07/08 collapse

Here's 1 of numerous banks regionally in hot water for these practices that I know of. Involves fdic, feds, and fed home loan bank
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DannyK said:
Too many people with zero equity in their house because they had interest only loans.
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They had equity (see reappraisal), then sunk it through heloc.

We built in 16, we're going to sell in 20+/- (builder lifestyle) but with covid starting, and the borrowing ease, we dipped on a 30day quick close, standing still in a rental, put my money elsewhere.
 
Paragon said:
fake equity gains
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Point of view of the observer. Anything was worth nothing at one time, worth something at its peak and worth nothing in the future. At what point do you choose for baseline? I get it you view the equity gains as overinflated and will likely drop away at a future point. Doesnt mean it isnt worth that amount at that moment in time. As long as someone would pay that rate, that is the value.

The people who invest in the market, watch it quadruple over 30 years, then scream about a 20% loss on a major dip are missing that it still has greater value than they originally invested and have been schooled that market timing is very hard even for the professionals.
 
Mr Stubs said:
And why shouldn’t they think that way, property values have been increasing at ridiculous rates. So many people have ended up with large equity gains in very few years.
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Because they'll bitch its the banks, builders, someone fault that they couldn't meet increasing payments on taxes, or afford it after 1,2 or 3 hiccups.

Equity gains, like Paragon says, are fake, until realized at cashed out.

Cashing out and sticking it back in, while not inherently bad, is, when you put a pool in. Now it's with 500k. Well when the downturn occurs, the equity and general correction takes place, and that 500k note on a 350k house, perhaps you're the 10-12% on ARM, and BOOM.
 
clodhopper said:
Point of view of the observer. Anything was worth nothing at one time, worth something at its peak and worth nothing in the future. At what point do you choose for baseline? I get it you view the equity gains as overinflated and will likely drop away at a future point. Doesnt mean it isnt worth that amount at that moment in time. As long as someone would pay that rate, that is the value.

The people who invest in the market, watch it quadruple over 30 years, then scream about a 20% loss on a major dip are missing that it still has greater value than they originally invested and have been schooled that market timing is very hard even for the professionals.
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Yup.

But most think short term.
 
Trackerbacker(fvckvs) said:
Equity gains, like Paragon says, are fake, until realized at cashed out.

Cashing out and sticking it back in, while not inherently bad, is, when you put a pool in. Now it's with 500k. Well when the downturn occurs, the equity and general correction takes place, and that 500k note on a 350k house, perhaps you're the 10-12% on ARM, and BOOM.
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and the property tax valuation will never go back down to what it was before the sale at the top of the market, ****ing the next owner(s) forever
 
[486] said:
and the property tax valuation will never go back down to what it was before the sale at the top of the market, ****ing the next owner(s) forever
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Not here. I had the valuation of my house adjusted after the 08 crash. There was even a form online that was a piece of cake to submit. And yes, I said that about a government agency in CA.

Saved me a couple hundred a year on a 93k house that dropped into the high 70s. Sold it for 175k about 8 years ago.:smokin:
 
Santa said:
Not here. I had the valuation of my house adjusted after the 08 crash. There was even a form online that was a piece of cake to submit. And yes, I said that about a government agency in CA.

Saved me a couple hundred a year on a 93k house that dropped into the high 70s. Sold it for 175k about 8 years ago.:smokin:
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Yall have a decent proposition regarding that. One of the few smart things
 
clodhopper said:
Point of view of the observer. Anything was worth nothing at one time, worth something at its peak and worth nothing in the future. At what point do you choose for baseline? I get it you view the equity gains as overinflated and will likely drop away at a future point. Doesnt mean it isnt worth that amount at that moment in time. As long as someone would pay that rate, that is the value.

The people who invest in the market, watch it quadruple over 30 years, then scream about a 20% loss on a major dip are missing that it still has greater value than they originally invested and have been schooled that market timing is very hard even for the professionals.
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Here's the current story. Prop values shot up before the 08 bomb. There really wasn't a reset. What happened is that bailout money transferred into buying up a bunch of properties creating a mega rental market. A few companies were/are paying top dollar for properties sight unseen which helped keep and increase market values.

Rental properties drop value precipitously and we really haven't fully seen the effects of the covid lockdowns. There is too much rental market to maintain high property values and with inflation, increases in loan rates, the bottom will fall out
 
Paragon said:
Here's the current story. Prop values shot up before the 08 bomb. There really wasn't a reset. What happened is that bailout money transferred into buying up a bunch of properties creating a mega rental market. A few companies were/are paying top dollar for properties sight unseen which helped keep and increase market values.

Rental properties drop value precipitously and we really haven't fully seen the effects of the covid lockdowns. There is too much rental market to maintain high property values and with inflation, increases in loan rates, the bottom will fall out
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Completely agree. Totally unstable and a bad long gamble. My point is the value is the value at only a point in time. If companies are "overpaying" for property, then that is the current value, ie what it was worth to the purchaser. If the market value estimators are lagging behind the market and setting values based on "comps" that sold a month ago, that doesnt mean the market competing and actuallly buying at a higher price point is "over paying", but rather the going rate at that moment.

