another housing bubble in the works?

[Corporate Thug]

Because you fuck the entire country in the long run.

And B of A gives a fuck about that? If they did, this thread wouldn't exist to begin with.

 

[Corporate Thug]

It's sad that you have to explain that to people. I guess economics>America to the truly lost.

No need to explain, I understand it perfectly. I'm just not naive enough to think that the banks are going to place the well being of the country in front of the well being of the shareholders, executives, and fatty bonuses. You could call them truly lost or whatever else you like, but that doesn't change the reality of it.

 

[purbeast0]

hope not because i just purchased my first home in september.

 

[KeithP]

If by "low inventory" you mean banks holding onto homes to keep prices artificially high..then sure.

And/or intentionally pricing the houses low to get buyers in a bidding war which drives the price back up.

-KeithP

 

[Corporate Thug]

And/or intentionally pricing the houses low to get buyers in a bidding war which drives the price back up.

-KeithP

If that's the case, the buyer is really to blame. I just can't imagine why anyone would pay X amount more than the comps.

It's like a auction in that sense right? Let's say there is a piece of art appraised at 500k w/ opening bid of 100k...if the bidders are rationale, the selling price should not exceed much more than 500k (of course art is not a particularly good example because I guess there is some intrinsic value etc. in it but you get the point).

 

[Engineer]

Of course there will be another housing bubble, that's the only way we can keep our economy moving along (bubbles):

 

[drebo]

No need to explain, I understand it perfectly. I'm just not naive enough to think that the banks are going to place the well being of the country in front of the well being of the shareholders, executives, and fatty bonuses. You could call them truly lost or whatever else you like, but that doesn't change the reality of it.

They sure as shit would care if the US government weren't a bunch of fucking thieves and crooks.

The only reason they don't care is because they know that they have nothing to fear. If they create another bubble, the government will just pick up the pieces.

In the long term, though, people's savings become worthless, houses are overvalued in comparison to local wages, and the entire country is worse for it.

The banks are expecting to balance the higher home prices with more lenient lending standards again, and they expect the government to back them. It didn't work last time, and it's not going to work this time.

While I don't agree with the government mandating that the banks sell the houses, I do disagree with the government giving banks the free interest loans which are allowing them to hold on to the houses while not destroying their balance sheets.

 

[BoberFett]

Of course it's going to decay. However, I'm pretty sure someone had to take a look at the sell price of the house minus decay versus flooding the market w/ inventory and made a quantitative decision that the lower price of the house w/ decay is still higher than what would happen on the whole if they flooded the market w/ inventory.

The prices have to drop, and they have. But that doesn't mean that the banks can't control the drop.

That can't last forever though. You can only sit on inventory for so long. Keeping the market propped up through reduced inventory just means that it's keeping people out of the market. What makes banks think that people will be any more able to purchase at current values a couple of years from now? In addition, banks sitting on a foreclosed property means they have an asset, but there's no cashflow attached to it. What good does that do them? Tying up cashflow in the form of homes that they're sitting on to keep asset values high will eventually catch up to them.

 

[Corporate Thug]

That can't last forever though. You can only sit on inventory for so long. Keeping the market propped up through reduced inventory just means that it's keeping people out of the market. What makes banks think that people will be any more able to purchase at current values a couple of years from now? In addition, banks sitting on a foreclosed property means they have an asset, but there's no cashflow attached to it. What good does that do them? Tying up cashflow in the form of homes that they're sitting on to keep asset values high will eventually catch up to them.

I don't think they intend to sit on it forever but they are slowly releasing the homes to the market...one supply starts to dry up, driving up demand, the next round of houses are released, etc. At least that is my layman's understanding of it. It's like the engineer controlling the flood gates.

 

[Pr0d1gy]

The prices have to drop, and they have. But that doesn't mean that the banks can't control the drop.

Ah yes, Capitalism, where the markets determine the price. Wait, what? So we DON'T actually live in a Capitalist society at all, then....

 

[Corporate Thug]

They sure as shit would care if the US government weren't a bunch of fucking thieves and crooks.

The only reason they don't care is because they know that they have nothing to fear. If they create another bubble, the government will just pick up the pieces.

In the long term, though, people's savings become worthless, houses are overvalued in comparison to local wages, and the entire country is worse for it.

The banks are expecting to balance the higher home prices with more lenient lending standards again, and they expect the government to back them. It didn't work last time, and it's not going to work this time.

While I don't agree with the government mandating that the banks sell the houses, I do disagree with the government giving banks the free interest loans which are allowing them to hold on to the houses while not destroying their balance sheets.

I agree with what you are saying but the government has already encourages (or at the very least ratified) the bank's actions w/ the bailout, so like you said, why should they stop now? I don't know how the government could buckle down now - they have already caved. What bargaining chips do you have now? I hope the government wasn't dumb enough to think that they learned their lesson and the gov will just help them out this one time...

One minor point, I don't think it was interest free loans.

I'm looking here and it seems that a majority of the banks are paying interest:

http://projects.propublica.org/bailout/list/category/Bank

 

[Corporate Thug]

Ah yes, Capitalism, where the markets determine the price. Wait, what? So we DON'T actually live in a Capitalist society at all, then....

It's certainly not a purely laissez faire capitalist system. Otherwise, the banks would have failed.

A mix of corporate and regulatory capitalism seems to be more accurate classification.

http://en.wikipedia.org/wiki/Corporate_capitalism

 

[mikegg]

But that does make perfect sense. Why saturate the market the decrease to value of your own product?

You're right. It doesn't make sense to overproduce a product and devalue it. In this case, shift blame to the government for using tax payer money to help banks. Shift blame to the government for lowering interest rates to 3.5% - barely above inflation rate.

 

[rommelrommel]

You're assuming that the above will be done in an uncontrollable manner. I'm sure the banks are smart enough not to do that.

They're trying but at some point it gets hard to push shit uphill.

 

[z0mb13]

the next housing bubble is still far off

let me know when mortgage companies/banks start giving 100% LTV loans with no income verification (liar loans) or Adjustable rate mortgages again

Better yet, wake me up when the secondary market appetite is back up to purchase mortgage back securities

 

[gamefreakgcb]

This sucks. We are looking for our first home purchase and the inventory has basically dried up in the last 4 months or so in the area we want to move to. Barely 1 new house listed in the past 3 weeks.

 

[mikegg]

This sucks. We are looking for our first home purchase and the inventory has basically dried up in the last 4 months or so in the area we want to move to. Barely 1 new house listed in the past 3 weeks.

Yup. We been looking for a year. We have 50% down for a good house and 100% down for a low end house. Nothing so far...

 

[LegendKiller]

the next housing bubble is still far off

let me know when mortgage companies/banks start giving 100% LTV loans with no income verification (liar loans) or Adjustable rate mortgages again

Better yet, wake me up when the secondary market appetite is back up to purchase mortgage back securities

There are plenty of re-remic, rehab and other deals out there. Non-agency RMBS would probably do OK in the market.

as far as a housing bubble, I don't think so.

As far as the excess inventory, considering so much of it is owned by securitization trusts it isn't as easy as just selling the inventory.