Info Have we learned nothing from the 2007 meltdown?

[zinfamous]

Poor deal at the individual level and lots of desperate folks will likely get scammed, but not indicative of a systemic issue of abuse. Nor likely to lead to a cascading failure of financial institutions if things do go pear shaped. I'm hoping the relaxation of strict mark-to-market rules mean a 2008 style meltdown centered on real estate won't happen again, or if it does it will need to happen via an entirely different set of circumstances.

right, I already mentioned that this isn't likely a problem that will have a major impact on the overall economy (auto financing isn't "tendrilled" throughout the market at every single level like mortgage financing was/is), but the fact that a major dealer is pushing this kind of thing during prime time local and national news time....is fishy to me. It's a bit of a bold statement, no? I see it as some sort of confident embrace of a trend that they are experiencing.

 

[fskimospy]

I tend to think they are all scammy, but that kind of financing is beyond the pale. It is an entirely different level, especially when you consider that authorized dealerships do offer financing through primary legitimate lenders...one would think that those lenders wouldn't want to associate with a business that is also pushing this kind of scammery.

This sort of thing is what the CFPB was designed to stop. I remember reading an article a while back about how the business plan for these lenders anticipates that people will not be able to pay and that their car will eventually be repossessed. They sell the car, get some sales fees and a few payments, then repo the car and sell it to someone new.

 

[s0me0nesmind1]

I tend to think they are all scammy, but that kind of financing is beyond the pale. It is an entirely different level, especially when you consider that authorized dealerships do offer financing through primary legitimate lenders...one would think that those lenders wouldn't want to associate with a business that is also pushing this kind of scammery.

Yeah he is just trying to make illogical equivalencies.

A reputable car dealership trying to make a sale is... Annoying but begrudgingly how it works.

Their job is to sell it for the highest price.
Your job is to buy it for the lowest price.

The ultimate conclusion is both parties meeting somewhere in the middle.... Unless youre someone like my mom and sees a sticker price and doesn't understand how the industry works heh.


Though I will say, thanks to the internet and being able to search through databases of certified vehicles there really isn't as much haggling games as there used to be.

 

[s0me0nesmind1]

This sort of thing is what the CFPB was designed to stop. I remember reading an article a while back about how the business plan for these lenders anticipates that people will not be able to pay and that their car will eventually be repossessed. They sell the car, get some sales fees and a few payments, then repo the car and sell it to someone new.

Well, to be honest the problem there isn't corruption so much as the same thing as the financial collapse... Folks getting loans they shouldn't be qualified for. Both parties are damn equal IMO. Anyone worth a shit unless you are medically evaluated as mentally retarded should be able to do basic math of your take home pay in conjunction with your bills. This isn't geometry, algebra, calc or trig... It's fucking addition and subtraction.

I'm also just much more libertarian in that ignorance is not an excuse.

I guess a fix for that would be if they repo the car then they can no longer collect remaining debt... That would instantly make them make sure that the buyer is likely to pay.

 

[Jhhnn]

Well it kinda sucks for the other hundreds or thousands of little guys who can't get housing because the first little guy is squatting on their rent controlled unit preventing a new 41 story building from being erected to provide new housing and add to supply/lower prices.

I somehow doubt that very many little guys will be buying condos with sky gardens. Just a hunch.

 

[ralfy]

That is only a fraction of "shadow" derivatives which have a global notional value of up to $1.2 quadrillion.

 

[dawp]

Well, to be honest the problem there isn't corruption so much as the same thing as the financial collapse... Folks getting loans they shouldn't be qualified for. Both parties are damn equal IMO. Anyone worth a shit unless you are medically evaluated as mentally retarded should be able to do basic math of your take home pay in conjunction with your bills. This isn't geometry, algebra, calc or trig... It's fucking addition and subtraction.

I'm also just much more libertarian in that ignorance is not an excuse.

I guess a fix for that would be if they repo the car then they can no longer collect remaining debt... That would instantly make them make sure that the buyer is likely to pay.

the problem is an unscrupulous lender will tell those that can't afford the loan that they can and some will believe the loan officer and sign away.

 

[ch33zw1z]

the problem is an unscrupulous lender will tell those that can't afford the loan that they can and some will believe the loan officer and sign away.

