Anyone notice the media push to get people to buy houses?

[AP]

Ever since Bush made that statement about wanting people to buy homes, every time I turn around it seems like my local news stations are trying to get people to buy homes.

Are these the last few breaths inflating the bubble before it bursts?

[KissMyAsscroft]

1. Why else would they be doing it?

For the good of the citizens? HAHAHAH!....yeah right.

News is big business...there is ALWAYS $ involved.

[Fenris]

2. They know the bottom's about to fall out

[AP]

3. On that same note, why is NPR talking about the NRA every time I turn...

...it on?

Literally.

I've seriously reduced my time listening to ATC and ME and WE and WATC. However, I believe the three times I've turned it on in the last three days, each time they were doing a story about the NRA.

[Dover]

4. Yes, one burst bubble coming right up. Read this DU thread about it

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=114x7934

[DinahMoeHum]

11. Check out this article as well - The Washington Monthly. . .

"There Goes the Neighborhood"

http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html


:evilfrown:

[Philostopher]

16. Just read that one last night.

It was an eye-opener. I remember reading doom and gloom predictions about the 'housing bubble' in The Economist back in 2001, too, don't recall who wrote the one I read back then. Whomever it was predicted all the way back then that the housing bubble would go within the next five years, and take the U.S. economy with it, even if there was an unstable recovery. The WaMo article says pretty much the same thing, and adds all the nuts and bolts about how Greenspan has kept the bubble in the air by various means.

They also say, in the (WaMo) article, Greenspan's pushing people to refinance existing loans to adjustable rate mortgages. I'm no economist, mind you, but how little sense would a person have to have, to refi into an adjustable rate mortgage when the prime is in the toilet? Or desperate, I guess -- even a variable rate mortgage would have lower interest than credit lines on which you were about to default. Maybe they're hoping that will keep banks afloat when people suddenly realize they can no longer pay their overstretched revolving credit because they can barely even make the minimum payments and interest.

[AP]

22. Another possibility: they want to make sure private companies have...

...Americans by the balls if Bush loses in November.

If they want to destroy the next Dem president, they just need to have the private companies squeeze consumers until they hurt, and then have them blame the democrats in office at the time they do it.

Telling Americans to refininance all the equity they have just before the elections sounds to me like they're saying, let's make sure every American consumer has his and her mouth on hook which is tied to a line which is controlled by a private corporation which is friendly to Republicans.

[notbush]

5. No matter why you think the addm. says Buy a house now....

If you think you can afford the payments on a house....DO IT NOW.
I think we are seeing the end of historically low interest rates.As they go up,many people will not have the chance to "buy their own" for years to come.
It looks like inflation is raising it's ugly head, and that will drive interest rates up .....that's not good for Joe Average.
I am old enough to remember 18%-20% 30,yr. loans. Many young people better plan on renting for a long....time.
If you can....build it,buy it now.

[sandnsea]

6. But housing prices will go down

As interest rates go up. So I would only say buy if you plan on living in the house for ten years or more.

[Dover]

10. ...or if you can lock in a low interest rate.

Otherwise, I think it will be a buyer's market very soon.

[ender]

13. or...

if you can find a good deal on a house.

[AP]

7. People have to move and sell. If interest rates go up, prices will have to

go down.

The banks will make their profits. The question is whether homeowners will make their's.

[nolabels]

8. Nothing like paying for the same house five or six times

18%-20%interest rate on a 30 year loans YIKES :scared:

[notbush]

9. Yea that's scary

My wife and I got married in July of 1980. She bought a house 2 or 3 years earlier with a FMHA loan. At that time the government subsidized her 300 dollar a month payment, so her actual payment was $97 a month.
However.......when we got married our combined income no longer "fit" the program ....we were asked to refinance the loan.
First time I ever went loan shopping.
Every single bank we talked to said "kick the clawd, do whatever it takes to avoid a refinance now".
We were able to put it off for a couple of years, interest rates had dropped to the 10% area by then.
Can you believe anybody ever signed a 30yr. 18% mortgage?
Millions did.
Might be part of why JC lost the election in 80.

