The Government and Federal Reserve are scheduled to remove their market props soon. Do you think it will happen on schedule?
Irvine Home Address … 5054 ALDER Irvine, CA 92612
Resale Home Price …… $420,000
{book1}
Forever, got a feelin' that forever
Together, we are gonna stay together
For better, for me there's nothin' better
You're the biggest part of me
Well, make a wish baby
Well and I will make it come true
Make a list baby
Of the things I'll do for you
Ain't no risk now
In lettin' my love rain down on you
So we can wash away the past
So that we may start anew
Biggest Part of Me — Ambrosia
The US Government and the Federal Reserve control the biggest part of the mortgage finance market. They are making a wish that house prices will stabilize through printing money to subsidize borrowers. Can they wash away the past and start anew? 
Most financing for our housing market is coming directly from the Federal Reserve through the purchase of agency debt at inflated prices. This unique method for printing money (it has never been done before) is a reaction to the remarkable deflation of debt caused by bank write-downs. Reprinting lost money is not without risks, particularly when this free money has gone to inflate prices in the mortgage market to artificially lower interest rates. At some point, the presses turn off, and the market must adjust to the loss of demand. What happens next is a guess, but it certainly looks as if mortgage interest rates are going to go up.
Stakes are high as government plans exit from mortgage markets:
For more than a year, the government pulled out the stops to revive home buying by driving down mortgage rates.
Now, whether the housing market is ready or not, the government is pulling out.
The wind-down of federal support for mortgage rates, set to end in two months, is a momentous test of whether the Obama administration and the Federal Reserve have succeeded in jump-starting the housing market and ensuring it can hold its own. The stakes for the economy are massive: If the market again falls into a tailspin, homeowners could face another wave of trouble, and it would deal a body blow to President Obama's efforts to get the economy on track.
Keeping the mortgage rates at historic lows, which required a commitment of more than $1 trillion, was viewed within the administration as a central plank of the economic strategy last year, senior officials said. Though the policy did not attract as much attention as rescue efforts to bail out banks, it helped revitalize home buying in some parts of the country and put money in the pockets of millions of homeowners who were able to refinance into lower monthly payments, the officials added.
This is the real stimulus of the mortgage refinance boom from the Fed's money-printing. The real beneficiaries of mortgage interest rate relief are conservative debtors who lock in low rates and pay off existing debts earlier. Any uptick in consumer spending coming out of this recession will be lead by the under-leveraged who now enjoy greater disposable income. Back to the article:
"We did what we thought was necessary to stabilize the market, but we don't think the government should continue special efforts forever," said Michael S. Barr, an assistant secretary at the Treasury Department. "As you bring stability, private participants come back in. We do expect this now that the market has stabilized. I'm not going to say there will be no effect on rates, but we do think you are seeing market signs and market signals that there should be an orderly transition."
It is laughably stupid to suggest there will be no effect on rates; the real debate is over how fast rates will go up and how high they will go — and whether or not the powers-that-be will intervene again if necessary.
A few federal officials and many industry advocates disagree, saying the government is exiting too soon. They offer dire warnings of higher rates and a slowdown in home sales. Fed leaders say they will end a marquee program supporting the mortgage markets in March. Obama's economic team, led by Treasury Secretary Timothy F. Geithner, has decided not to replace it and has been shutting down its own related initiatives.
Over the past year, these programs have enabled prospective home buyers to get cheap loans, helping those buying and selling property as well as those eager to refinance existing mortgages. If the end of the initiative drives up interest rates, say from 5 percent to 5.5 percent, homeowners could be deterred from refinancing, industry officials say. A sharper increase in rates could make homes too expensive for many buyers, forcing them from the market and causing the recent pickup in home sales to stall.
Notice the fear is not any rise in interest rates, but a sharp increase. I agree with this assessment. If rates went to 7% in 2010, the housing market would collapse.
"Mortgage rates are the lifeblood of the housing market, and we have cautioned the Fed about the sudden stoppage of this program," said Lawrence Yun, chief economist of the National Association of Realtors.
