price ratio for non-distressed properties also improved and rose to 96.8 percent in March, up from 94.9 percent a year ago.
“We are seeing a very strong market for non-distressed properties and that is important because the metrics for this segment are not affected by policy decisions at mortgage servicers to release or not release distressed properties onto the market,” said Thomas Popik, research director for Campbell Surveys.
Wow. There are 7.2 million more renters now than in 2004, and just 400,000 more homeowners per US.
Las Vegas is still driven by investors. Irvine renter is right, the the market is catching fire and someone other than investors may end up holding the bag. You cannot have price stability without serious down payment stability which I wrote about some time ago: http://www.recourse-loans.com/2013/01/housing-as-store-of-wealth-real-estate.html
Slow Wage Growth Not Keeping Up With House Price Increases
Restrained by slow wage growth, personal income rose a disappointing $30.9 billion (0.2 percent) in March—half of what economists expected—as spending rose $21.0 billion or 0.2 percent, the Bureau of Economic Analysis reported Monday.
Economists had expected income to improve 0.4 percent in February and spending to increase 0.1 percent.
The Bureau of Labor Statistics (BLS) reported average weekly earnings rose 0.3 percent in March with an increase of 88,000 payroll jobs, boosting aggregate weekly earnings, which represent about 52 percent of personal income.
The personal income number is a key driver of the economy fueling consumption which is, according to Friday’s Gross Domestic Product report, about 71 percent of the total economy. Wages grew just 0.2 percent in March, down from 0.7 percent in February. In 2012, wages grew an average of 0.3 percent per month.
Even though total personal income rose faster than spending, savings dropped $1.8 billion after accounting for taxes, reducing disposable income and personal interest (no-mortgage), which rose $1.6 billion during the month despite continued low interest rates.
The personal savings rate—measured as a percentage of disposable income—remained at February’s rate of 2.7 percent.
Personal income had improved $15.2 billion in February, largely on the strength of an $80 billion increase in dividend payments. Dividend payments in March increased by $4.5 billion over February.
Lock in your high cost basis.
Builders hold lotteries for eager new homebuyers
By Les Christie | CNNMoney.com – 5 hours ago
Demand among homebuyers is so high in some parts of the country that builders are holding lotteries to decide who gets to purchase homes in their developments.
O’Brien Homes started holding a monthly housing lottery for its 228-unit development called Fusion in Sunnyvale, Calf., after seeing throngs of prospective buyers camp out at the openings of other new condo complexes in the area.
“We didn’t want that,” said Susie Frimel, a spokeswoman for O’Brien Homes. “We wanted our customers to be pleased with the process.”
Each month, as new sections of the development came under construction, roughly 50 buyers would show up at O’Brien Homes’ sales office hoping to be picked for one of the 10 or so sites available. The participants were already pre-qualified for a mortgage and had their down payment in place. After being assigned a number on a bingo ball, they crossed their fingers and waited for each ball to be plucked from the tumbler.
For each unit, the company drew a winner and a back-up, just in case the winner backed out.
Lotteries are not a perfect solution, especially for the buyer who walks away empty-handed.
“Some people would come back month after month,” said Frimel. “It got very frustrating for them.”
Adding to that frustration was that home prices rose virtually every time a new group of homes went on sale. The two-, three- and four-bedroom homes started out between $420,000 and $620,000. The last grouping went for $555,000 to $815,000, a 32% increase.
Even with the price hikes, buyers kept returning. O’Brien started issuing returnees an extra bingo ball. If they lost for four straight months, they would get five chances the next time.
The last available home in the complex closed last week. Some customers got shut out. For Frimel, that was one of the hardest things to watch. She had gotten to know many of the regulars well.
In addition to O’Brien Homes, other Bay Area builders are also using lotteries, including Shea Homes at a development in Livermore, Calif. and Shapell Homes in San Ramon, Calif.
But lotteries aren’t just taking place in California. In northern Virginia, Camberley Homes held a lottery to sell two model homes in a new community called One Loudoun last week. More than a dozen people participated.
In Florida, GL Homes held its first lotteries since the housing bust. In mid-April, the company sold off 11 of its model homes in Delray Beach, Fla. in its first lottery in more than five years.
“[O]ur homes are at a price that we are willing to accept and not force customers to potentially get into a bidding war,” said GL Homes division president. Marcie DePlaza. “So for us, the lottery is the fairest way to determine the priority in which customers will be able to purchase our model homes.”
