Comments on: Foreclosures and Negative Equity – Why Financial Bailout Programs Fail in California. Income, Budget Problems, and Underwater Mortgages.

By: irondoor

irondoor — Thu, 28 Jan 2010 06:32:36 +0000

A couple, one a firefighter the other a teacher graduate college and start working at age 25. Each starts out at $40,000 (just a number). They receive 3% annual pay raises and retire at age 55. At retirement their combined incomes are $194,180. The firefighter retires at 90% of income, the teacher at 70%. Their annual retirement income is $155,345 and is adjusted annually for inflation for life. Healtcare and other benefits are basically free for life.

And with tenure and unionization, they probably cannot be fired during their working career. All guaranteed on the backs of the taxpayer.

By: Alex

Alex — Wed, 27 Jan 2010 15:34:15 +0000

Housing economist Dean Baker, the co-director of the Center for Economic and Policy Research, laid out his case at a risk conference last week for why we still have a housing bubble. Adjusted for inflation, home prices are still 15-20% higher than they were in the mid-1990s. “There’s no plausible fundamental explanation for that,” he says.

People citing Dean Baker as proof that THEIR area is overvalued should be very cautious not to overgeneralize. Mr. Baker bought a house 3 months ago in Washington DC – an area that went up 165% from 2000-2005, and only went down 15% since. Turns out, SOME areas are going to do better than others — sometimes much much better.

Not saying your area is one such immune area, but be warned – Mr. Baker himself had to eat crow on his neighborhood – perhaps you will too.

By: Jeff

Jeff — Wed, 27 Jan 2010 07:49:10 +0000

I don’t agree with Bernie Sanders much and I am from Vermont but I think he is right here.

By: Joe R

Joe R — Wed, 27 Jan 2010 07:16:51 +0000

I agree that the shadow inventory will keep prices from rising any time soon. What I’m not sure of is the idea that the income statistics for the area are truly representative of the buying public. Specifically, foreign money that is trying to get out of the dollar and into the United States. I have heard that real estate in certain areas in Southern California is very desirable to foreign buyers. I believe that this is another factor in the lack of as steep a plunge of prices in the more desirable coastal Los Angeles and Orange counties compared to the drop in the “Inland Empire”. I wish that you would do some research in this area. Specifically the ethnic makeup and citizenship of current buyers. I only have anecdotal information, but it makes me suspicious. I have seen with my own eyes, statements of accounts set up in the name of poor relatives of rich foreigners that were large enough to buy several houses for cash!

By: WP

WP — Wed, 27 Jan 2010 00:07:18 +0000

“As a matter of policy I can’t see that we want people to buy a house in 2009 that’s 10-20% higher than it would sell for in 2011,” he says. “In so far as the FHA was encouraging people to buy homes in bubble markets that were not deflated, that’s not good for the FHA and you didn’t help the homeowner. We didn’t do those people a favor.”

My point exactly in my post from 1/24. FHA=”More of the same.” Low/No down loans which artificially increase demand while the banks restrict supply for as long as they can in a desperate effort to keep prices up. Bad news for the housing market in general when these loans go bad, and for bad news for the taxpayer who will be left to foot the bill when people walk away from their FHA loan in 2 years. The only ones who benefit from FHA are those in the Real Estate industry.