But senior government officials said it could be hard to reverse course without damaging the credibility of the Fed and the administration. If the government loses the trust of the financial markets, preparing them for policy changes could be tougher, possibly resulting in economic disruptions. The officials said they also worry that the mortgage market is becoming overly dependent on federal support, inserting the government too deeply into private enterprise.
The Government is concerned about inserting itself too deeply into private enterprise? Porn-stars show more restraint!
Only a new crisis would be able to persuade the administration and the Fed to change their minds, officials said."
Pulling out of the mortgage market? Government will stop subsidizing mortgages until prices start going down, at which point, Government will declare a National Banking Emergency and reinsert their members into private enterprise.
Have Government supports reached climax?
So what do you think? Is the Government really out of the housing market, or are they committed to writing a blank check to support home prices?
Irvine Home Address … 5054 ALDER Irvine, CA 92612
Resale Home Price … $420,000
Income Requirement ……. $88,257
Downpayment Needed … $14,700
3.5% Down FHA Financing
Home Purchase Price … $148,000
Home Purchase Date …. 8/23/1996
Net Gain (Loss) ………. $246,800
Percent Change ………. 183.8%
Annual Appreciation … 7.7%
Mortgage Interest Rate ………. 5.13%
Monthly Mortgage Payment … $2,208
Monthly Cash Outlays ………… $2,960
Monthly Cost of Ownership … $2,200
Property Details for 5054 ALDER Irvine, CA 92612 
Beds 2
Baths 1 full 1 part baths
Home Size 1,189 sq ft
($353 / sq ft)
Lot Size 3,136 sq ft
Year Built 1973
Days on Market 4
Listing Updated 1/26/2010
MLS Number P719210
Property Type Single Family, Residential
Community University Park
Tract Tr
WOW! NOT A SHORTSALE – GREAT PRICE. Vaulted Ceilings, Warm Fireplace, Enormous Kitchen, and Attached Garage make this home an unbelievable value. Attractive Patio Entry and Patio Backyard have generous planters for the greenthumb who wants a private oasis. Only 1/4 mile from walking bridge that leads you to the Lakes in Woodbrige. You are also a short walk to Strawberry Farms – a haven for golfers and agriculturalists alike. This home is in one of the highest nationally ranked school districts – University High, and central to the best Irvine has to offer. Community is full of greenbelts and has a fantastic community center, pool and spa. HOA is very low, but nothing is sacrificed. Owner wants this sold – bring in your offer before it is gone! Older roof has 1 year warranty – Seller to offer $4000.00 credit to buyer for use towards new roof of their choice.
If this is not a short sale, the borrowers have not maxed-out their HELOC because the total indebtedness on the property includes a $351,000 first mortgage and a $80,000 HELOC.
- This property was purchased on 8/23/1996 near the last market bottom for $148,000.
- The owners used a $140,600 first mortgage and a $7,400 downpayment.
- The refinanced in 1997 for $138,200, so they were diligently paying down the loan for at least 18 months.
- On 11/18/2003 they liberated their equity with a $247,100 first mortgage.
- On 10/19/2006 they refinanced again with a $231,393 first mortgage — three years of relative frugality.
- On 2/22/2007 they refinanced on last time with a $351,000 first mortgage and a $81,000 HELOC
- The $81,000 HELOC was replaced with an $80,000 HELOC a few months later.
- Total debt is between $351,000 and $432,000.
-
Mortgage equity withdrawal is between $210,400 and $290,400.
I wasn't sure how to classify this kind of HELOC abuse. These owners invested less than $8,000 and extracted over $210,000; quite a bountiful cash harvest. I can see why people want one of those.
These borrowers more than doubled their original $140,600 mortgage, so I think they earn an "E," but based on the not-a-short-sale come on, the borrowers at least believe they borrowed below the level of appreciation on the unit, so they might argue for a "D" instead. In either case, while we are debating the subtleties of irresponsibility; the owners are losing their prize steed.