Last weekend, more than 1,000 people showed up for a sale of lots in its Boynton Beach, Fla., community featuring homes ranging from the high $300,000s to the low $600,000s. GL Homes held a lottery, in which 75 home buyers entered to win their first choice of lots.
“We set up a big tent outside the sales office to handle the crowd,” said DePlaza. “We had them write out pink index cards and we put them in a tumbler. The first winner was so excited, she was crying.”
Buyers seem to prefer the lottery system to competitive bidding or trying to be the first in line when a home goes on the market.
“I thought the way [GL Homes] handled it was very professional,” said Neal Rosen, a math teacher who, with his wife Felicia, participated in a the lottery on April 20. “There was no rushing. They had plenty of food. And I got the lot my wife and I agonized over for three weeks.”
To keep up with all of this surging demand, builders are trying to build faster, according to Glenn Kelman, founder of real estate broker Redfin. “Builders are trying to get as much inventory to market as they can,” he said.
After the hard times of the housing meltdown, builders are savoring the return of the buyers.
“We went years without having to resort to lotteries or camping out,” said DePlaza. “We’re thrilled to see them back.”
Why don’t they just raise the price until the number of buyers equals the number of houses they have available?
Builders like the frenzy. They believe that they need momentum to carry them through the sales cycle. If they raise prices too high too soon, they risk losing momentum. If sales drop low enough, then they have to lower prices which pisses off the previous buyers. Further, lowering prices during a sales cycle actually hurts sales because prospective buyers expect further price drops. We saw that play out at Columbus Grove in Irvine as they tried to close out construction.
Supply of HUD REOs on MLS Expected to Increase Steadily over Next Two Years
Any homebuyer on the market right now will tell you the crowd of buyers and multiple offers are creating a challenge.
Those in search of distressed homes owned by the U.S. Department of Housing and Urban Development are not immune to this supply-and-demand situation. In fact, recently one HUD home in San Diego attracted 100 offers within 10 days.
“In this market, because it’s so competitive we’re seeing buyers just happy to get a house. They are being less selective on location and condition,” said Whissel, broker/owner of Whissel Realty.
But in its latest news report, RealtyTrac reported that an uptick in homes owned by HUD may create opportunities for patient buyers.
Experts project that over the next two years, as lenders steadily work through a backlog of foreclosures delayed by foreclosure-processing reviews, the supply of these HUD homes will increase significantly.
Hey IR
Do you play the new Simcity? Just wondering since you were in land development. Although I’ve stopped playing now since I been a bit busy lately, but when I did veg out on it, it was so fun laying out roads and watching my cities grow.
I used to play Sim City quite a bit. I’ve built my share of big cities. After a while, it just becomes a giant time-suck, so I had to quit playing to get other work done.
It was only good with very small cities. Once I started to need services (Police, Fire, Schools,) I started to have financial problems. Also, I never could get the mass transit to work right and it would usually kill.
http://online.barrons.com/article_email/SB50001424052748703889404578440972842742076-lMyQjA1MTAzMDIwNzEyNDcyWj.html#articleTabs_article%3D1
On the Rise
THE MILLENNIALS — sometimes called Generation Y, and defined by many demographers as ranging from ages 18 to 37 — make up the largest population cohort the U.S. has ever seen. Eighty-six million strong, it is 7% larger than the baby-boom generation, which came of age in the 1970s and ’80s. And the Millennial population could keep growing to 88.5 million people by 2020, owing to immigration, says demographer Peter Francese, an analyst at the MetLife Mature Market Institute.
Owing in part to the Millennials’ surge, apartment demand is strong around the country. Housing could be the next major industry to benefit from their size and maturation, but Wall Street could reap the biggest rewards. The MY ratio, which compares the size of the middle-aged population of 35-to-49-year-olds with that of the young-adult population, ages 20 to 34, explains why.
Middle-aged folks have higher incomes than younger people, and a greater urgency to save for retirement. They invest their savings, which drives up stock prices. When the MY ratio is rising, meaning the older cohort outnumbers the younger, the stock market typically does well. The ratio has been falling since 2000, which has exerted a drag on stock prices.
Alejandra Grindal, a senior international economist at Ned Davis Research, notes the MY ratio will bottom in 2015 and then rise through 2029. It is one of several reasons the firm is bullish on stocks.
AS THE MILLENNIALS’ EMPLOYMENT situation improves, more young adults living at home will pack their bags and move out. That could spur an increase in U.S. household formation, which turned negative in 2007-08. Since then, the number of newly created households has recovered to about a million a year, still well below an annual average of 1.5 million since the 1970s, according to Census Bureau data.
