Who’s gonna buy a house that isn’t actually worth 1M for 1M dollars? That has been the problem with the housing market for decades now. I mean, consider this…
There were people who bought a house in my parents neighborhood that was being forclosed on for 100K. They didn’t do ANYTHING to the house, and due to demand, the house all of sudden appraised for 135K. The new owners moved in, lived in it for a year, and then when they moved, sold the house for 170K. So with no improvements whatsoever, a house increased in value 70K…and we wonder how the hell it all happened.
When they can’t sell the house for what they THINK its worth, and can’t pay the mortgage anymore, what choice will they have?
Umm that isn’t how housing prices work, they are worth what people are willing to pay for them, not based on some calculation of how much the materials cost. I don’t know how you would go about changing that do you?
There is a reason they are rising that quickly in Seattle, bunch of hi-tech workers with a lot of money. No r4eason that should burst unless those companies crash. In any case, not much that can be done about it, supply and demand. And it’s localized so doesn’t present a danger to the entire financial system.
I’ was talking about the people buying a $1,000,000 now that was worth $350k four years ago. If their is another financial crisis they will be the first to walk out of their mortgages.
I know how housing prices work. That said, lets not act like appraisals dont play a huge part in this. An apprasial is nothing more than a cost valuation of the home itself, implied value notwithstanding.
Explain to me how a house that was worth 100K based on the house itself suddenly becomes worth 170K with no discernable change in the house itself. That is where the problem came in last time…overvaluation of a commodity for no apparent reason. Banks were left holding the bag for hundreds of thousands of houses that werent worth the paper the mortgage was written on, and in the long run WE ALL ended up paying for it.
Yup. There certainly is nothing new under the sun. Judging from the posts in the thread the people are once again deluded by paper money, and suffer the evils inflicted upon them by those in charge of printing and distributing worthless script.
Looks like the dominoes are starting to fall. Boa appears to be the first. I have to wonder why are these banks not doing a better job at mitigating these times? It seems they are depending on bailouts. I was young at the time but what happened to the savings and loan fallout of the 90s? I dont remember a bailout for them.
Huh? I’m not sure what “point” you are referring to.
JWK
“Of all the contrivances for cheating the laboring class of mankind, none have been more effectual than that which deludes them with paper money. This is the most effectual of inventions to fertilize the rich man’s field by the sweat of the poor man’s brow.”_____ Daniel Webster.