“The Government and Federal Reserve are scheduled to remove their market props soon. Do you think it will happen on schedule?”
You’re joking right IR?
🙂
Don’t worry – they are going to talk a good talk and hold the course. At the 11th hour they will “carefully review” the situation and decide that it would be more “helpful” to keep the scheme going and extend everything out to some new fake deadline.
Rather then when will the government stop all the money printing and borrowing, when will they have no choice because the dollar declines and the debt stops selling.
Until then, I get the sinking feeling that our leaders are like junkies with an endless supply of smack. Problem is, at some point the dealer wants his cut…
Federal reserve is debt buyer of last resort. They will most likely shift purchases from MBS’s to 10yr treasuries. Since many mortgages are semi-linked to 10-yr treasuries, rates may not rise as much as people think.
Say investors want a point spread for a mortgage over a 10yr note, if 10year notes fall 0.5% it would counteract the 0.5% increase in MBS rates from the fed purchases stopping.
All true.
But regardless of if they are buying MBSs or treasuries, they are ballooning their balance sheet. How long can they do this? Can they just print money for all eternity without consequence?
Consequence is, or would be, inflation. I believe that banks increased the money supply, mostly because they increased their leverage ratios. The fed is mostly soaking that up, which is a big reason we are not seeing consumer prices go up.
We had massive inflation from 2003-2006, it’s just that it was mostly in real-estate and not accurately reflected in cpi.
Thanks for your timely and educational article on a possible soon end to government support to banks, homebuilders and homeowners and also an example of mortgage equity withdrawl.
You write: “Most financing for our housing market is coming directly from the Federal Reserve through the purchase of agency debt at inflated prices. This unique method for printing money, it has never been done before, is a reaction to the remarkable deflation of debt caused by bank write-downs” … (Yes there was some deflation of debt on the bank’s books, but the remaining debt is written to fantasy and not to market; and the debt that is on the Federal Reserve’s books, is toxic sovereign debt, and will cause gold to inflate in value)
And you write: “Reprinting lost money is not without risks, particularly when this free money has gone to inflate prices in the mortgage market to artificially lower interest rates. At some point, the presses turn off, and the market must adjust to the loss of demand. What happens next is a guess, but it certainly looks as if mortgage interest rates are going to go up.” … (The yield curve began rising dramatically on January 14, 2010, this will create an investment demand for gold).
Also you write: “The Government is concerned about inserting itself too deeply into private enterprise? Porn-stars show more restraint! Only a new crisis would be able to persuade the administration and the Fed to change their minds, officials said.” Pulling out of the mortgage market? Government will stop subsidizing mortgages until prices start going down, at which point, Government will declare a National Banking Emergency and reinsert their members into private enterprise.” … (If this be the case, gold will really skyrocket in price).
I strongly encourage investors to cease all brokerage trading and invest in the gold ETF, GLD, held in a trust account not at a brokerage account, British Sovereign gold coins and purchase gold at BullionVault.com and GoldMoney.com
Buy now or be priced out of living on earth forever, you can’t make this crap up.
You have to love these gold hustlers whipping up the frenzy for “precious metals”; the new bubble looking for greater fools. Step right up everybody.
Gold is a currency. Always has been, always will be. Nothing special about it beyond that – although it’s nice to look at. AZDavidPHx- nothing to fear. It’s gone up more than 400% since 2000 only because many are loosing trust in paper currency.
Hustlers you say? What about those real estate hustlers, or US dollar hustlers?
DoomsdayRichard – suggestions for investing in gold are good except for GLD, the ETF. That’s still paper gold as there is much suspicion whether they hold enough of the physical gold. Much better is the Canadian ETF – CEF. The gold they hold is verified.
It was a good idea in 2000 – not necessarily so today. Not when the infomercials are pushing you to send them grandma’s wedding band in exchange for some pizza money.
Exactly. If there’s somebody on TV at 2 AM trying to get you to invest in…whatever, now’s the time to short that commodity. In 2006, there were a lot of people on TV trying to get you to invest in real estate.