Greater financial security could mean an increase in the birth rate, which typically slumps during economic downturns. Francese sees the average birth rate for U.S. women rising to 2.1-2.2 in coming years from a depressed 1.9 recently. “A lot of Millennials put off having babies, and now they will get to work,” he says.
That suggests they will also start buying homes. Pat Tschosik, a consumer strategist at Ned Davis Research, figures there will be more home buyers than sellers in the 12 years ending with 2019, giving the housing market a boost.
LOL
http://moneymorning.com/images3/student-loan-bubble-2.png
86 million strong?
Ha!
http://moneymorning.com/images3/student-loan-bubble-3.png
Yes, I knew you would respond that way… and apparently you didn’t bother to read the full article. 😉
“There is almost $1 trillion of student debt outstanding in the U.S. today, which could limit the purchasing power of Millennials. “These people have a mortgage and no house,” Francese says.
But here, too, total figures are misleading. The average student loan among Gen Y-ers is $25,000, and the median loan is nearly $14,000, according to the Federal Reserve Bank of Kansas City. Less than 1% of student loans are larger than $100,000.“
That student loan debt will be a problem. Many of these borrowers won’t qualify for much of a loan due to the drag on their back-end ratios. And that’s assuming they can come up with a down payment.
Excellent post, however…
considering current monetary policy; a ‘bubble/bust’ ponzi construct remains the model; the fact that the fed is encouraging speculation (not discouraging it), and systemic collapse has only been papered over (not restructured), question is: are you gonna put your downpayment ‘chips’ on black, or on red?
are you gonna put your downpayment ‘chips’ on black, or on red?
Gold? Silver? Within 60 days I expect to see an increase in printing. It’s coming.
If so, evidently, it’s coins please
US Mint Gold Sales Surge To Highest Since 2009
http://www.zerohedge.com/news/2013-04-24/us-mint-gold-sales-surge-highest-2009
I didn’t fully appreciate how destructive the federal reserves policies are until I saw how they coddled the Ponzis. As I mentioned in a previous post, the main positive impact of a recession is to cleanse the system of Ponzi schemes. By lessening the impact of recessions, Ponzi schemes survive, and the resulting inefficiency continues, and ultimately, these schemes destabilize the economy.
Boost in Home Prices Doesn’t Equal Bubble
Hedge funds including Paulson & Co. Inc. are pushing Congress to abandon plans to liquidate Fannie Mae (FNMA) and Freddie Mac as investors buy up preferred stock that has long been considered worthless, according to people with knowledge of the discussions.
The improving finances of the two government-owned mortgage companies have kindled hopes among shareholders that they could be revived as private firms. Even as lawmakers from both parties and U.S. housing officials say that won’t happen, preferred shares of Fannie Mae have more than doubled in price since early March. They closed at $4.75 yesterday.
Paulson & Co. is among funds that met with members of the Senate Banking Committee and with staff members in the House of Representatives, said two of the people briefed on the matter. Claren Road Asset Management LLC and Perry Capital LLC also have lobbied, said those people and a third person. They spoke on condition of anonymity because the meetings weren’t public.
“There are funds that have taken very large positions, large hedge funds, and they are lobbying heavily,” Senator Bob Corker, a Tennessee Republican, said in an interview, declining to confirm any names. “I don’t give investment advice, but I don’t see how these are going to be worth anything down the road.”
Armel Leslie, a spokesman for Paulson, and Liz Gill, a spokeswoman for Carlyle Group LP, majority owner of Claren Road, declined to comment. Perry Capital general counsel Michael Neus didn’t respond to requests for comment.
Lobbying Blitz
The blitz of hedge-fund lobbying reflects how Fannie Mae and Freddie Mac’s return to profitability is complicating discussions about housing finance reform. Lawmakers in the House and Senate are working on bills that would wind down the two government-sponsored enterprises, which currently own or back about half of outstanding home loans.
To date, the Washington debate about housing finance has focused less on how to dispose of Fannie Mae and Freddie Mac and more on how to lure private investments back to the mortgage market. Also at issue is what share of mortgage risk, if any, the U.S. should assume in the future.
Washington-based Fannie Mae and McLean, Virginia-based Freddie Mac (FMCC) buy mortgages from lenders and package them into securities on which they guarantee payments of principal and interest. Their bad investments in risky loans in the run-up to the 2008 credit crisis led to a taxpayer bailout and enshrined them as symbols of excess in the housing market.
