OT: 50 year mortgages?

[medaille]

I also advocated for different ways of creating more inventory and reducing costs.  Like I said, until we get the details, no reason to have a strong opinion especially without talking about a comprehensive strategy.  

And yes...subsidies cause prices to rise...  Once again...see the Affordable Care act.  Take a crappy healthcare system where we dramatically overpay....and turn it into a "hold my beer" contest

Agreed that increasing housing supply and reducing costs are key.

I just don't think there's any validity to a 50 year mortgage lowering monthly costs, beyond the first little bit as the market adapts to the new rules.

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I also think that if you make lending a lower monthly cost, that will increase the amount of investors looking to buy properties. Like if my costs on a cash basis go down $400 a month due to 50 year mortgage, but I get to charge the same amount for rent or airBNB, that’s an extra $400 in my pocket. Somehow, you’d have to exclude investors from doing this or you’d make the problem worse for the college kids trying to start a family, because why not buy up as many homes as possible?

[medaille]

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[JimmyinSD]

I dont think this is a hill anyone has to die on...

I'm of personal belief choices are good, just that this isnt a good choice.

Medaille is right, this is a significant problem at the very Macro level.

The only issue is when this goes sideways on people,   and it will,  this will be just like student loan debt,  CC debt,   and everything else....the poor people were preyed upon,  we need to bail them out,  and then we will need to bail out the lenders to keep the charade afloat.   There is no accountability for those personal choices anymore.

[Waterboy]

The only issue is when this goes sideways on people,   and it will,  this will be just like student loan debt,  CC debt,   and everything else....the poor people were preyed upon,  we need to bail them out,  and then we will need to bail out the lenders to keep the charade afloat.   There is no accountability for those personal choices anymore.

I don't disagree with this part, which is why I mentioned above that banks need to be held accountable for their loan practices.  These types of loans will need to be selectively implemented, backed, and used more as a bridge to move some renters into home buyers and to hopefully spur additional home building.

[purplefaithful]

So we're left hoping financial institutions make good, moral decisions for their patrons and those patrons having an iota of common sense to make good decisions?

LOFL!!

Sorry, its my old man yelling at clouds coming-out...

[JimmyinSD]

So we're left hoping financial institutions make good, moral decisions for their patrons and those patrons having an iota of common sense to make good decisions?

LOFL!!

Sorry, its my old man yelling at clouds coming-out...

The banks job is to make money for its investors,  to identify safe or at least secured loans,  and to charge interest commensurate with the risk.  its not their job to decide if the borrower is smart enough to make an informed decision. I think perhaps we need to change this narrative that everyone should be a homeowner,  for many that is likely to much responsibility.

Also this idea that first time home buyers should be shopping in the markets they are.....evryone wants a nice home,  but far to many get locked into houses with to much required upkeep,  or just plain shitty built homes that become money pits far sooner than homes much older.  

The system is fucked,  I am not sure what the answer is,  but I dont think 50 year mortgages is the answer.   I honestly am expecting a major correction in the housing market in the next 5 years or so.  They are way overvalued and that typically leads to a bubble bursting similar to 08.  I think the best path would be to make it harder for people to qualify for home loans,  that would soften the market and drive down prices IMO.  Should also lower the likelihood of mass foreclosures if the market were to collapse due to other reasons.

[purplefaithful]

You're right Jimmy, iT costs a ton of $$ to upkeep a house & property...

We built ours in 99 and now its going on 27 years, which blows me away.

Just the cost to re-do our outdoor deck is staggering, let along appliances, window, flooring, plumbing updates etc...I cant imagine the % of houses in disrepair. Too many are struggling to pay bills and food, let alone cover a house expense.

I read where 25% of Americans are living check to check now.

[BigAl99]

The system has been made to be like it is, deregulation for the sake of innovation.  Gramm-Leach-Blilely removing Glass- Stieagall and the Bank Holding acts, which combined investment banking and Insurance services with commercial banking in an effort to give the the bank depositor higher interest rates. But really just created another way to funnel money to the investor class.  My favorite is "Riegle-Neal Interstate Banking and Branching Efficiency Act of 1994" the birth of too big to fail bailouts.  There was marginal effect for the customer at the cost of safety, and big gains for the large banking and the investors.

[JimmyinSD]

You're right Jimmy, iT costs a ton of $$ to upkeep a house & property...

We built ours in 99 and now its going on 27 years, which blows me away.

Just the cost to re-do our outdoor deck is staggering, let along appliances, window, flooring, plumbing updates etc...I cant imagine the % of houses in disrepair. Too many are struggling to pay bills and food, let alone cover a house expense.

I read where 25% of Americans are living check to check now.

To many people are house rich and cash poor,  this is nothing new,  but people are just plain idiots when it comes to borrowing beyond their means.  It makes it very hard to have empathy for those that fall upon hard times and are suffering when they are in positions they should have never put themselves in to begin with.

[medaille]

The banks job is to make money for its investors,  to identify safe or at least secured loans,  and to charge interest commensurate with the risk.  its not their job to decide if the borrower is smart enough to make an informed decision. I think perhaps we need to change this narrative that everyone should be a homeowner,  for many that is likely to much responsibility.

Also this idea that first time home buyers should be shopping in the markets they are.....evryone wants a nice home,  but far to many get locked into houses with to much required upkeep,  or just plain shitty built homes that become money pits far sooner than homes much older.  

The system is fucked,  I am not sure what the answer is,  but I dont think 50 year mortgages is the answer.   I honestly am expecting a major correction in the housing market in the next 5 years or so.  They are way overvalued and that typically leads to a bubble bursting similar to 08.  I think the best path would be to make it harder for people to qualify for home loans,  that would soften the market and drive down prices IMO.  Should also lower the likelihood of mass foreclosures if the market were to collapse due to other reasons.

I disagree with the idea that it isn’t the banks job to ensure the customer is making a smart decision.  Housing is a necessity.  If there aren’t enough houses, people will just borrow whatever the banks will lend them, which is way too much money, and it drives the price up for everyone.  There is nothing in the system that punishes banks from overlending.  Banks will give children credit cards that trap them in debt.  If you can’t afford your house, the bank just takes it back and resells it to a new sucker that prefers to live inside a building.  If they do it too much, they just have the politicians they bribe to make the taxpayer pay for it.  They are actively incentivized to push debt onto people as fast and as large as possible.  If we ever want to get out of this cycle of everyone being in debt up to their eyeballs, there needs to be some mechanism that restricts banks from overlending.

The problem that happens when you make it harder to get a loan, is that you are making it so that only investors can buy houses and that will push it further towards gen Z+ never being able to afford a home.  There needs to be some mechanism that prevents investors from buying property that should be going to home owners.  I think the local governments all need to gathering data on how many homes of each type (single family, condo, apartment, rental homes, airBNB, etc.) are needed to support the community, and if the quantity is below the threshold, they need to inhibit investors from buying those homes.  I don’t know the best way of doing that, maybe you just tax them at a higher and higher rate until they drop out of the market and put that money into a fund to be used as the down payment for a first time homeowner, or invest in new housing development or something.