[nolabels]

17. Just like they are trying to keep them low for *co

But heck, that's what the original post was all about :silly:

I dropped my 30 for a 15yr a couple ago, it was almost tempting to get another for just 10 year Refi a month ago. But that was before it shot up a quarter point. I still am saving a load with the fifteen with only 12yrs left. Paying 30% to 40% less than many pay just for rent. It's no B.S. that people have equity in something have an easier time getting at more cash. I am no money grubber, but it is easy to see how it works.

[lectrobyte]

12. I tend to disagree

Between the downward pressures on wages, and the changing demographics of this country, I think housing prices are headed down.

And that's not even considering the energy situation -- you'll be able to pick up today's top of the line energy-hungry McMansion cheap in a few years, assuming you don't worry about heating and cooling it.

[Daedalus]

14. Housing

Housing is necessery in any form of economic development...every president should push housing, particularly in todays low interest rate market...

[revcarol]

15. Every President should also be pushing for decent-paying jobs

with benefits, for ALL Americans. This President is doing the opposite.

Let's face it: many are so insecure in their job status that they would be foolish to take on a big mortgage no matter what the interest rate.
Has to be an individual decision. People should also not buy unless they have enough in savings to exist at least EIGHTEEN MONTHS without pay, because the numbers of 'long-term unemployed' are drastically increasing.

Seems to me that Greenspan and the President are urging Americans to take on more than they can chew to further decimate the middle class.

[AP]

21. Two-front battle: not only must the president fight to encourage the flow

of wealth to people who work for a living (through higher wages), but the president must protect those same people from being the prey of privateers who want that money.

I guarantee you that the minute Americans find the opportunity to get some more money in their pocket, interests rates on all debt (credit card, mortgages, etc.) will go up so that people will find themselves at breakeven despite the fact they're earning more, and paying more in taxes on those earnings.

And interest rates aren't the only place where people who work for a living are robbed.

The tax code is another place. Earned income is taxed at the highest rates there are, while income skimmed off the top of corporate activities is barely taxed. The S&L crisis and 2001 stockmarket bubble are other examples.

In the 80s, people who worked for a living put their money into savings banks. That money was stolen by people like Neal Bush. Who put the money back in the banks? People who work for a living were taxed to pay for the FDIC bailout. You paid an avg of 15K a year in Fed Taxes from 1986 to 2003? Well, a lot of that money went to fill up your savings account which was robbed in the S&L crisis.

Middle class people then put their money in their IRAs throughout the 90s. That was a lot of wealth, eh? Well, Enron robbed it. This time there was no bailout. That money's gone. You won't get taxed to replace it. But you won't get that money back either. Actually, if retire into poverty, everyone else who works for a living will be taxed to pay for your care...if you're lucky. So people who work for a living will pay for the fact that retirement savings were looted from IRAs, either straight up as taxes to pay for SS, or, if we refuse to be taxed to support old people, will pay in other ways. What child will watch his or her parent live an undignified, impoverished old age? None. SS will be privatized. Just like the middle ages, you'll support your parents in their dottage. That's if you don't put them on a slab of ice and push them out to sea.

Real estate is now where a lot of people who work for a living have dumped a great deal of their wealth. Who's protecting that wealth from the avarice of the privateers? Nobody. Connect the dots. FDR gave the working class wealth. They put in in the banks in the 80s. The Republicans stole that money. They put it into their retirement accounts in the 90s. The Republicans stole that money. They put it into their homes in the 00s. You think the Republicans are going to steal that mone?

[catzies]

24. Welcome to DU, daedalus!

:hi:

Where does "affordable housing" fit in in your scenario of what presidents should push? :)

[Must_B_Free]

18. There's a big difference between internet and homes

Internet, the market in general was based on what are essentially lies. What everyone figured out is that the business facades they thought they were investing in were really just fake fronts propped up by stickes in the back, like "gone with the wind" sets.

Housing picked up after the bubble of corporate accountability burst, because real property is a tangible place to invest.

Nothing is going to make confidence is walstreet con men come back quickly, thus, housing stays the place to put money.

When inflation goes up, building materials will increase in price driving housing costs even further. What will still have potential to suffer are modest properties in populated places which lose a labor market, for example the Altoona effect can still be in play.

