401K's

[ProudVirgin69]

People who bought high maxxing out their mortgage will be upside down (owe more than the house is worth) when r/e crashes.

This leads to foreclosures and the banks sit on these bad loans for years so they don't book the losses.

Why would it lead to foreclosures?  Unless they lose their job they could just keep paying the mortgage, knowing that values are highly likely to recover

[loco]

[IroNat]

Why would it lead to foreclosures?  Unless they lose their job they could just keep paying the mortgage, knowing that values are highly likely to recover

See my modified post.

Some people don't like paying on a mortgage that is higher than the value of the house and they walk away.

Happened lots of times in the last crisis.

Have you ever owed more on your house than it's worth? 

Imagine owing $500k on a house that is worth $300.  Why would you want to continue paying?

You can be assured it's a miserable feeling.

[karasan]

See my modified post.

Some people don't like paying on a mortgage that is higher than the value of the house and they walk away.

Happened lots of times in the last crisis.

Have you ever owed more on your house than it's worth? 

Imagine owing $500k on a house that is worth $300.  Why would you want to continue paying?

You can be assured it's a miserable feeling.

I guess it can make sense if you bet on devaluation of the currency

[ProudVirgin69]

See my modified post.

Some people don't like paying on a mortgage that is higher than the value of the house and they walk away.

Happened lots of times in the last crisis.

Have you ever owed more on your house than it's worth? 

Imagine owing $500k on a house that is worth $300.  Why would you want to continue paying?

You can be assured it's a miserable feeling.

yeah i know it happened in 2008.  i remember hearing that advice back then, only to watch investors snatch the foreclosures up for pennies on the dollar.  I wouldnt be surprised if it was coordinated between the media and institutional investors.

Im sure it suks to be underwater on a mortgage but its temporary as property values are likely to recover, like they did after 2008.  walking away from your mortgage means you're gonna lose all of your equity and be renting for the foreseeable future, how is that any better?  even if you can afford another down payment, whos gonna lend to you after a foreclosure?

unless you 1) Are forced to move 2) lose your income or 3) have an ARM, staying put and paying the mortgage off is the best thing to do.

[ProudVirgin69]

this is a crude graph but still supports my point.  home values in most of the country recovered ~5 years after 2008, and continued to grow.  homeowners who stayed patient were rewarded.  those who were not patient, lost out.

[Humble Narcissist]

Why would it lead to foreclosures?  Unless they lose their job they could just keep paying the mortgage, knowing that values are highly likely to recover

Don't forget about the inflation of everything else. People are paying way more for gas and groceries and everything else. What they could afford in a house a few years ago may be different now.

[IroNat]

yeah i know it happened in 2008.  i remember hearing that advice back then, only to watch investors snatch the foreclosures up for pennies on the dollar.  I wouldnt be surprised if it was coordinated between the media and institutional investors.

Im sure it suks to be underwater on a mortgage but its temporary as property values are likely to recover, like they did after 2008.  walking away from your mortgage means you're gonna lose all of your equity and be renting for the foreseeable future, how is that any better?  even if you can afford another down payment, whos gonna lend to you after a foreclosure?

unless you 1) Are forced to move 2) lose your income or 3) have an ARM, staying put and paying the mortgage off is the best thing to do.

If you mortgaged to the hilt to buy the place you might have very little equity to lose.

It probably won't happen anyway.

[Rambone]

I'm all excited for the housing crash.

Going to buy something real nice.

Dirt cheap.

People buying houses recently are about to get screwed hard.

I personally don't see a housing crash. There are some notable facts presented in the vid like way stricter lending practices, higher consumer credit scores, less adjustable rate loans out there, higher home equity for the average family and a better jobs market although pay won't keep up with the rate of inflation. I could see it more as a slowdown scenario like he said. The public will cut their discretionary spending, but they won't be skipping their mortgage payments. The stock market could be a different story though.

[IroNat]

The residential real estate market usually stalls out when interest rates rise.

