"Homeownership should not be part of the American Dream"

  • Posted by a hidden member.
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    Mar 15, 2011 5:03 PM GMT
    There are those on both the right and left who have pointed out the foolishness of promoting home ownership through US tax policy, legislation and subsidies. At the very least the financial subprime crisis would not have been so bad if it would have happened at all. I don't believe in artificial limits but I also don't think that banks should be protected from losses.

    http://finance.fortune.cnn.com/2011/03/15/homeownership-should-not-be-part-of-the-american-dream/

    Most banks want to securitize loans made to borrowers buying homes with little money down. Did we learn nothing from the financial crisis?

    In an attempt to fix some of the problems that caused the housing bubble and financial crisis, banking regulators are coming up with new mortgage lending rules that will address what lower-risk quality mortgages should look like. The goal is to let lenders sell so-called "qualified residential mortgages" to investors without having to retain the risks.

    The question the Treasury Department must now answer is what makes a qualified mortgage? Regulators including the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency are pushing for a 20% down payment on such loans. While the big banks like Bank of America (BAC) and JP Morgan Chase (JPM) have not formally weighed in, their lobbyists at American Bankers Association and the Mortgage Bankers Association say that requirement is far too high and would price many buyers out of the housing market.

    The debate will have broad implications for how homebuyers finance their mortgages. During the housing boom, many Americans took out home loans with little to no money down. When prices fell steeply following their mid-2006 peak, many borrowers didn't have enough equity to cushion the blow, leading to record foreclosures nationwide. Meanwhile, the big banks and investors holding these risky loans suffered huge losses.

    Joseph Pigg, vice president and senior council of the ABA, says the 20% proposal is much too narrow and he worries it could further hamper demand for homes, especially when the fragile real estate market is still recovering. And while a heftier down payment generally reduces the risks of a loan, he says, other factors such as income, credit score, the property's location and other factors determine the quality of a loan.

    But perhaps it's time to question whether homeownership should even be part of the American Dream. Tighter mortgage lending rules could return the housing market to the way it was in the 1970s, when homeownership was much lower and virtually all homebuyers put down at least 20% of the value of the house. Standards began changing around the 1980s as home prices appreciated significantly and mortgage financing became more sophisticated.

    It's easy to see why bankers would gripe about the 20% minimum. Smaller loans translate into smaller profits. And lenders can fully securitize only qualified mortgages -- any loans made without the designated down payment can still be sold, but the lenders would have to retain 5% of their value on their books.
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    Mar 15, 2011 5:05 PM GMT
    Your thread title is idiotic...
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    Mar 15, 2011 5:08 PM GMT
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?
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    Mar 15, 2011 5:12 PM GMT
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?
    Think about it. Can you not even see the disparity of the article and the 'title'?
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    Mar 15, 2011 5:18 PM GMT
    TropicalMark said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?
    Think about it. Can you not even see the disparity of the article and the 'title'?


    Not really - I mean the argument of the article is that the pursuit of homeownership has been somewhat irrational such that it pushed asset prices to unreasonable heights also creating incentives for the financial services sector to fuel that demand. I mean obviously there were problems there too... but there seem to be more productive pursuits than the accumulation of things.
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    Mar 15, 2011 6:24 PM GMT
    I did read the article and I can't say I disagree with it. Housing in general in the US is WAY overpriced and the way in which we prize having enormous homes that are unnecessary, extremely costly, and a drain on most families' income is detrimental to our economy.

    My mother's parents raised nine children in a three bedroom house with a partially finished basement. Now, if you watch HGTV or DIY, you see families of four (most of whom are solidly middle class) in search of homes with 5 bedrooms, four bathrooms, a living room, den and playroom. It's just ridiculous.
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    Mar 15, 2011 7:22 PM GMT
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.




    That's total BS, SB.
    Tropical called the TITLE of the thread "idiotic".
    He DID NOT call riddler "idiotic".
    Therefore - Tropical IN NO WAY launched a "personal attack" against riddler.
    In fact - YOU are the one who launched an assortment of VERY personal attacks against Tropical.
    Shame on you SB for being so mean-spirited and hypocritical.
  • rnch

    Posts: 11524

    Mar 15, 2011 7:23 PM GMT
    Christian73 saidI did read the article and I can't say I disagree with it. Housing in general in the US is WAY overpriced and the way in which we prize having enormous homes that are unnecessary, extremely costly, and a drain on most families' income is detrimental to our economy.

    My mother's parents raised nine children in a three bedroom house with a partially finished basement. Now, if you watch HGTV or DIY, you see families of four (most of whom are solidly middle class) in search of homes with 5 bedrooms, four bathrooms, a living room, den and playroom. It's just ridiculous.