Plus, with inflation, cash is devalued. Cash you are holding buys less, so you are losing. Better to have it invested somewhere. With inflation, you can justify raising your labor rates, so now you have more money coming in to pay off the mortgage at the old rate.

People who are holding now will do well with the inflation.

[AP]

20. The internet may have been a bubble, but in some respects, people

understood the risks. Money was cheap in the late 90s and people knew that some internet ventures were going to last a long time and create a lot of wealth, and some would pop. But you were never going to be the amazon or ebay if you didn't take a chance. There was a lot of calculated risk that probably will pay off long term.

Another thing about the internet is that it wasn't responsible for ALL the air which was let out of economy. I believe GE has lost WAY more of its value than, say, Amazon (but I could be wrong). Enron wasn't an internet company either.

And bubbles like Enron were created becaused the tax on cap gains was lowered so people decided the way to get a lot of low-taxed money was through stock speculation, and not through getting wages from long-lasting employment. That's what Enron was all about. It was a vehicle for delivering short term wealth to insiders through cap gains (using public pensions and IRAs and mutual funds as a source for much of the overvaluation of its stock). It was nothing more, and nothing less.

In some ways, real estate is similar (in the tax free gain respect). Thanks to the section 121 exclusion, inflated real estate values (and selling on the cusp) is a great way to get 500K of tax free money for a married couple.

But section 121 doesn't explain the whole deal, the way that 15% tax on LTCG explains the last stock market bubble.

Mortgages (new and refinanced) represent HUGE profits for banks. You have people with 100+% mortgages on their property. Interests rates are low now, but for most people they aren't locked. (And thanks to the tax deductions, that interest is in some respects, taxpayer subsidized profit for banks -- people are willing to accept higher mortgage interest payments because they see it as a tax break. So, the public purse shrinks while the private profits of banks increases).

As I see it, what has now happened is that so many people have exposed themselves to so much debt, interests rates are now a spigot which private banks can open and close at will, searching for the point at which debt holders cry uncle -- which is the point at which they go bankrupt. The banks don't want people to go bankrupt. They want you to be their wage slave. They want every last penny you earn up to the point at which you will go bankrupt. And with people in such incredible credit card and mortgage debt, they can now do that very easily.

When Bush and the local news tell you to go out and buy a house at these inflated values, what they're telling you to do is to turn control over your life to private banks.

That's the way I see it.

I don't know if there will be a real estate bubble that bursts. I suspect that if wages start to increase, and people have the potential to save more money, interest rates will definitely go up to suck up that extra income so that people are back to breakeven. If that means home prices have to go down, I'm sure the banks won't mind. They care more about their profits than the price at which homes are exchanged.

There is one unkown though: wages and wealth are NOT increasing for most homebuyers. Wages have stagnated. People are going into more and more debt (the bottom quintile of Americans now has a net worth of an average of -$10K -- which is a stunning statistic).

So, you can get a 100% or 110% mortgage these days. But where do you go from there if people can't even make their mortgage payments? What more can you do to keep the real estate market circulating if people have no money at all and can't even begin to think about owning a home? I know a lot of places are now finding that they're having record foreclusures (Philadelphia, for instance).

I'm not sure what comes next if prices have to drop dramatically because of glut of foreclosures and a public that's unwilling to take the risk of homeownership. I'm not sure that would even happen. It's really confusing.

[fishoutawata]

19. I can't wait!

The "Bursting of the Bubble" can't come fast enough for us here in Orange County, Ca. I just can't justify buying a 1100 square foot home in an "average" neighborhood for over 400k; no matter the low interest rate.

[sendero]

23. I think the housing market is vulnerable...

.... but that is not the point. If you want a house, if you need a house, and you can *afford* a house, buy one.

If on the other hand you will have to scrape every penny you have to get a down payment, or worse will get one of those "great deals" where you put very little down, we then wait until you can afford a home.

Because the last thing this economy needs is more foreclosures. And home-ownership is not for folks who are one paycheck away from default.

Put another way, Americans need to stop thinking about how much the payment is, and think more about the total payout.