troubling times

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Jae iLL

Jae iLL

Sicc OG
#1
Jun 27, 2003
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#1
I see a lot of articles being posted, not many discussions so I wanna ask sum of y'alls opinions on the real-estate market right now. So many Americans are using the school of thought, buy now pay later. Most buyers are putting less than 10% as downpayment.

Most buyers borrow their downpayment using a home equity line of credit which carries a variable rate and has no fixed payment schedule. If you make only the minimum payment, the balance of the loan will stay the same. What happens when the Federal Reserve raises short-term interest rates?

Interest only loans are used by, I think, 70 percent of buyers in the coastal regions of the US. What do you think of so many people purchasing homes using interest only loans?

Now, the thinking is that homeowners will own the home for less than five years as the price appreciates and they will sell the home and move on, or their income will increase as time increases and they'll be able to pay interest and premium. If the low interest rates rise and the real-estate market doesn't continue to boom then all these people with interest only loans who can't afford to pay interest and principle are gonna be screwed.

If you think we had a big problem with the stock market, just wait til the real-estate market collapses.
 
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D-Boy

Sicc OG
#3
May 18, 2002
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i guess what he's saying is that the real estate market is a bubble which will eventually burst. But since homes are purchased primarily through loans, this is gonna have very drastic consequences for people when they realize they have borrowed too much money for something that is not worth nearly that much.
 
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MaddDogg

Sicc OG
#5
Apr 25, 2002
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The real-estate market is huge because it is the American dream. Think about all the benefits of owning property, the asset to borrow against, your own land, your own place to have a home, a piece of land for your children, etc.

I dont know too much about the real estate market, but one thing i did notice in your post was the word BORROW. I dont know how much people pay attention to the Fed but Allen Greenspan made a quiet but very stern notice to the public and President Bush that our economy cant sustain the level of borrowing and debt we are currently under. He urged the administration to cut costs in the budget to help reduce debt (although we all know the 4 letter word he is probly really talkin about thats fuckin up the economy). He said that Americans are borrowing wayyy to much and paying on credit too often and not saving enough money. He also explained that a lot of American savings and assets are really owned by foreigners who could pull their money out at any time and crash the whole economy but dont do so at least yet because of the personal losses they might incur. Basically the economy sounds REALLY fucked up right now and Im not talkin about employment statistics, Im talkin about the American currency and return rate 5-10 years down the road. As Americans we over consume way to much especially with material goods and the envoirnment and right now it looks like it is going to come at the expense of my generation. Shit is lookin gloomy IMO and it dont matter if you got Dems or GOP in there because the problem wont ever be solved by a bunch of rich old white guys who have their own assets stabilized and their own security...look at the Euro right now its killin the dollar. We need to financially adjust and start saving money and owning our own businesses or else shit is gonna hit the fan and the market is gonna crash or there is gonna be a socialist style revolution to nationalize everything in our country and it aint gonna be pretty.

Thats my 2 cents.
 
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TOKZTLI

Sicc OG
#7
Jan 9, 2004
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#7
These are great practical points.

I'm actually squirreling away money right now so I can buy when the bubble bursts and homes are being lost and foreclosed on. Especially out here in the West Coast, home prices are astronomical. I plan to take advantage of the coming real estate crisis and making some ends for me and my family. You have to look at the big picture and see far down the road if you want to get ahead economically.
 
Jae iLL

Jae iLL

Sicc OG
#8
Jun 27, 2003
2,457
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#8
TOKZTLI said:
These are great practical points.

I'm actually squirreling away money right now so I can buy when the bubble bursts and homes are being lost and foreclosed on. Especially out here in the West Coast, home prices are astronomical. I plan to take advantage of the coming real estate crisis and making some ends for me and my family. You have to look at the big picture and see far down the road if you want to get ahead economically.
Click to expand...

good shit homie. My folks just bought a house on the EastCoast DC-Baltimore metropolitan area which is also in a bubble. We got a decent house, it's pretty small but we can AFFORD it. I remember when it jumped in value and my pops said he wished he bought a bigger place and my uncle told him "You should buy what you can finance, not what you can afford." Only problem is you think you can finance it TODAY, but what about later? Also, it's not just the fact that people are borrowing, it's the fact that around 70% of homeowners use interest only loans which work great until the worth of the home stops appreciating. I'm surprised there isn't a lot of red flags going up. A few years down the road when this bubble eventually bursts, and it will burst, the shit's gon hit the fan. I'm planning on moving back out West soon which is ALSO ridiculously expensive right now, but I aint fallin slave to debt.
 
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