This. I know I've said it before, but when my wife and I were starting to shop around for mortgages, it's was 2007-08 time frame, and the first Bank we looked into (which we banked with) offered us about 50k more than we could afford on paper, and with a variable rate interest. 50k was about 33% more than we wanted.

My wife and I went home and basically said wtf are they smoking, and didn't even call them back. How many people just say "wowsers, let's do this thing", plenty....which is how we got the collapse.

 

[fskimospy]

That is only a fraction of "shadow" derivatives which have a global notional value of up to $1.2 quadrillion.

No, they do not.

 

[glenn1]

I somehow doubt that very many little guys will be buying condos with sky gardens. Just a hunch.

Every unit brought online (even luxury "sky garden" units) increase supply and thus lower prices all along the price curve. Gentrification is a symptom of too little supply and forcing would-be buyers to purchase "downmarket" from where they typically would which hurts those little guys who get displaced. Even if the "sky gardens" building was only 20 luxury units that's up to 20 low income folks who might not be displaced by gentrification.

No, they do not.

If you double and triple count (or more) the same assets enough that might be true. Somehow the equities market has no problem not counting the value stock shares held in index funds again as adding to the total "notional value" invested in the equities market but I guess for derivatives folks throw their hands up in the air and don't even bother to try not counting them redundantly.

 

[fskimospy]

Every unit brought online (even luxury "sky garden" units) increase supply and thus lower prices all along the price curve. Gentrification is a symptom of too little supply and forcing would-be buyers to purchase "downmarket" from where they typically would which hurts those little guys who get displaced. Even if the "sky gardens" building was only 20 luxury units that's up to 20 low income folks who might not be displaced by gentrification.

Yes, I’ve never got why people think because new housing is often bought by rich people that it somehow doesn’t address the needs of middle and lower income people. Should we also not build new cars because they are often bought by the rich?

I genuinely wonder what people think is going on. Are the rich people all living in a van down by the river until suitable luxury housing is built for them? Or are they outbidding you for your house because that’s what’s available?

 

[dank69]

Well, to be honest the problem there isn't corruption so much as the same thing as the financial collapse... Folks getting loans they shouldn't be qualified for. Both parties are damn equal IMO. Anyone worth a shit unless you are medically evaluated as mentally retarded should be able to do basic math of your take home pay in conjunction with your bills. This isn't geometry, algebra, calc or trig... It's fucking addition and subtraction.

I'm also just much more libertarian in that ignorance is not an excuse.

I guess a fix for that would be if they repo the car then they can no longer collect remaining debt... That would instantly make them make sure that the buyer is likely to pay.

There are plenty of people who can't read, let alone add or subtract.

 

[s0me0nesmind1]

Yes, I’ve never got why people think because new housing is often bought by rich people that it somehow doesn’t address the needs of middle and lower income people. Should we also not build new cars because they are often bought by the rich?

I genuinely wonder what people think is going on. Are the rich people all living in a van down by the river until suitable luxury housing is built for them? Or are they outbidding you for your house because that’s what’s available?

They think rich evil people are going to build and jack up the rates I guess.....

To a certain extent it can be true, but you know... which would you rather have - homes increase in value while crime statistically goes down in the area or keep the crime rate but have cheap houses because no one wants to live where there is crime. Take your pick.

Ultimately though they should encourage any and all building. More housing = more supply to address the demand. Housing costs will naturally decline as a direct relation to how much you build.

People that believe in and act as if "gentrification" is a thing and that it is evil white people taking over need to be beaten senseless for how fucking dumb of a concept that is. Seriously, shit like that only comes from the mouthes of a liberal yuppie that has a college degree and works as a Starbucks Barista.

 

[glenn1]

They think rich evil people are going to build and jack up the rates I guess.....

To a certain extent it can be true, but you know... which would you rather have - homes increase in value while crime statistically goes down in the area or keep the crime rate but have cheap houses because no one wants to live where there is crime. Take your pick.

Ultimately though they should encourage any and all building. More housing = more supply to address the demand. Housing costs will naturally decline as a direct relation to how much you build.

People that believe in and act as if "gentrification" is a thing and that it is evil white people taking over need to be beaten senseless for how fucking dumb of a concept that is. Seriously, shit like that only comes from the mouthes of a liberal yuppie that has a college degree and works as a Starbucks Barista.