You must think the fed rate will be spiking soon too to stop artificially supporting the banks, no chance in hell.
You are misguided in the goal of low mortgage rates. It has nothing to do with the debtors. Mortgage rates, like the fed rate, is artificially low for the banks.
Unless you think the next bubble in any market is upon us neither rate is headed up any time soon.
The die has clearly been cast that the intention is to inflate away the debt and screw the savers.
The government and the banks get to spend the money first before it causes price inflation for the rest of us so what do they care?
They will not allow interest rates to rise until price inflation is well under way at which time the spin machine is going to say that it’s because of “increased demand” for goods and services in the “recovering” economy.
If it’s not a short sale, it’s not THAT irresponsible, considering it looks like the price is what the market can bear. There’s not that much difference in pulling out the money via refis and HELOCs or getting that same amount of money via profit due to a sale, IMHO.
Not much differnece? I weep for the next generation.
In both cases, they made a gross profit of $272,000 (on an initial investment of $7,400 plus whatever the value of the monthly payments they made was, minus the cost of renting a similar place). Why would it matter if it was all due to the sale of the house, or if some or all of it came earlier from refis or HELOCs?
For starters, what is my monthly payment on a profit of $272,000? Oh! Bingo! I do not have to make a payment on money that I have in my pocket. In fact, I will probably earn an ROI.
And if I borrow $272,000? And I am subsequently upside down? And if real life, not fantasy thinking, what did the borrowers do with that $272,000?
“Mortgage rates are the lifeblood of the housing market, and we have cautioned the Fed about the sudden stoppage of this program,” said Lawrence Yun, chief economist of the National Association of Realtors.
I think what the head cheerleader meant to say is “These articifically low mortgage rates are the only thing holding up the housing market. If the government stops this program, we will be up shit creek with no paddles and a leaking boat.”
I will be amazed if the .gov exits this program. They know full well that another big leg down in home prices could be the death knell for this shaky economy.
This is a pretty interesting shift in propaganda by the NAr(llittle ‘r’) to state that interest rates are actually the “lifeblood” of the housing market….
Why is the NAR commenting on the financial system? If you read their “Mission” statement , you see that their stated purpose is to facilitate the transfer of property and “preserve the free enterprise system”.
Seems to me that “cautioning” the Fed against raising interest rates is a pretty clear violation of their stated purpose that is “preserving free enterprise” in transfer of real estate if you ask me.
I recall seeing quite a few realtors(little ‘r’) defend themselves in the past by stating that the financing is between the bank and the borrower and does not involve them so their conscience is clear. Yet here we have their spokesperson stepping into the discussion and attempting to influence financial policy.
I guess the house sellers cannot shield themselves anymore with the defense that they are all independent.
From the humor department, I had to post this question from a “First Time Home Buyer” on the Zillow forums where sheeple line up to be spoonfed misinformation by realtors(little ‘r’):
First Time Home Buyer Advice
We have a clearly sophisticated individual here as evidenced by some hideously poor grammar and spelling. Not knit-picking the occasional slip that everybody makes from time to time.
This “home” buyer has dreams of running her own apartment complex from within her own 8 bedroom house. The plan is to buy an 8 bedroom house and live in it while leasing out the extra rooms to eager renters. Get it? Buy the large house and let the tenants pay your mortgage for you! Brilliant! I am sure nobody has thought of this before! How can this possibly not work?
I am thinking that we should notify MTV of Fox for possible royalty payments on an idea for a new reality television program. What can we call it? Tenant Hunters? Flip This Tenant? Breakfast At Ileins?
We are clearly scraping the bottom of the barrel for greater fools if this person is actually issued a “loan”. I noticed that the reply suggested that she go with an FHA loan……
Or maybe I am just out of touch. Anyone here ready to sign a lease and move in with this individual?
Buying a large house and renting out rooms is not a bad plan at all, if you don’t mind roommates (and all the headaches that come with having such). One advantage there is that if your income and/or family grows, you don’t have to move-you just stop renting out the rooms. That income probably can’t be counted as income for getting a home loan, though. But if you could qualify anyways, why not?