No Exit
Treasury holds $188.5 billion in senior preferred shares in the two companies, representing the amount of aid they have drawn from taxpayers to stay afloat. The companies have sent back $65.2 billion in dividends, which count as a return on the government’s investment and not as a repayment. Treasury also holds warrants to purchase nearly 80 percent of the companies’ outstanding common stock.
Under the bailout’s terms, there’s no mechanism for the enterprises to exit conservatorship. Neither Fannie Mae nor Freddie Mac can build capital because Treasury takes virtually all of their quarterly profits.
Holders of the rest of the preferred shares as well as common shares were widely presumed to have been wiped out when the government took over. The companies’ return to profitability has created renewed enthusiasm for the enterprises’ securities.
Hedge funds don’t publicly disclose their holdings of Fannie Mae and Freddie Mac securities. Claren Road and Perry Capital hold preferred shares, according to investors in the funds.
Taxpayer Profit
Fannie Mae’s preferred and common shares spiked after the company reported record earnings of $17.2 billion for 2012 on April 2. Common shares closed yesterday at 83 cents, giving the company a market capitalization of $4.8 billion, up from $1.5 billion at the end of 2012, according to data compiled by Bloomberg.
If the housing market continues to improve, and Fannie Mae and Freddie Mac remain in conservatorship for the next 10 years, taxpayers would come out ahead by $50 billion, White House budget analysts have projected.
Hedge fund lobbyists are arriving at Capitol Hill meetings with detailed financial analyses contending that selling off the government’s shares and recapitalizing the companies could make taxpayers an even larger profit, the people said. That also would boost chances that investors in preferred shares would benefit. The funds are making it clear they would be interested in buying the shares now held by Treasury, the people said.
youd have to be a serious idiot to put a large down payment in this market. i can’t wait for the FHA rules to change in June and wipe away a shit load of buying power from ponzis.
The cynic in me thinks the rules won’t change all the much. They not going to make it difficult for the banks.
Indeed.
Not only that…. but by hoping prices will rise, people are actually hoping/cheering for the purchasing power of every hard earned dollar in their money clip to decrease. Imagine that. And, to add insult to injury, it’s happening right under their own noses.
I must be an idiot. We put down 100%.
Excuse me, make that a serious idiot, according to Stopthemadness.
The sooner, the better.
OH MY GOSH! I got curious and “zillowed” my address. According to their “zestimate”, our property has appreciated 26.7% in the 1 1/2 years we have owned it!!! And the inflation rate is less than 2%?!
I just pulled comps on all the properties in my funds in Las Vegas, and I was equally as astonished. The appreciation is remarkable.
Of all the people I know, your market timing has been the best. As I recall, you sold your home in Long Beach in 2005, put the money into gold, then sold some gold in 2011 to buy a house in Coto. You could not have timed that any better.
This is cool also; just Google Earthed our house. The photo was taken after we bought the home, but before we started redoing the backyard. Our minivan is parked out front. All the previous owner’s trash has been removed from the backyard, (it was a short sale on a home going to foreclosure auction in a few days). You can see the bunny pen, (he died). And the original patio, (it is gone also), with our old patio furniture is showing. TOO COOL!
Wow I must have struck a nerve with you. The market of 18 months ago puts you into late 2011 a great time to buy.
I don’t see how this market is like the one 18 months ago but keep posting abut google earth!
I guess I should get use to it, but I am still amazed that some people are so arogant as to think that they know better what people should do with their money and have some opinion as to the intelligence of how others spend their money. Do you how many opinions I got telling me that it was stupid to pay cash? I don’t know for sure, but my guess is that not one of those who told me paying cash was stupid either has the cash to buy a home or will they ever. We bought our home, knowing that on a real dollar basis, we could invest our money and get a better return than SPENDING money on a house. We bought because my wife wanted her own home. It had NOTHING to do with being intelligent or stupid. It had nothing to do with investing. A house is an expense and/or a speculation. A great time to buy is a personal choice. There is NO general good time to buy or bad time to buy a personal residence. There is personal choice. And lastly, most people who speculate on the appreciation of a personal residence will lose on a real dollar basis, just like any speculation. Houses are mostly an expense to most people.
Great commentary! And with REAL facts!?!
It is unbelievable the nonsense that is spewing out on this issue from the National Association of Realtors, the Mortgage Banker Association, and that unrepentant realtor-in-Senator’s clothing, Johnny Isakson of Georgia.
It is sad that the discussion on this issue is so imbalanced by the huge bags of “campaign contributions” that flow to only one side. Home buyers about to be skinned have no lobby.
You’ve done a magnificent job of providing some sanity in what is otherwise another money grab by the same folks who took us down just a few years ago.
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