The "luxury homes" of today will be the middle and working class homes of the future, just as the new luxury cars of today get bought by the poor and middle class tomorrow. One of my previous homes was built in the 1930s of 3 courses of brick with the round top gothic door and the whole shebang. It was probably considered an "executive home" at the time of construction and now it's in a neighborhood known for its mixed economics and high diversity and certainly not full of "executives" by any means.

 

[fskimospy]

They think rich evil people are going to build and jack up the rates I guess.....

To a certain extent it can be true, but you know... which would you rather have - homes increase in value while crime statistically goes down in the area or keep the crime rate but have cheap houses because no one wants to live where there is crime. Take your pick.

Ultimately though they should encourage any and all building. More housing = more supply to address the demand. Housing costs will naturally decline as a direct relation to how much you build.

People that believe in and act as if "gentrification" is a thing and that it is evil white people taking over need to be beaten senseless for how fucking dumb of a concept that is. Seriously, shit like that only comes from the mouthes of a liberal yuppie that has a college degree and works as a Starbucks Barista.

The reason why gentrification is (often) a thing is that rich people have enacted zoning regulations that prohibit developers from building in their areas. Take Park Slope in NYC for example - filled with incredibly expensive brownstones that are not dense at all by NYC standards. Do we make new apartment towers there? Definitely not, because the people who live in Park Slope are politically powerful and can afford expensive lawyers. So instead they build on the other side of Prospect Park which is much poorer.

When new construction happens in poor areas housing prices in that area DO increase because that's the only place they're allowed to build. The better answer is to build new apartment towers everywhere, doubly so in Park Slope.

 

[s0me0nesmind1]

The reason why gentrification is (often) a thing is that rich people have enacted zoning regulations that prohibit developers from building in their areas. Take Park Slope in NYC for example - filled with incredibly expensive brownstones that are not dense at all by NYC standards. Do we make new apartment towers there? Definitely not, because the people who live in Park Slope are politically powerful and can afford expensive lawyers. So instead they build on the other side of Prospect Park which is much poorer.

When new construction happens in poor areas housing prices in that area DO increase because that's the only place they're allowed to build. The better answer is to build new apartment towers everywhere, doubly so in Park Slope.

I guess I considered "gentrification" to be more specific. What you're describing with regulations I moreso attribute as simply NIMBY.

As the definition here states - it is a term for the ARRIVAL of rich people to a poor area.... not rich people that are already established in an area keeping out poor.

Gentrification is a general term for the arrival of wealthier people in an existing urban district, a related increase in rents and property values, and changes in the district's character and culture. The term is often used negatively, suggesting the displacement of poor communities by rich outsiders.

Either way the main argument is that evil rich people are taking away the culture of their shitty area and replacing it with middle class stuff. OH THE EVILS! God forbid we want to do something about crime rates and urban areas where no one wants to live and no company wants to build new jobs.

 

[fskimospy]

I guess I considered "gentrification" to be more specific. What you're describing with regulations I moreso attribute as simply NIMBY.

As the definition here states - it is a term for the ARRIVAL of rich people to a poor area.... not rich people that are already established in an area keeping out poor.

Either way the main argument is that evil rich people are taking away the culture of their shitty area and replacing it with middle class stuff. OH THE EVILS! God forbid we want to do something about crime rates and urban areas where no one wants to live and no company wants to build new jobs.

Well yeah, they are arriving in that poor area because they got chased out of their wealthier area because they could no longer afford it. Why couldn't they afford it? The rich people established in their old area prevented any homes from being built so they were priced out. Gentrification is a cascade effect.

 

[glenn1]

Well yeah, they are arriving in that poor area because they got chased out of their wealthier area because they could no longer afford it. Why couldn't they afford it? The rich people established in their old area prevented any homes from being built so they were priced out. Gentrification is a cascade effect.

The question is why anyone should consider gentrification to be “bad.” As if the ghetto is something we should protect like an endangered species.

 

[fskimospy]

The question is why anyone should consider gentrification to be “bad.” As if the ghetto is something we should protect like an endangered species.

I agree that people have no special right to live anywhere just because they lived there before.

I do think the one valid point that anti-gentrification people have is that a big reason why new development is concentrated in their areas is because it is blocked by rich people in their own neighborhoods. The rich have no more right to have government regulations preserve how their neighborhoods are than the poor do.