Every investment carries risk, some more than others. I am absolutely positive that you bought something for a price that another person would consider "unreasonable". That doesnt mean you got shafted, it was a price you thought was fair. The other guy might be a skinflint, but that is his business.

There are people who are buying the very market you describe and making money. Likely controlling risk by holding the asset for limited time, banking on the market holding out just long enough. It is just the last guy holding the asset when the music stops that has the problem. Point of view, immediate time value.
 
Paragon said:
between it and obamacare, my "loss" is incalculable. covid bull**** just rubbed my nose in it and might have put the final nails in my primary income
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I know crispin has shared, old site I think, but I'd be curious to know what you mean, what happened?

From the sympathy standpoint. Nothing sickens me more then .gov killing american spirit.

If you dont want to share, completely understandable
 
I think predatory lending had a big part. Everyone calling you up saying yeah I can loan you more money. We will just do a 45 year loan, or interest only loan. Or yes I can loan you up to 125% of your homes inflated value that will be whatever I tell the appraiser it needs to be. Inflating the value inflates the taxes owed. Or just giving people loans that should have been denied. Friend of mine had a bankruptcy. He had no problem getting a home loan. That is not right.
tax abatements in local communities didn't help either.

I had bought a fixer upper, closed on it 2 days before the crash in 2007. What I paid $40k for I could have gotten for $20k a week later. Ouch. When I sold it 5 years later I had to sell it on contract just to break even. The only money I made on that house was the interest rate I charged on the contract. I lived in it for 5 years but think I only made $12k on it. (hind sight, I should have rented it out)

My kids are pretty smart but even today they are being told they can afford homes that are 3 times their annual income.
Uhm, no you can't.

For me growing up, home loan payment/rent needs to be 1/4-1/3 of your monthly income. Anymore than that and you will have financial trouble.
gotta say that was pretty accurate.

I know some of you think ARMs are bad, but I am on one now. Sitting pretty good actually, got a great rate to start. Set to change this month, so it will actually go down about 1/2 point. Before it adjusts again I hope to have the home paid off. If not I will be close. So in my case the ARM was a great choice, but most people don't understand what they are doing and if they don't know, they should not trust the lender to pick for them.

Not sure I agree we are in that same boat today.
 
Tiha said:
Not sure I agree we are in that same boat today.
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The policies to get here were a different road, but we ended up at the same spot again.

People are over extended; whether it be home, vehicle, CC, etc. High energy prices. Add in high inflation this time around.

Right now, the general public is blinded by the 'it's worth more than I paid for it' mentality.
 
Land is paid for house is paid for. The car is owned by my brother's estate unsure what will happen there. All our expenses are the usual food, utilities, and such. No credit cards I learned early in life to pay cash or do without
 
DannyK said:
Too many people with zero equity in their house because they had interest only loans.
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It was so many parts you honestly couldn’t narrow it down to only 5 major reasons.

The government deregulated the industry under Clinton and the same people who had been in charge took advantage. When the crash happened thos people should have been made examples of so we could actually reform the industry. However the government stepped in and saved us…. Same congress critters that stood back and watch the last one happening are looking agains saying. “See I ****ing told you they were dumb enough to fall for it again. Pay up.”
 
I hear what your saying on inflation being part of the gains in equity. It's a small percentage though. Nationally real estate has been up like 8% ANNUALLY and our market is nearly double that. Inflation currently equals a 1 year of gains nationally and still doesn't touch the values in a lot of markets. It's going to take a while to put a dent in the equity, especially if housing remains strong. Spoiler - immigration, population and aging trends all say we have more people who want somewhere to live.

After the predatory lending wave, most everyone was underwater. Some PUDs had 100's of foreclosures eventually, so everybody lost value. Today the AVERAGE equity is over $200k. The polar opposite of 08.

In our market it's a lot of cash, and huge down payments. Your 3.5% FHA loan is rarely going to win, and almost every offer is competing.

Easy to walk away when you could never really afford it, and have negative equity. Now almost all consumer loan products have hard firewalls of debt to income, and verify durability of the income. I turned down people all the time with damn good jobs, income, and assets.

Now days, your "average" homeowner used the proceeds from their last house as a down, got a amazing fixed rate, and have jobs/ DTI that fully support the mortgage. They ain't just gonna fold up and sell you their house for pennies on the $. At best you may snag some ****holes that some first timer, or wannabe flipper got in over their heads in.

your market may vary:flipoff2:
 
Alpine4x4 said:
Let it crash, we sold and got our "fake" equity out in cold hard cash.
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This is the route we went too... House appraised for 30% more than we paid for it in two years.
We are trying to get something small built but cost is no bueno and it seems like everyone is 6-12 months out.

We've heard locally that some builders are starting to sell some of their equipment because the writing is on the wall and they aren't interested in getting stuck holding the bag.
 
There is no such thing as predatory lending. Nobody forces you to overpay for a property, agree to pay too much interest or take out an ARM. You make your choices and need to use common sense when you agree to a loan.

Culturally we need to learn to live within our means. If you want it go earn it - it isn't given to you, you don't deserve it and it isn't somebody else's fault when things go wrong.

If you want to buy at the peak of the market, be prepared to get through the correction when some of the variables will change.
 
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