<p>Simon Property Group is building a huge new mall in our town. They stiffed a bunch of banks recently by not paying the mortgages on their malls in other places so that the banks had to foreclose. Apparently they don’t have any problems getting further loans to build the new one in our town.</p>
<p>According to a story in the New York Times yesterday, some American cities are completely underwater. In hard hit cities like Orlando and Las Vegas, the total value of area homes has fallen below the total mortgage debt on those homes. Scary stuff.</p>
<p><a href=“http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html[/url]”>http://www.nytimes.com/2011/10/19/business/economic-outlook-in-us-follows-home-prices-downhill.html</a></p>
<p>“Apparently they don’t have any problems getting further loans to build the new one in our town”</p>
<p>Well…maybe the fact that my wife works for a developer and is going to lose her job is coloring my views.</p>
<p>Nah :)</p>
<p>Lizard, that is a great, but gloomy article…</p>
<p>There was an article that came out a couple of days ago…I can’t remember where…that talked about how difficult the economy is for
those over 55. Since I am 55, maybe that is coloring my views.</p>
<p>Maybe…</p>
<p>What I still think is a major problem is if you have 500,000 in
cash…which I know most don’t…and you need to keep that money in
safe and liquid short term instruments…you may make only 5,000 a year
on that money…I know seniors get SS…but they are getting killed on their money…just killed. I guess all those online retirement calculators
are bs.</p>
<p>“If you want you really help housing then lower mortgage rates to homeowners and homebuyers…instead of helping financial institutions…”</p>
<p>I agree!</p>
<p>Just an aside; Has anyone noticed that Lancaster PA, the state capital, has just filed for bankruptcy protection? Anyone?</p>
<p>Harrisburg! Lancaster is where Burt is from.</p>
<p>
</p>
<p>Dstark,</p>
<p>I cannot believe you said that! A seasoned financial guy like you! I can write a book or pointing you to two or three books about the cause of current state of financial downturn, but I would like to see your side of view and why you make a statement like the above.</p>
<p>I figure Las Vegas would have to be up there, since the Sister Wives family was able to find four empty houses to move their large families in quite quickly. </p>
<p>Not surprised to see Baton Rouge up there, as there was lots of building going on in anticipation of businesses/people relocating there permanently after Katrina. Unfortunately, people came back to New Orleans to live and work, while Baton Rouge continued developing without the population to support its growth.</p>
<p>Not at all surprised to see Indianapolis on the list. The metro area was one of the first places to see large foreclosure neighborhoods and although it is a city that wants to bring in business, it rates very low in educated workforce.</p>
<p>artloversplus…i don’t know…</p>
<p>if you lower the cost of something…demand goes up…</p>
<p>that’s what they taught me in economics…</p>
<p>(not totally true though…sometimes an increase in the price of something will cause demand to go up…like stocks)</p>
<p>but…really…if the cost of owning a house goes down…and people can really take advantage of this…by actually getting the lower cost loans…home prices will stop decreasing…and may even rise …:eek:.</p>
<p>At an extreme…how much more house can you afford …if interest rates were zero…and you could actually get this loan? You could actually afford to pay a lot more for a house, right?</p>
<p>It just makes no sense to me for the FED to keep lowering interest rates…without the benefit of this trickling down to the economy…</p>
<p>As an aside…And it looks like Europe is going to bail out its banks…in the name of bailing out Greece…I guess the Greeks don’t want to be bailed out…with all the rioting going on in Greece. ;)</p>
<p>The world is so Orwellian…</p>
<p>I didn’t realize Indianapolis had a mortgage problem… Did home prices go up much in Indianapolis?</p>
<p>I heard that the Minneapolis area is a mess…</p>
<p>On the flip side…people are able to buy homes they couldn’t afford before…</p>
