Comments on: Sheep Back to the Slaughter: Lessons from the Great Depression Part VIII: All the Change and Bear Market Rallies. http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/ How I Learned to Love Southern California and Forget the Housing Bubble Sun, 07 Sep 2008 23:19:31 +0000 http://wordpress.org/?v=2.2.2 By: Roger http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11765 Roger Thu, 24 Apr 2008 16:07:20 +0000 http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11765 The US, and the world, aren't even close to the end of the problem. 15X times your annual income for a house is impossible to sustain. I haven't even gone beyond 1.5 and I don't suffer any consequences for living within my means. Savings and Loan debacle (1987); hedge funds (1998); internet bubble (2001); housing debacle (2007); and commodities in a few years are just the latest "tulip frenzy" (1634). And all the so-called "smart" people and political "leaders" keep selling the latest unsustainable "ponzi" scheme. As this Credit Suisse articles predicts we have a lot more pain to go through: http://seekingalpha.com/article/73814-6-5-million-foreclosures-is-there-a-behavioral-problem?source=yahoo The US, and the world, aren’t even close to the end of the problem.

15X times your annual income for a house is impossible to sustain. I haven’t even gone beyond 1.5 and I don’t suffer any consequences for living within my means.

Savings and Loan debacle (1987); hedge funds (1998); internet bubble (2001); housing debacle (2007); and commodities in a few years are just the latest “tulip frenzy” (1634). And all the so-called “smart” people and political “leaders” keep selling the latest unsustainable “ponzi” scheme.

As this Credit Suisse articles predicts we have a lot more pain to go through:
http://seekingalpha.com/article/73814-6-5-million-foreclosures-is-there-a-behavioral-problem?source=yahoo

]]> By: Julie http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11572 Julie Mon, 21 Apr 2008 20:42:28 +0000 http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11572 This really has more to do with your last article, but anyway... The days of a 5% down, 30 year fixed mortgage are really just fancy fantasies now. The numbers you used ($465,000 would require an income of $113,162) won't work anymore. You need to add from one-half to 3/4 of a percent to your interest rate for having less than 20% down, then you have to add another half percentage for having what they are calling a 'Jumbo Conforming' mortgage (over $417k but less than the new max $729k). So you are really looking at a percentage rate of closer to 7 to 7.25. On top of that, you have PMI insurance - what you now have is a total mortgage payment (including tax and insurance) of around $3,400 something a month. This is well above the recommended 28% of the monthly income of someone earning $113k a year. PMI is nearly impossible to avoid - piggyback loans are not an option. One other option is to add another half percentage to your rate - but that is locked into the 30 year fixed. So unless you can refinance later at a lower rate, the punishment for not having 20% will continue through the life of the loan. OUCH! This really has more to do with your last article, but anyway… The days of a 5% down, 30 year fixed mortgage are really just fancy fantasies now. The numbers you used ($465,000 would require an income of $113,162) won’t work anymore. You need to add from one-half to 3/4 of a percent to your interest rate for having less than 20% down, then you have to add another half percentage for having what they are calling a ‘Jumbo Conforming’ mortgage (over $417k but less than the new max $729k). So you are really looking at a percentage rate of closer to 7 to 7.25. On top of that, you have PMI insurance - what you now have is a total mortgage payment (including tax and insurance) of around $3,400 something a month. This is well above the recommended 28% of the monthly income of someone earning $113k a year.

PMI is nearly impossible to avoid - piggyback loans are not an option. One other option is to add another half percentage to your rate - but that is locked into the 30 year fixed. So unless you can refinance later at a lower rate, the punishment for not having 20% will continue through the life of the loan.

OUCH!

]]> By: JWC http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11558 JWC Mon, 21 Apr 2008 15:05:42 +0000 http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11558 Every real estate pundit in the country should be required to read this article. May make them realize just how screwed up things are right now with no end in sight for years to come. Every real estate pundit in the country should be required to read this article.
May make them realize just how screwed up things are right now with no
end in sight for years to come.

]]> By: Cee http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11506 Cee Sun, 20 Apr 2008 20:09:17 +0000 http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11506 Doctor, thank you for the great service that you are doing here with the excellent analysis found on your site, bringing out truth from history... so glad to see sites like yours that are consistently informing the public. I feel that it's going to take nothing short of major pain (which may soon be coming) for people to wake up to the realities of basic economics and how screwed the current economic environment is. What continues to amaze me is how we got here. This used to be a country of laws and of values, where savings and financial stewardship was valued. Also, how did we get to the point where the Media is allowed to provide such misleading information, and people are allowed to make such terrible decisions with credit, and their future? Finally, Doctor, any thoughts on last August's meltdown, and what this coming August might look like based on what is happening? Doctor, thank you for the great service that you are doing here with the excellent analysis found on your site, bringing out truth from history… so glad to see sites like yours that are consistently informing the public. I feel that it’s going to take nothing short of major pain (which may soon be coming) for people to wake up to the realities of basic economics and how screwed the current economic environment is. What continues to amaze me is how we got here. This used to be a country of laws and of values, where savings and financial stewardship was valued. Also, how did we get to the point where the Media is allowed to provide such misleading information, and people are allowed to make such terrible decisions with credit, and their future? Finally, Doctor, any thoughts on last August’s meltdown, and what this coming August might look like based on what is happening?

]]> By: John B. http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11491 John B. Sun, 20 Apr 2008 16:29:33 +0000 http://www.doctorhousingbubble.com/sheep-back-to-the-slaughter-lessons-from-the-great-depression-part-viii-all-the-change-and-bear-market-rallies/#comment-11491 As usual Doc. a great interweave of past and present. The idea that a cheap dollar will increase exports and reduce debt is a fallacy. It may have been the solution years back when the Dow Industrials were actually goods producing industries. However, today that is not the case, eight of the companies listed on the Dow are there more because of capital requirement than their ability to produce goods. The loss of dollar value results from excess supply being pumped int o the system daily by the Fed. (as you have often noted) As usual Doc. a great interweave of past and present. The idea that a cheap dollar will increase exports and reduce debt is a fallacy. It may have been the solution years back when the Dow Industrials were actually goods producing industries. However, today that is not the case, eight of the companies listed on the Dow are there more because of capital requirement than their ability to produce goods. The loss of dollar value results from excess supply being pumped int o the system daily by the Fed. (as you have often noted)

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