Our Economy

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Re: Our Economy

Postby Trumpetmaster » Thu Feb 10, 2005 12:17 pm

BTW - The cost of housing here on Long Island with the high property taxes has forced many of the younger people to leave the Island. Those who stay remain at home with their parents in order to save money. Even if both husband and wife work, it is sometimes not enough money and they may be working 2 jobs just to get by.
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Re: Our Economy

Postby OperaTenor » Thu Feb 10, 2005 12:29 pm

Hi RC,

I have one question about the article. Didn't the last downturn in the housing market follow a stock market crash? I'm thinking about the 89(?) crash followed by the early 90's housing market slump, unless they're unrelated?
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Re: Our Economy

Postby RC » Thu Feb 10, 2005 1:56 pm

Well heck, I really don't know but I could speculate all day. :D

There is a lot of discussion about correlation between housing and the stock market but LOTS of things effect the markets (obviously), and they get all twisted over international issues too. You know...stuff like wars and oil. ;) ;)

But it's abundantly obvious, to me anyway, that the interest rates were lowered quite intentionally to kick start the economy. And the immediate effects show up in housing.

Shap made a statement about banks/lenders not loaning you money if you can't afford it but banks are really pretty short sited (not like they're doing a booming business in CD's :roll: ), and I'm REALLY glad you brought up the last "slump". Remember all the repo's? Holy cow - what a nightmare. It could happen and I think it probably will.
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Re: Our Economy

Postby RC » Thu Feb 10, 2005 2:02 pm

You know, there is plenty of evidence to indicate that you can borrow more than you're worth and this does tie in with what Shos started.

Look at what some of the other posters comments about debt. Now that wouldn't be hard to GOOGLE.

Without looking, I'd guess that American's savings rates are 2% or less right now.
A man is the sum of his actions, of what he has done, of what he can do, Nothing else.
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Re: Our Economy

Postby OperaTenor » Thu Feb 10, 2005 2:11 pm

Yes, my gig on it was the guy stated that the stock market always followed the housing market. If they were connected, they didn't follow that pattern last time, right?

I was unemployed for ~4 months in 94, and thought I might like to get into real estate. Talk about bad timing. While I was studying, I worked evenings in a Century 21 office calling expired listings(this was in Temecula, CA, where there were scads of new developments). The VAST majority of the folks I called were upside down on their mortgages(I called ~150 every evening), and were in danger of being repo'd/foreclosed. (Most of them also had extremely derogatory things to say about the realtor I worked for. It was ugly, but I learned some new and creative profanity in the process.)
I also recall that as a period where there was such a glut of foreclosures, the banks were doing just about anything to forestall foreclosure. They had a hard time turning the foreclosures they did have on their hands.

That slump was a net ~25% drop in the housing market. With the fantstic overvaluation currently occurring, I wonder if the drop can be greater if/when it happens this time.

Jim "Chicken Little" B.
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Re: Our Economy

Postby RC » Thu Feb 10, 2005 2:30 pm

We shall see I guess. I think you and yours are approximately same age as me and mine and we are in the crosshairs as far as the economy goes.

I think we have a long way to go and by then, we will have lost our chance. We made a run for the top and didn't quite make it just through fate but there is the ever tempting dive for the bottom still. :( (that would be a Dad quote).
A man is the sum of his actions, of what he has done, of what he can do, Nothing else.
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Re: Our Economy

Postby piqaboo » Thu Feb 10, 2005 3:15 pm

Au contraire, Shap.
For reasons I do not begin to understand, Banks will very happily lend you money you cant repay. I have no idea why, but they will.
The bank was DELIGHTED to approve me for an ungodlyhigh mortgage loan, on my salary alone.
I couldnt service that loan amount. I couldnt service HALF that loan amount. Using 100% of my take-home pay. (Skip eating, lighting the house or heating it.)
But they were QUITE willing to loan it to me.
Altoid - curiously strong.
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Re: Our Economy

Postby OperaTenor » Thu Feb 10, 2005 4:36 pm

What she said. I refinanced my house and borrowed an extra $38,000 from my hospital bed with no sure prospect I'd be able to work again to make payments.

Methinks the banks are speculating on a bullish housing market, and anticipate they'll get their profit even if they have to foreclose.

Pretty durn short-sighted if you ask me, given the history of 15 short years ago.

But then, short-sightedness goes hand-in-hand with supply side economics, IMNSHO.

:D
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