Home Ownership

[Synphul]

Originally Posted by Gatordash [You must be logged in to view images. Log in or Register.]

Every realtor/loan officer I talk to says a crash like 2008 can never happen again because we have all these restrictions in place so you can't give out bad loans to people. Yet housing prices and inflation is outpacing wages pretty significantly so I don't get where they are finding all these high income earners to keep buying these super expensive homes.

Of course they'd be saying that. Most realtors/loan officers I know are financial idiots that have the financial knowledge of a high schooler. They fill in forms and kick it upstairs to people/algorithms making the decisions. Loan officers are mostly data entry people, and realtors, I shouldn't even have to tell anyone about how much you can really trust the majority of realtors on money matters.

Someone I know just got a loan on a million+ dollar house with $200k in equity on their existing home that they have to sell for contingency. She's an elementary school teacher (with no higher degrees) and he's a small-time project manager making less than 150k gross with two kids. By the time you add in the high property taxes and insurance in that area I don't see how they will manage without living on the bone. I know they got a recent ~50k settlement from a car accident but the numbers simply don't add up to be sustainable because they don't like to live modestly. They are looking at paying at least $4k/month for a mortgage/insur/taxes/hoa before monthly expenses. I can tell he's already sweating bullets, but doesn't have the balls to stand up to his wife and tell her how bad of a decision this is for them.

Not to get political, but Trump rolling back some of the Dodd-Frank regulations was a bad move in the long run imo. This was in theory to make it easier to lend to less qualified applicants again to help invigorate economic buying power for a lower income-secure sector of consumers. The next crash, if we don't see multiple smaller crashes before a big one, will be from banks not having to keep enough liquid capital in reserve to cover their loans (the minimum percent liquid vs extended was lowered) thus crying for another bail out, a high percentage of people borrowing against their home for cheap money and not being able to pay it back when home volumes drop or they lose a job, all combined with a cooled off or dropped-out housing market.

2020 and early 2021 is an anomaly in economics, imo, so where we go from here is somewhat uncharted territory. The country was propped up by goverment money and people that kept working having extra money to spend because they couldn't go out and spend it at their normal spots/activities. Add to that the mass exodus we're seeing of people living in major cities to the burbs or rural areas because they found out just how bad the big city blows when shit hits the fan and we've got what we're seeing today.