    YES!! i was just about to post something about this.

    peep's expectations and desires are wayyyyyy out of line for today's economy.

    why does a 2 child family need a 3000 square foot house?

    in the dim 1970's (my childhood time) a 2000 square foot house was considered H U G E.
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    Mar 15, 2011 7:30 PM GMT
    southbeach1500 said
    rickrick91 said
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.




    That's total BS, SB.
    Tropical called the TITLE of the thread "idiotic".
    He DID NOT call riddler "idiotic".
    Therefore - Tropical IN NO WAY launched a "personal attack" against riddler.
    In fact - YOU are the one who launched an assortment of VERY personal attacks against Tropical.
    Shame on you SB for being so mean-spirited and hypocritical.


    RickRick, your writings are idiotic.

    But YOU aren't.

    Hmmmmmm........




    You've seem to have been in such a bad mood lately, SB.
    It's a shame that you're expressing that here with these mean-spirited personal attacks!
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    Mar 15, 2011 8:46 PM GMT
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.
    Riddler..
    Southbeach has sand in her clit today.. SB's clit itches so badly she failed to actually read what was written and the fact that we actually had a dialogue going.
  • vintovka

    Posts: 588

    Mar 15, 2011 9:08 PM GMT
    The problem here in the US is that we have a retirement system that presupposes that people will use their homes to save money over their lifetimes and downsize when they retire. If they do not buy more house than they need then there's nowhere to downsize to. Similarly if the next generation opts out and decides not to buy in, then the retirees are fucked. The tax structure rewards home ownership though, so you're equally fucked (or perhaps more so) if you rent your whole life.

    And just to preempt the usual argument that comes from the right about how we need personal responsibility and personal savings in answer to old age, consider this: private retirement schemes face the same pressures that are faced by the housing market (and by social security), i.e. demographic pressure. The problem with using home ownership to save for retirement comes about when the next generation cannot or will not pay the price you expected to get for your home. This can happen because of falling population and/or falling wages. Similarly, falling wages or population means that the next generation has a collectively lower amount of money to put into savings/investments, which means that when retirees go to sell their stocks, there may not be buyers at the price they had hoped for and the cash flow from retirees into the economy that is not associated with work (and increased productivity) will likely cause inflationary pressures to boot. In other words the demographic pressure that threatens social security also faces the housing market and private retirement schemes. Did anyone bother to read all this? haha.
  • conservativej...

    Posts: 2465

    Mar 15, 2011 9:24 PM GMT
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.


    There are several on RJ who I think occasionally miss their meds. We are in the midst of them SouthBeach. I must admit they do add a laugh. Keep posting SB and Riddler.
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    Mar 15, 2011 9:38 PM GMT
    rnch said
    Christian73 saidI did read the article and I can't say I disagree with it. Housing in general in the US is WAY overpriced and the way in which we prize having enormous homes that are unnecessary, extremely costly, and a drain on most families' income is detrimental to our economy.

    My mother's parents raised nine children in a three bedroom house with a partially finished basement. Now, if you watch HGTV or DIY, you see families of four (most of whom are solidly middle class) in search of homes with 5 bedrooms, four bathrooms, a living room, den and playroom. It's just ridiculous.


    YES!! i was just about to post something about this.

    peep's expectations and desires are wayyyyyy out of line for today's economy.

    why does a 2 child family need a 3000 square foot house?

    in the dim 1970's (my childhood time) a 2000 square foot house was considered H U G E.



    For some of us living in small condos in older East Coast cities, 2000 sf is still considered huge! My home isn't even half that and there are rooms I rarely use.

    Becoming a homeowner, however, was a dream come true. Fortunately, I was held to a rigorous standard when applying for the loan, which in turn steered me in the right direction when borrowing. Setting realistic expectations, followed up with rigorous standards, is a better than the blanket suggestions that homeownership overall should be discouraged or that 20% down become a fixed standard.

    Additionally, with the coastal cities tending to be more expensive property markets than other areas, there has to be some regional flexibility in determining the size of loans being issued (and therefore setting the expectations of buyers). Otherwise, first-time homeownership could become an impossibility for hundreds of thousands more.
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    Mar 15, 2011 10:17 PM GMT
    Home ownership is entirely possible if you but within your BUDGET! I can understand why so many people want to own a home because it gives them a sense of security, wealth, stability, and the feeling of having made it in America. But when it's being 'forced' upon us as being necessary, people make unwise choices and there are loan providers, both public and private, willing to take advantage of that vulnerability. We are now feeling the effects of that greed and thrusting that we MUST own a home.