Sellers have to mentally accept lower prices since buyers can afford less which takes awhile.

30 year rate is just over 6%.

[ThisisOverload]

I personally don't see a housing crash. There are some notable facts presented in the vid like way stricter lending practices, higher consumer credit scores, less adjustable rate loans out there, higher home equity for the average family and a better jobs market although pay won't keep up with the rate of inflation. I could see it more as a slowdown scenario like he said. The public will cut their discretionary spending, but they won't be skipping their mortgage payments. The stock market could be a different story though.

We will see in 2-3 years.

Housing sales already starting to decline.

I work in land development so i see it pretty early.

The biggest developers i deal with are preparing for a long term decrease.

Nobody knows, just speculation.

But when those nice new houses at the top of the hill are sold at a reduced cost, i'll be on them quickly.

[Rambone]

We will see in 2-3 years.

Housing sales already starting to decline.

I work in land development so i see it pretty early.

The biggest developers i deal with are preparing for a long term decrease.

Nobody knows, just speculation.

But when those nice new houses at the top of the hill are sold at a reduced cost, i'll be on them quickly.

The house at the bottom of the hill is hungrier than the house at the top of the hill

[ThisisOverload]

The house at the bottom of the hill is hungrier than the house at the top of the hill

That's true, it's not as hungry.. but when it wants the food...it's there.

[IroNat]

The house at the bottom of the hill is hungrier than the house at the top of the hill

Awesome.

[Rambone]

That's true, it's not as hungry.. but when it wants the food...it's there.

 

[SGT BARNES]

tell the house on the hill i said hi...and im looking forward to seeing it in southafrica

[POB]

That's true, it's not as hungry.. but when it wants the food...it's there.

I see what u did there😎

[Rambone]

tell the house on the hill i said hi...and im looking forward to seeing it in southafrica

 

[ThisisOverload]

tell the house on the hill i said hi...and im looking forward to seeing it in southafrica

 

[Freemason]

I owned a construction company 1999 through 2009. Predicted and watched the housing crash in real time. Luckily was completely prepared and didn’t lose my ass.

Some big differences between then and now. Then a huge number of people owned multiple homes. I mean people that had no business owning multiple houses and they all believed they could flip out of them for a profit at any time. Now most homes here are owner occupied primary residences. Second is the qualifying for a mortgage was a joke then. Now it is relatively strict and takes much longer to close. 30-60 days is norm in 2006 you could close in 3-5 days.

Third, and a big one here, is the cost to build. As home values climbed in 2003 through 2007 the cost to build stayed basically the same. Materials were steady and labor only cost a bit more if you were in a hurry and wanted to swipe some trades off of other jobs.

This time home values are climbing concurrently with cost to build. The home values today are actually quite realistic if you consider a self build hiring your own subs will cost close to a purchase of a similar home off the market.

Also don’t think your going to be able to scalp some good deals if the market drops unless you are a cash buyer. Lenders predicting about 10% mortgages rates by Dec

Of course I could be wrong but like I said some significant differences between 2008 and what’s happening now.

So if the market is primed to tank why are all the multi billion dollar fund buying up single family homes? Well they used to invest in your mortgages. Mortgages were considered safe investments and used to be profitable. Well now (well actually up to the beginning of this year) mortgages only earn about 3% for the billionaires while you peasants enjoy 5 to 20% appreciation on a real asset that only gets more valuable with inflation. Meanwhile the note holders investments plummet with dollar devaluation.

My personal prediction is we will see more homes slip into corporate ownership for rentals and people squeezed out of the ability to own their home. Renting will become the normal way to live in a house and the corporations will enjoy the asset appreciation of the real estate. Peasants will pay rents that go up every time the dollar value goes down. If you own your home and have a mortgage under 4% never sell it or refinance it. In a pinch do a HELOC but right now a 3% mortgage they are actually PAYING YOU TO USE THEIR MONEY. And trust me they hate you for it.