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146 Comments
- piratearggghhh, on 02/22/2009, -0/+138What's funny is people are waiting for the housing market to recover. Clearly from this chart it *IS* recovering. It was never meant to be so high in the first place thanks to fraud, deregulation and greed. I mean, do people really need to be millionaires to own a house?
- buddamus, on 02/22/2009, -1/+64I'm the other side of this, I'm wishing prices crash and burn so I can own my own home and not having me and my partner to take on 2 jobs each
- govsucks, on 02/22/2009, -12/+71THis whole "lack of regulation" thing is starting to get on my last fraking nerve.
The EU is the most regulated place on Earth yet the have the same if not bigger problem. Anyone care to elaborate on why?
What caused this problems is government making guarantees and coercive laws it NEVER should have made, mortgage people taking advantage of those asinine guarantees and people who are foolish or wanted to live like a rich guy and purchased homes bigger than they should have.
If your job was to look at risk and the government came along and said "I want more of X and Y people to have houses, if you make them loans I will guarantee them." Do you think you would be able to sell more homes?
Government and people like Barney Frank are the ROOT cause of this problem. Notice those home values started really taking off in 97 when Bill Clinton was president. This is because Barney and his pal Bill pressured banks to make loans to poor and minorities that would have normally (without government coercion) not gotten a loan. In some cases banks were even sued or kept from expanding do to low quotas.
This article, just like everyone else, ignores the 2 trillion ton elephant called government that is stinking up the room - jkroge, on 02/22/2009, -0/+56Link to larger version of the chart: http://static.seekingalpha.com/uploads/2009/1/30/s ...
- BossKey, on 02/22/2009, -0/+40You're basically wishing prices would return to a realistic, sustainable value, hard to fault you for that.
- inactive, on 02/22/2009, -0/+36"Unsustainably high home prices can not be sustained."
- c010rb1indusa, on 02/22/2009, -4/+37I remember Bush bragging in one of his state of the unions that more American's owned homes than ever before. And now we know why.
- Bactame, on 02/22/2009, -2/+31Housing price chart is really interesting since it runs across the last hundred years then goes crazy after the dot com crash. Recovery from the dot com of course was the real estate boom which of late is down to a whimper.
- heyitsguay, on 02/22/2009, -0/+21This is the reason I don't understand why people seem to expect it is desirable to return price levels for houses to something like what they were a year ago. Yeah, i get that current homeowners get screwed over, but clearly the price spike was unnatural.
- jodes440, on 02/22/2009, -0/+18WRONG. People who can afford to own a home should be able to own a home. The minute the gov't starts intervening and allowing people to buy things THEY CANNOT AFFORD, we get into problems.
There is no such thing as a free lunch. - TrevorBelmont, on 02/22/2009, -1/+18BIG WORDS
little content - Deausx, on 02/22/2009, -0/+17Holy hell, talk about putting things in perspective. I read politics and I follow financial news so I "knew" that homes were way over valued and that the current mortgage crisis was because people were buying homes they couldn't afford. But I had no idea that the spike was THAT steep. Good find.
- inactive, on 02/22/2009, -2/+18a thousand diggs up for you govsucks, finally someone understands what really happened!
- Volatile36, on 02/22/2009, -0/+14Don't forget laziness. Because people were willing to pay an extra $200,000 for a renovated kitchen so they wouldn't have to do it themselves...
- clusterfudge69, on 02/22/2009, -0/+14A few years ago there was such real estate boom after the 2000 dot com bubble broke, the 2001 recession, and 9/11 I couldn't understand how anyone could afford the houses they were buying. Well now I understand with all the no income and no asset loans. Yes, housing prices are way above what they should, but I have no idea what they really should be either. Hopefully it will stabilized at some point.
- Gondring, on 02/22/2009, -5/+18Actually, it wasn't *deregulation*, but *regulation*, that required lenders to give our loans to people who couldn't afford them--which inflated prices by artificially pumping up demand.
- jasdf, on 02/22/2009, -3/+16"in addition you will be making a $100 payment per month for a deadbeat who bought more house than they could afford, is still watching a 52 inch HDTV, still eating in their perfect kitchens with granite counter tops and stainless steel appliances."