Looks like Geotpf is ready to sign up and move in.
An old coworker of mine, a long time ago got this advice from a real estate agent he was working with while looking for income property:
“Rent it to a bunch of illegal aliens, they always pay fast, on time and with cash. They know that if they pay late you can call the INS”.
I think the Fed thinks that big money needs something to be investing in. 400 basis points return over the Fed Funds rate is a very healthy margin, especially with the tightening of lending standards reducing the risk levels to AAA again.
We’re all bemoaning 1.5% and lower interest earnings on our savings and CDs, and yet we think there’s no appetite for a good solid 4%?
A year ago investors/banks were scared off mortgages nearly completely. Now that the risks appear manageable, and the great depression has not come to pass, the safe money needs somewhere to invest in again. That’s what the Fed thinks. Or hopes. And if there are truly signs that they’re wrong, then they’ll step back in.
IR,
Thank you for taking your time to list the dates and HELOC amount again.
I think you will see the blog’s discussion more interesting and “heated”. For example, I think if you listed the 1 million option-arm on the featured house in TRock last week, the discussion would have taken a totally different turn.
Battling Back, Home Builders Cut Prices, Work Faster
http://online.wsj.com/article/SB10001424052748703422904575039691675728982.html?mod=WSJ_hps_sections_realestate
Home-Ownership Level Falls to 67.3%
http://online.wsj.com/article/SB10001424052748704022804575041083721893188.html?mod=WSJ_hps_sections_realestate
Anyone willing to bet the govt. will extend the buying of MBS?
I think they will end the $8000 incentive program just b/c they extended once and this one kinda work only if people feel a sense of urgency…
But not to worry, they will come up with other gimmicks to “shore up” the house price as Obama said.
2 great articles, I dont know if I should get angry or disgusted, they worth reading…
http://moneymorning.com/2010/02/02/aig-collapse/?source=patrick.net
” Just last week, the House Committee on Oversight and Government Reform held a hearing on the U.S. Federal Reserve’s decision to directly pay billions of dollars to banks as part of its scheme to bail out insurance giant American International Group Inc. (NYSE: AIG).
According to committee Chairman Dennis Kucinich, D-Ohio, the testimony that congressmen heard just didn’t “pass the smell test.”
What really stinks about the whole mess is not only the cover-up of what really happened and why, but the inability of anybody in Congress to actually do their homework and be able to frame pointed questions and get to the truth…. ”
http://www.marketwatch.com/story/our-debt-time-bomb-is-ready-to-go-ka-boom-2010-02-02?source=patrick.net
“20 reasons Global Debt Time Bomb explodes soon
Commentary: Which trigger will ignite the Great Depression II?”
I don’t know why people keep saying mortgage rate/interest rate will go up. I guess the question is how soon. Because I can see the govt. can keep interest rates low for quite a while (maybe another 1-3 years), just by doing what they’re doing now and assuming there’s no other world changing event. And the govt. knows that shit will hit the fan if rates go up now.
Yes, rates will eventually have to go up just b/c everything in this universe has to go in cycles. But I don’t see it in the short term.
IR,
Very funny puns.
The govt (or Feds) will keep the fix going until enough of the bad debt liability is transfer to the govt or the larger WS banks’ liabilities are at a low for WS. Then the plug will be pulled and the housing market will crash. Over course the banks will be sit on tons of cash to buy at new market prices. History repeats itself but with different names (but most of the family names remain the same).
The ones hurt will be all except those holding the proper assets of the day. Unfortunately it’s not cash of the savers today. 🙁
Stocks for the moment, until the people are convinced to start to reinvest. The mutual funds are very low on cash, so need new money to prop up the prices. Banks have been using free Fed money to restart the stock boom. Mutual funds to buy at the inflated prices and new money is needed for the banksters to exit with a real profit. Bankster need to time it right to really profit on both ends (pun intended). As long as money is flowing, the banks and Feds are happy. 20% unemployment makes them even happier for wages can be driven down and workers working harder for fear of lay-offs, greater profit margins.
