I'm usually a whiner but not a protester...I will fucking protest if I am paying for some schmuck's house in Nevada because they were stupid enough to pay $600k for a house in the desert and I wasn't so stupid. That would cause me to lose my mind I think...no joke. :eek:
We just came through a period in our collective history where "Flip This House" and "Sell This House" are two of the more popular TV shows. There was a period of 3 years where you could buy pretty much any house anywhere, sell it again in a few months and pocket 30% profit. Borrowing on a 5-year ARM in this sort of environment isn't a bad idea at all. As long as you get out before the end. You seem to be advocating that the banks should know the customer's economic and market outlook is wrong and deny credit on that basis. Or, alternatively, approve a loan conditioned upon selling the house in 5 years? An argument I'll concede is that a sophisticated business tool (short-term ARM) was made available to people who are unsophisticated. Still, I'm not sure how a lender could possibly judge that. Everyone was making money flipping houses. Just watch a re-run of "Flip This House" and see people flipping burgers start flipping houses and make 5x their yearly income in just a few months.
Fully, I think the lender really was asking to get punched in the face. If you ran a car dealership, would you sell people cars and finance them knowing that in 1-2 years they probably won't be able to afford the increased payment price? It's stupid business practice....stupid stupid stupid. They did it because they were greedy for more business and probably didn't foresee this crunch being so bad and will be stuck with a bunch of losses on foreclosures in a market loaded with inventory and lacking buyers(at least those who will qualify). It's going to be ugly and frankly, if these companies were lending to people who couldn't afford it and go out of business because of their lending practices...I'd say good. Let someone else step in and do it. Economic Darwinism...these companies are going to find it harder and harder to sell their MBS, company bonds, and legitimacy after pulling such a disturbingly greedy scam.
Read in the Economist a few months back that average property (residential) in Hong Kong and Japan were down 40% and 50% respectivly over 10 years. What's interesting in both cases is when those markets were booming maybe 1 out of 100 people would have believed that sort of price decline was possible. Not saying it's going to happen in the US/Europe but it's certainly something to consider. I also remember many years back a short report on the news about the then HK property boom. The agent was showing a couple round a pretty crap apartment and basically said at the end 'you want it or not, say yes or don't waste my time because I've got another 10 people to show around'.
Flip this house. What a joke that show is. I'm looking forward to that show being cancelled. When it finally is, that is when we'll know that housing prices have bottomed. They buy some house for $300k, spend 50 bucks for some paint, and then the dumb soccer mom tries to sell it for like $5 million after 2 weeks. Bankruptcy is what it takes to wake these fools up.
they have 2 shows on FLIP THAT HOUSE AND PROPERTY LADDER man did they make it look easy, every show I watched they were turning a profit. I saw a few shows later on showing a couple of people holding onto the house for months and months. I just laughed.
the big dilemma...fed cuts rates, dollar drops further in value, increases inflation further...also mexicans want more money lol
I liked the Flip this House episodes with TradeMark Properties but in Googling around (http://www.flipthislawsuit.com) I see they are engaged in a lawsuit against A&E.