 

[SMOGZINN]

The question is why anyone should consider gentrification to be “bad.” As if the ghetto is something we should protect like an endangered species.

You an I agree here. Gentrification is the natural regenerative process of a city. Without it a city would slowly rot from the inside out.

 

[SMOGZINN]

I agree that people have no special right to live anywhere just because they lived there before.

I do think the one valid point that anti-gentrification people have is that a big reason why new development is concentrated in their areas is because it is blocked by rich people in their own neighborhoods. The rich have no more right to have government regulations preserve how their neighborhoods are than the poor do.

Gentrification happens in an area because the land value of that area drops to the point that it starts to become attractive to younger generations that are looking for good deals on land closer to the city centers where they work. As that land value drops younger people start to move in and use their income to fix up the houses they live in. Those same people are on the upward trajectory of their career paths so they start to have more and more disposable income, this in turn attracts businesses that want to earn that disposable income from them, which in turn means that area businesses get a influx of money and start to upgrade. The entire area slowly starts to ratchet upward, until those yuppies start to have families and move to the suburbs, leaving behind those that did not move upward in their careers and can't afford to move out, the businesses follow the people that are moving out, leaving the businesses left to be on a tight budget where repairs start to be put off, this is where the cycle starts to repeat.

 

[s0me0nesmind1]

I agree that people have no special right to live anywhere just because they lived there before.

I do think the one valid point that anti-gentrification people have is that a big reason why new development is concentrated in their areas is because it is blocked by rich people in their own neighborhoods. The rich have no more right to have government regulations preserve how their neighborhoods are than the poor do.

Not necessarily? You're basically saying that they definetly would have built in the richer area. Doesn't it sound reasonable that someone wants to build it in a poor area as well?

You're at a higher risk but likewise you have a much higher return on investment potentially.

 

[fskimospy]

Gentrification happens in an area because the land value of that area drops to the point that it starts to become attractive to younger generations that are looking for good deals on land closer to the city centers where they work. As that land value drops younger people start to move in and use their income to fix up the houses they live in. Those same people are on the upward trajectory of their career paths so they start to have more and more disposable income, this in turn attracts businesses that want to earn that disposable income from them, which in turn means that area businesses get a influx of money and start to upgrade. The entire area slowly starts to ratchet upward, until those yuppies start to have families and move to the suburbs, where the cycle starts to repeat.

Land values in those neighborhoods weren't dropping, they were just increasing more slowly than the skyrocketing values of other, wealthier neighborhoods. I used to live in Prospect Lefferts Gardens as one of those gentrifiers and every gentrifier I knew, myself included, wasn't a person who desired to move into that neighborhood because it was closer to the city center, they were people who used to live in neighborhoods closer to the city and were chased further out by rising rents.

Gentrification, at least in NYC is not people moving in closer to the city to save time on commutes and then using their money to upgrade the neighborhood, it's people moving further away from the city and accepting longer commutes to find something they can afford because, again, development is harshly restricted in richer areas.

 

[fskimospy]

Not necessarily? You're basically saying that they definetly would have built in the richer area. Doesn't it sound reasonable that someone wants to build it in a poor area as well?

You're at a higher risk but likewise you have a much higher return on investment potentially.

Well if people don't want to build in the richer areas then there's no need for government regulations prohibiting it. After all I'm not actually arguing that anyone needs to build anything anywhere, I'm simply arguing for the government to stop BANNING building.

The reason why people in Park Slope, San Francisco, etc., fight for exclusionary zoning is precisely because they know people would build there otherwise and want to stop it.

 

[SMOGZINN]

Land values in those neighborhoods weren't dropping, they were just increasing more slowly than the skyrocketing values of other, wealthier neighborhoods.

Okay, they are not dropping in absolute value, but in relative value.

I used to live in Prospect Lefferts Gardens as one of those gentrifiers and every gentrifier I knew, myself included, wasn't a person who desired to move into that neighborhood because it was closer to the city center, they were people who used to live in neighborhoods closer to the city and were chased further out by rising rents.

There is a well known pattern to gentrification, you are describing second (or perhaps third) wave gentrification. You can basically draw concentric circles around a city center and the gentrification will pulse outward in waves radiating along those circles. It is never exact because some areas hold their value better than other either because of a natural attraction, some economic reason ( for example a large business that is unusually successful), or a social one (successful ghettoism), but it is generally circular, and generally moves together.