Also the Fed is really semi-independent of the govt. The Feds orders the US treasury to print money and can also create money by ledger entry into an accounts (banks) and the banks can also create money by ledger entry into smaller accounts, i.e., business loans.
As for yesterday’s talk on anarchy, that’s the buggieman that the govt uses to justify its actions — we averted a depression with the bailout. to keep you safe, we need more money for the ….
http://www.redfin.com/CA/Irvine/38-Blazing-Star-92604/home/4683768
I am wondering how this got sold that cheap, will the price eventually fall to this level?
Family, good friend, house is half gone. One of those.
Could be it was taken by the bank in a foreclosure. Maybe this was the value of the first, but it had a huge second on top.
Although the Google Street View does show a rather large crack in the driveway. Maybe foundation issues?
Rising FHA default rate foreshadows a crush of foreclosures
http://www.washingtonpost.com/wp-dyn/content/article/2010/02/01/AR2010020103527.html?sid=ST2010020201459
Continuing IR’s theme:
Cheap money isn’t the lifeblood of the Real Estate sales, it’s market vaseline that allows quick, rigid penetration by homedebtors into virginal housing markets.
Low rates aren’t a Realtors siren’s song, but simply the Kama Sutra of street peddlers trying to entrap John and Jane Doe’s into swallowing more than they should at one time.
But once the cheap thrill of overpaying for a house you lusted after blows over, these buyers will realize they are now stuck in a lifeless fiduciary relationship that isn’t going end well.
My .02c
Soylent Green Is People.
AZDavid said –
“The die has clearly been cast that the intention is to inflate away the debt and screw the savers.The government and the banks get to spend the money first before it causes price inflation for the rest of us so what do they care?”
That is very true. But …. Savers may still be vindicated in the end. And your cash may actually command more and more purchasing power in the foreseeable future. A year ago I thought the chance between high inflation and deflation was a toss-up. But I am convinced now that a prolonged deflation is a far more likely scenario after witnessing all these policy lunacies.
As long as China continues to peg RMB to USD and expand its investment on production and export sector, there is little chance for price inflation. Our gov’t can debase USD as much as they want but how would it help if Chinese gov’t follows the suit with RMB in lockstep? Devaluation of USD/RMB will force other export driven countries (Japan, Korea, Southeast Asia … ) to devalue their currencies if they want to compete for the dwindling demand from US and EU. Expanding production capacity in the face of global slowdown is insane, and equally insane is taking on more debt to solve a crisis that was caused by too much debt. Both are extremely deflationary policies that amplify over-supply while continually depressing aggregate demand (higher tax, higher interest payment). And doing the right thing is not politically feasible in US, China, or any countries getting caught in this gross imbalance we call global economy.
Once the downward spiral takes hold, no amount of money printing or low interest rates will be able to reverse the course. Expectation will be set that price will continue to go lower. Bad policies will ensure the world will keep getting flooded with endless cheap goods while purchasing power of the entire population sinks under the weight of debt and tax burden.
For those eager to jump into any asset markets as the way to hedge against an imminent high inflation, think again.
What’s the source data for the public vs. private net mortgage issuance?
SIGTARP Warns of Second Housing Bubble
The Special Inspector General for the Troubled Asset Relief Program (SIGTARP), which oversees the federal government’s economic recovery program, called for reform to prevent government bailouts in the future and warned of a government-induced second housing bubble.
“Even if TARP saved our financial system from driving off a cliff back in 2008, absent meaningful reform, we are still driving on the same winding mountain road, but this time in a faster car,” SIGTARP wrote in its latest quarterly report (download here). “To the extent that institutions were previously incentivized to take reckless risks through a ‘heads, I win; tails, the government will bail me out’ mentality, the market is more convinced than ever that the government will step in as necessary to save systemically significant institutions.”
