The Solution To The Housing Crisis Is.........

[Drizzay 745]

I worked in the Sub-Prime world back in 2005-2011.  What a world it was!

 

Greedy brokers and maybe the dumbest of dumb American borrowers.

[Ron_Artest 2,226]

Maybe we can combine a 50 year variable rate balloon payment with zero down, no work requirement and 12 months no PMI.  What could go wrong?

[TimHauck 3,311]

1 hour ago, jonnyutah said:

Maybe we could change the terms a bit. Maybe you pay a little more, you dont have to pay for repairs or lawn care and you still dont gain any equity. We could call it house borrowing or something. 

 

Just deport all the illegals right?  That will surely bring down prices of $500k+ houses in the suburbs right?

lol

[Fnord 2,524]

While this isn't necessarily in the same vein as what is being discussed, I think 3D printed homes are probably the wave of the future. Once they can scale up operations, find the "magic formula" for building materials, and tradespeople get some experience working on them, they seem like a valid part of making home ownership easier.

Understanding @easilyscan's loathing of getting gov't involved, I still don't see how any realistic options don't include gov't subsidies and probably some kind of restrictions on who gets to buy "affordable" housing. Companies like VRBO and AB&B are greatly exacerbating the problem by making it more profitable to own investment properties, further shutting out first time home buyers.

[jonnyutah 547]

4 hours ago, TimHauck said:

Just deport all the illegals right?  That will surely bring down prices of $500k+ houses in the suburbs right?

lol

"Omg look at me everybody, I dont understand upward buying pressure on necessary items!"

-timhauck

[Drizzay 745]

5 hours ago, Ron_Artest said:

Maybe we can combine a 50 year variable rate balloon payment with zero down, no work requirement and 12 months no PMI.  What could go wrong?

Interest only too!

Interest only Balloon Notes as a 2nd mortgage were quite popular with the sub-prime borrowers back in 2006.

[jonnyutah 547]

Lets get rid of the 620 credit score minimum!

[nobody 2,889]

Japan was offering 100 year mortgages back in the day when their housing prices skyrocketed.  I don't know if they still do that today.

It's all bad.  People need to stop buying stuff they can't afford and housing prices will stop going up.

[Strike 6,023]

I don't really have anything specifically against 50 year mortgages, although I did run the numbers on a mortgage calculator today and for a $320k loan at 6%, the difference in monthly payment going from 30 year to 50 year was about $200, from about 2k to 2.2k.  The total payments went from about 800k to about 1.2 million over the life of the loan.  This is consistent with numbers someone posted up above.  So the relief gained from adding 20 years to a loan just isn't that significant, and the total amount paid is pretty significant.   Also, adding more people to the home buying market will likely result in higher prices to buy a home which may offset and financial benefit from adding 20 years to the length of the mortgage.  

That said, I've always been a proponent of buying vs. renting for the following reasons:

1)  If you rent you gain nothing.  Real estate pretty much always increases in value over time so unless you're bailing in a year the risk is almost non-existent and you usually gain equity over your time in a purchase that you don't in a rental. 

2)  You gain cost certainty with a purchase that you don't in a rental.  I worked with a kid who was renting and waiting for the PERFECT starter home.  He had his wish list and didn't want to buy until he found it.  In the meantime he lived in a one bedroom apartment in Denver during a period of time when prices were going through the roof, both for rentals and purchases.  He could have easily purchased a one bedroom condo equivalent or better than his one bedroom apartment but because it wasn't his perfect starter home he didn't want to do that and just kept moving every year when his lease expired and the rent went up too much for his taste.  

The reality is, we have the most incoming immigration of any country on Earth.  This includes our legal immigration pathways.  It's not just the illegals.  So we're constantly squeezing our housing markets, especially in the more desirable cities to live in.  We either build more or curb immigration to take that pressure off the market.