This is the root cause of all of our problems; overspending in order to keep up with the Jones'.
The fools need to be kicked back to reality and live in a house and with stuff that their income can actually support. - 007brendan, on 02/22/2009, -0/+13Do you realize what you're saying? Everyone SHOULD own a car, everyone SHOULD own a big-screen tv. If you don't have the means to purchase these things, what can the government do to help you besides STEAL money from someone productive, and give it to you. It's perfectly honorable to be a renter.
- jedinsyd, on 02/23/2009, -0/+12If housing was such a reliable investment rising at 5-10% per year there would be cottages in Europe worth billions.
- AshsToAshs, on 02/22/2009, -0/+11Heres hoping pricing will one day go back down to the 1890 value so i can one day actually afford a house without taking out a loan that ruins my life.
- Devaney, on 02/22/2009, -0/+11my thoughts exactly...I know I'd never be able to afford a house for what they're selling at now
- bigj480, on 02/22/2009, -0/+11Sure, IF IF IF they can afford them! I'm sorry but it is not the governments duty to encourage bad lending practices in the name of charity. Want more poor and minority families to own houses? Start a friggen charity and quit asking the government to do everything for everyone. Jesus, you big government folks just don't get it! What have they done to earn your trust and make you think; "Hey, I want to give these guys more of my money because they are better at deciding how to spend it than I am."? Predatory lending? They were doing EXACTLY what the government(or some in the gov.) wanted them to. Affordable housing, my ass!
Who started Fannie & Freddie? That's right, the government. They also had a large influence on what was done ate those firms.
I don't like partisan politics and I'm not a republican, but sometimes peoples own words incriminate them, checkout these two vids:
http://www.youtube.com/watch?v=hxMInSfanqg
http://www.youtube.com/watch?v=gzEIMco49AE - bbardlbradd, on 02/22/2009, -0/+10People that don't know the true nature of America always call what americans think "unamerican".
- thebigredcat, on 02/22/2009, -2/+12People buying more house than they could afford, builders catering to that demand and house flipping all aided by low interest, a deregulated market and short sighted business douchebags trying to grab a piece of the fat money while they could.
http://www.crisisofcredit.com/ gives a really great overview. Cheers to the Digger that posted this link a little while ago. - borednerd, on 02/22/2009, -0/+9I understand and agree that no one should be excluded from owning a home due to their ethnic background, but what's your argument that poor people SHOULD (your emphasis) own homes? Owning a home isn't a basic human right, it's a decision based on someone's financial standing.
Of course I agree that poor people need at the very least basic housing but being able to own a home is a privilege that should be for people who have planned and saved, not a handout from the government - govsucks, on 02/22/2009, -1/+10Oh, I don't. There are plenty of government buffoons including Bush that also carry much of the blame.
- mattsadd, on 02/22/2009, -1/+10govsucks is 100% right. It amazes me how so many modern Americans don't know this about their own country. We are not a people that shamelessly suckles the teet of government!
- 007brendan, on 02/22/2009, -8/+16Yes, there was fraud, but mostly only on the part of the government. Deregulation had nothing to do with it. It was the heavy regulation that led otherwise intelligent people to take incredible risks, because the government rubber stamped everything. Without the regulation, people would be forced to assess the risks themselves, and we would have never had this problem. There is nothing wrong with greed (except that it's unattractive), it's one of the invisible hands that drives the market.
- govsucks, on 02/22/2009, -0/+8I don't put the majority of blame on the poor, I place most of it on the government. That should have been obvious.
- trythison4sighs, on 02/22/2009, -0/+8And what would those "numerous presumptions and assumptions outside the real world conditions" be?
- Gondring, on 02/22/2009, -2/+10Yes, it was government-mandated lending that drove demand up artificially--unsustainably.
That government-mandated lending is from REGULATION, not DEregulation.
They are trying to build the Great Lie. - inactive, on 02/22/2009, -1/+8I've seen this chart before the crash and nobody would believe it. There is an online calculator that tells you what your home will be worth after the crash based upon rental value.
http://www.howtosellyourhouse.net/value.html
The problem is, rental values will fall by some percentage, etc. Also, the market will 'over-correct' in the beginning meaning the value will fall to a figure lower than the equilibrium value that this simple calculator gives.