The report warns the government’s efforts to stabilize the housing market may create a second bubble. “The government has done more than simply support the mortgage market, in many ways it has become the mortgage market, with the taxpayer shouldering the risk that had once been borne by the private investor,” the report said.
realtor(little ‘r’) short sales her own house Bank Goes After Her For The Difference
Bad link. Trying again
Key paragraph for this blog is this:
“Some states, such as California, are “non-recourse” and don’t allow deficiency judgments. But, even there, if the original loan was refinanced, some or all of it may be subject to claims.”
Goodbye DiTech!
WSJ article interviewed traders and thought while government action might raise rates by a little, the demand for increased yields would likely bring buyers into the market to replace the Fed. Basically everyone is tired of leaving money is 0.5% yielding investments.
Cheerleading by the WSJ? Maybe. But one thing I have learned over the last year that dry analysis and “obvious” outcomes haven’t meant anything. By any measurable standard the stock market should be well below where it is today (10%+ unemployment, increased business taxes coming, consumers still not buying, etc.) but it isn’t.
I don’t know if you have ever discussed this, but what are your thoughts on this person’s views?
http://finance.yahoo.com/tech-ticker/home-economics-the-'american-dream'-is-a-“scam”-james-altucher-says-409285.html
Is renting really better than buying, no matter the housing situation?
That’s not what the author is saying.
They are saying that a house is not your ticket to wealth; they make no comparison between renting and owning. Nor do they say that nobody should buy a house. They take exception with people being debt slaves to houses.
Owning is great if you can pay it off and be debt free.
“Owning is great if you can pay it off and be debt free.”
No big ticket item is “debt free” in America (i.e. car, house, boat, etc). You still need to pay taxes on the big ticket items EVERY FREAKING YEAR just to keep it.
I’d like to see big ticket item not having such a huge obligation per year. 1+% property tax per year? Try 0.25% property tax per year on a house that I bought here in Asia.
China having housing bubble? At least they don’t have to pay property tax at all. Talk about truly debt free if you own it outright.
You own NOTHING in China. It’s a communist country, they can walk in and take everything just because.
Enjoy that piece of sh1t country with it’s commie gov and lack of any regulation other than bribes.
Hopefully you gave up citizenship to go buy a house there. I see your freedom only took a house….what are all you others willing to trade for your freedom?
Yup, I just can’t wait to move to freaking CHINA.
http://www.azcentral.com/news/articles/2010/02/02/20100202phoenix-food-sales-tax-approved.html
AZDavid gets to pay 2% more for food stuffs. news at 11!!!
Yup. The lone protester out in front of City Hall screaming bloody murder did not appear to persuade them.
I am surprised that they did not throw the children on the pile of items to be saved by the new tax.
“Is the Government really out of the housing market, or are they committed to writing a blank check to support home prices?”
Of course they aren’t out of the housing market. They still guarantee the great majority of mortgages.
There are a collection of related fears. 1. Huge portions of people with underwater mortgages stop paying. 2. Banks and other lenders start dumping homes in masse, provoking greater price reductions. 3. Escalating banks failures, with the same hockey stick pattern previously seen in mortgage defaults. 4. Rapidly increasing borrowing costs for all levels of government. 5. Overall drops in asset prices of all kinds. 6. Large scale rioting.
Only #6 has a clear and direct effect on the real economy. The rest are mostly financial crises. People aren’t directly killed. Property isn’t directly destroyed.
I happen to know the property owner for this property, and I discussed some of the background with him. He gave me permission to post this statement:
“This gentleman makes a lot of assumptions – some of which are correct, and some of which are not. My business is largely about buying low, selling high, and utilizing equity to drive cash flow. The property has been a rental for 11 years. There are better opportunities, so I am selling to purchase some all cash deals. Good investors will use HELOC’s, but in this case there is nothing utilized on the 2nd. The other important aspect is to drive the total cost of your debt down among all the investments that you own – that is why this has been refinanced. Other properties are held all cash. Just funny how he interprets without all the data.”
-Darth
P.S. I’ll cross-post this to today’s article, since this comment on an older article is not likely to be read.