    WE got ourselves into this mess and it's going to take a lot to dig us out. It may even mean readjusting what the 'American Dream' is.
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    Mar 15, 2011 10:26 PM GMT
    The middle class is being destroyed little by little as we are told we dont need that, we dont deserve that, we can get by on less. While super-rich get richer!
  • BIG_N_TALL

    Posts: 2190

    Mar 15, 2011 10:30 PM GMT
    icon_rolleyes.gif(sigh)
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    Mar 15, 2011 10:40 PM GMT
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.


    Hypocrite.
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    Mar 15, 2011 10:42 PM GMT
    southbeach1500 said
    Caslon17000 saidThe middle class is being destroyed little by little as we are told we dont need that, we dont deserve that, we can get by on less. While super-rich get richer!


    So stop listening to whoever it is "telling" you those things.


    Who tells you what you you think? It is as if you are a parrot of most conservative ideologues. Word for word. Point for point. I don't know if I have ever read a moderate post written by you. Just saying.
  • vintovka

    Posts: 588

    Mar 15, 2011 11:01 PM GMT
    [quote][cite]FlibbertyGibbet said[/cite]
    southbeach1500 said
    Caslon17000 saidThe middle class is being destroyed little by little as we are told we dont need that, we dont deserve that, we can get by on less. While super-rich get richer!


    So stop listening to whoever it is "telling" you those things.




    It is a FACT that we used to have a gini coefficient (which measures the disparity of wealth) comparable to the other OECD nations and now we have one comparable to Russia and Mexico. So (if by middle class we mean people who are in the middle of the rich and the poor) the middle class is disappearing. Now if by middle class you simply mean something else, then we're not really talking about the same thing.
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    Mar 15, 2011 11:15 PM GMT
    in my opinion homeownership should be the cornerstone of american financial stability and class mobility. its really loathsome what happened with the financial crisis, and set us back quite a bit more than tends to be reported. i worry for the future of this country.
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    Mar 15, 2011 11:24 PM GMT
    oliver1989 saidin my opinion homeownership should be the cornerstone of american financial stability and class mobility. its really loathsome what happened with the financial crisis, and set us back quite a bit more than tends to be reported. i worry for the future of this country.
    And you should be..
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    Mar 16, 2011 12:02 AM GMT
    Christian73 saidI did read the article and I can't say I disagree with it. Housing in general in the US is WAY overpriced and the way in which we prize having enormous homes that are unnecessary, extremely costly, and a drain on most families' income is detrimental to our economy.

    My mother's parents raised nine children in a three bedroom house with a partially finished basement. Now, if you watch HGTV or DIY, you see families of four (most of whom are solidly middle class) in search of homes with 5 bedrooms, four bathrooms, a living room, den and playroom. It's just ridiculous.
    Christian, you most definitely have a point. The house I grew up in was 1700 feet and everybody who visited my house was like "damn that's huge!". (unfortunately, due to the awkward layout, it didn't quite work out for entertaining for my mom's liking) I visited my sister's apartment last fall, and I learned that 750-1000 square feet is more than enough to live and entertain a small crowd. Even in the Ikea store, they were able to display a <600 square foot display "home" and I saw a crowd of 10+ people inside just looking at the furniture and chilling. However, home owning should not necessarily not be part of the American Dream. There are advantages and disadvantages to owning houses as there are to living in an apartment. Everybody's different.
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    Mar 16, 2011 12:04 AM GMT
    southbeach1500 said
    rickrick91 said
    southbeach1500 said
    riddler78 said
    TropicalMark saidYour thread title is idiotic...


    That's the title of the article. I've revised to add quotes. Curious though, why do you see it as idiotic?




    Riddler78...... TropicalMark is one of those liberals on here with anger management issues.... He is projecting his own internal anger and despair on you and several other RJ members who have political views different from his.

    This frequently manifests itself with socially inappropriate posts (such as the one quoted here) and unprovoked personal attacks on other RJ members.




    That's total BS, SB.
    Tropical called the TITLE of the thread "idiotic".
    He DID NOT call riddler "idiotic".
    Therefore - Tropical IN NO WAY launched a "personal attack" against riddler.
    In fact - YOU are the one who launched an assortment of VERY personal attacks against Tropical.
    Shame on you SB for being so mean-spirited and hypocritical.


    RickRick, your writings are idiotic.

    But YOU aren't.

    Hmmmmmm........


    Oh the irony. I see what you did there
  • TheIStrat

    Posts: 777

    Mar 16, 2011 12:07 AM GMT
    If you have a good stable job with a decent paycheck, then home ownership is one of the most secure vehicles of wealth generation.

    Suze Orman told me that
  • BIG_N_TALL

    Posts: 2190

    Mar 16, 2011 12:09 AM GMT
    TheIStrat saidIf you have a good stable job with a decent paycheck, then home ownership is one of the most secure vehicles of wealth generation.

    Suze Orman told me that


    Yeah, I heard that from her as well... however I don't think she is living in a 2011 reality...