The multi-century "P/E" ratio for homes has an equilibrium value of between 15 and 17. So the figure you should use in this calculator is the value of your home's potential income AFTER property taxes, expenses, some percentage for repairs/maintenance and vacancies. - FrozenPie, on 02/22/2009, -0/+7Let me live in your house, I deserved it!
- MarkyBear, on 02/22/2009, -2/+9Many comments here fail to recognize the problem has less to do with homeowners buying more than they could afford and more to do with the banks and government allowing poor loans to be made. The banks are in the business of knowing how to recognize a viable loan and have the responsibility for approval. But more than that, had the majority of these home purchases required 20% down (as it used to be) the crash (and certainly some of the run-up) never would have happened. Once a loan is underwater, even those who can easily pay will walk away from their house... and then it's simple dominoes.
- inactive, on 02/22/2009, -1/+8Bad news for current home owners, good news for me.
- BCPneumatics, on 02/22/2009, -0/+7*****, people didn't like that for some reason. It's true though, check it out:
http://www.sixwise.com/newsletters/06/01/04/which- ...
(Google will turn up many similar numbers) - inactive, on 02/22/2009, -1/+8What I gather from the chart is that the house I bought in 1991 is worth about the same today as it was back then (if the trend continues).
Then again I paid it off last fall, so what do I really care. - mattsadd, on 02/22/2009, -0/+7That's exactly what Mother Russia said, and look how many Russians emigrated to this country because we didn't do it their way.
Everyone SHOULD own a home. Government SHOULD NEVER help them own it. - IJstickI, on 02/22/2009, -0/+7someone had to bring bush into it
- inactive, on 02/22/2009, -0/+7Your only screwed if you bought on the wild ride up. When things smell fishy they usually are.
I stopped dumping money into my companies stock as it sailed over $100 a share. When it collapsed to almost a $1, I bought.
Going from 1 to 20 was a heck of a better investment than 30 to 100. - newsboys, on 02/22/2009, -2/+9Greed.
- inactive, on 02/22/2009, -0/+6Them's book learnin words.
- Peekman, on 02/22/2009, -0/+6Too bad you didn't sell it in 2008 :P
- boner79, on 02/22/2009, -1/+7I wish we could have a EE professor go on CNN and explain control system theory to all these idiots. Using my foggy memory of linear control systems the way I see it is that basically the Democrats want more damping so as to not overshoot the bottom but that will take longer to reach a steady state. The Republicans want the opposite, less damping to reach steady state sooner and if we overshoot a lot so be it. The question in my opinion then is if what is worse: overshooting the bottom by a lot or taking too long to reach the steady state. My apologies to control system experts out there for my elementary explanation.
- Gondring, on 02/22/2009, -0/+5@AshsToAshs
Yeah, especially if your tax dollars have to go to have to go to paying for "incentives" and "subsidies" to others who have mortgages that Obama wants to prop up.
Instead of letting things settle out to natural market prices, the DC crowd try to act as the Gods of Government and meddle with it--causing these messes. - BCPneumatics, on 02/22/2009, -2/+7The typical return on a kitchen renovation is 93%, meaning it is actually cheaper (on average) to buy a house with a newly renovated kitchen than to do it yourself. Of course if you do all the grunt work or have a particularly bad kitchen, you can actually get past 100%.
- jodes440, on 02/22/2009, -0/+4You say that now....
- ousthouse, on 02/22/2009, -2/+6I agree. Unfortunately, many people would say that your belief means that you're unamerican.
- Y0tsuya, on 02/22/2009, -0/+4Most recently renovated kitchens are slap-on jobs done in a hurry to "make it look pretty" for the sale. I did the remodeling myself: learned to hang cabinets, wire outlets, install built-in appliances, and most importantly paid attention to every detail. With the money I saved I was able to order good-quality cabinetry. I got the kitchen exactly the way I wanted and did not have to argue with any contractor.
- inactive, on 02/22/2009, -4/+8How exactly did that happen?
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