<p>[cheap-retirement-homes-cnnmoney:</a> Personal Finance News from Yahoo! Finance](<a href=“http://finance.yahoo.com/focus-retirement/article/113679/cheap-retirement-homes-cnnmoney;_ylt=AhbTYtZZIFgyXrpHQIYT3f1O7sMF;_ylu=X3oDMTE1YjRmOW1vBHBvcwMzBHNlYwNmaWRlbGl0eUZQBHNsawNpYm91Z2h0bXlkcmU-?mod=fidelity-livingretirement&cat=fidelity_2010_living_in_retirement]cheap-retirement-homes-cnnmoney:”>http://finance.yahoo.com/focus-retirement/article/113679/cheap-retirement-homes-cnnmoney;_ylt=AhbTYtZZIFgyXrpHQIYT3f1O7sMF;_ylu=X3oDMTE1YjRmOW1vBHBvcwMzBHNlYwNmaWRlbGl0eUZQBHNsawNpYm91Z2h0bXlkcmU-?mod=fidelity-livingretirement&cat=fidelity_2010_living_in_retirement)</p>
<p>“If you want you really help housing then lower mortgage rates to homeowners and homebuyers…instead of helping financial institutions…”</p>
<p>???</p>
<p>Rates are the lowest they have been in years (or even ever) and the housing market is still crap. The problem, imo, is no one buys while prices are still falling. It will be cheaper next month, next year, in 2 years, etc, etc, etc. Since most need at least 20% down to get a loan it’s like throwing your money away. </p>
<p>The banks should have modified homeowners loans when this mess first started by lowering the principle but they just didn’t want to put the loss on their books because, for some absurd reason, they thought the housing slump was a blip and house prices would again go up quickly. So they foreclosed instead thinking they would reap a profit by selling it. Even their stubbornness re short sales is coming back (finally) to bite them as people just walked away instead, leaving the banks with a house they can’t get rid of, instead of accepting the short sale bid and taking a smaller loss. </p>
<p>"if you lower the cost of something…demand goes up…</p>
<p>that’s what they taught me in economics…"</p>
<p>Not always. Why buy something today when it will be cheaper tomorrow? That is what happens when you have deflation. </p>
<p>Until the excess housing is gone home prices will continue to fall.</p>
<p>If you allow homeowners who are underwater to refinance with lower rates…you will have fewer homes on the market.</p>
<p>The lack of new home sales is bullish for housing …some day.</p>
<p><a href=“Record Low New Home Sales In 2011 | Seeking Alpha”>Record Low New Home Sales In 2011 | Seeking Alpha;
<p>dstark, as a matter of practically that would have to apply to ALL residential mortgages, but unfortunately common sense is not on the menu. Yet.</p>
<p>Not yet…</p>
<p>[U.S</a>. Mortgage Fixes Won?t ?Shock and Awe? Economy - Bloomberg](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>
<p>“A federal plan to help homeowners refinance their mortgages is expected to reach fewer than 1 million borrowers, too few to give a jolt to the struggling U.S. economy, lawmakers and analysts say.”</p>
<p>The only way to turn around this economy is to increase employement, otherwise, it will be like Steve Jobs told Obama:“You will be one term president”.</p>
<p>Florida with its sluggish economy, high unemployment, and dire housing situation sure could use more, and better jobs.</p>
<p>[Florida’s</a> sinking feeling - St. Petersburg Times](<a href=“http://www.tampabay.com/opinion/editorials/floridas-sinking-feeling/1197596]Florida’s”>http://www.tampabay.com/opinion/editorials/floridas-sinking-feeling/1197596)</p>
<p>Good article, lizard. Time to cut the mortgage rates to existing homeowners…</p>
<p>On a 100,000 loan…if mortgage costs are cut 2,000 a year…all else being equal…home values increase at multiples of that 2,000.</p>
<p>Homes become more affordable for those living in their homes…so they may not have to sell, putting less pressure on the market. Home values increase so the homes are not so underwater, so people have more confidence in paying their mortgages. More home buyers can afford homes. </p>
<p>Also, the required down payments need to be adjusted lower. Financial institutions seem to get this wrong. As prices rise…they lower down payment requirements and when prices fall they increase down payment requirements…accelerating the moves in each direction.</p>
<p>One big problem though. If financial institutions lower mortgage rates…and lock themselves in to the low rates…and then rates rise…these institutions are buried. Borrowing short term and lending long term can be another death sentence for these institutions under this scenario. So…because the government can borrow long term at very low rates…the government has to step in…or somehow financial institutions have to be able to borrow long term at very low rates.</p>
<p>I notice that BofA has 20 year bonds yielding around 8 percent…so I doubt BofA is going to be able to step up to the plate and borrow cheaply long term. :)</p>