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#1

Off-Topic / Re: Mortgage Payments should b...

Last post by Max Rockatansky - Today at 11:45:38 AM

And reduce by 75% the amount of people willing to build a house since they wouldn't have any idea how much it would cost in five years.

The only thing that's certain in life is death and taxes. By taking away much of the potential profits from speculation, this type of mortgage should dampen changes in home prices.

Why is that a good thing? I'm not exactly a capitalism absolutist, but appreciation in and if itself is not something to avoid.

It is something to avoid if you're a first time homebuyer who doesn't have an existing house to sell at an inflated price to finance the purchase of another one.

While I understand that home ownership is a large contributor to the wealth gap, there are plenty of places in the country where you can move and be able to afford a house if that's what you want to do.

And there's nothing "inflated" about the price. Prices change based on market conditions. Sometimes the prices of homes go down, too. My house is down about $40k from its peak value in 2021.

The house I owned during the pre-bubble era had a county assessed value of $575,000 in 2007.  Just last year it reached the approximate same numeric value.  It would need to be valued at approximately $866,000 to pace the value it had in 2007 with inflation factored.

#2

Off-Topic / Re: Mortgage Payments should b...

Last post by Max Rockatansky - Today at 11:41:41 AM

That's what my brother did in Indianapolis.  I kept calling him a slim lord for years after he sold.  Can't deny the fact that he made some money off of, even though it was a questionable act.

If they have some insight into the future and can see an area that may gentrify, they can make some money.  But in the meantime, they just hope their asset isn't destroyed.

In his case the angle was renovation (involving eviction) which led to gentrification.  It actually worked too given it was a downtown area.  He asked if I was interested in investing in it but wasn't my bag. 

#3

Off-Topic / Re: Mortgage Payments should b...

Last post by michravera - Today at 11:39:19 AM

And reduce by 75% the amount of people willing to build a house since they wouldn't have any idea how much it would cost in five years.

The only thing that's certain in life is death and taxes. By taking away much of the potential profits from speculation, this type of mortgage should dampen changes in home prices.

Why is that a good thing? I'm not exactly a capitalism absolutist, but appreciation in and if itself is not something to avoid.

... and it wouldn't achieve the stated goal. The super-rich, who can afford to speculate and pay cash, would simply buy low and sell high to someone who would be willing to accept an indexed mortgage scheme. The only way to keep people from speculating is to ban private ownership (in which case the commune is speculating). If that happens, no one is building (or even maintaining) houses, except under the threat of the whip. -- Next Idea?!

#4

Off-Topic / Re: Mortgage Payments should b...

Last post by kernals12 - Today at 11:38:06 AM

If the payment had shot up just because of a hot real estate market, I'd have lost the house in 2009 when I was out of work for a while and living off money I had saved up at my previous job.

Your being laid off was likely connected to the recession that happened that year due to the collapse of the housing market. In this counterfactual world, your mortgage payments would've gone down, giving you more money to spend just when you needed it most. Economists would call this a "countercyclical effect" as it dampens the impact of economic swings.

#5

Off-Topic / Re: Mortgage Payments should b...

Last post by kernals12 - Today at 11:33:00 AM

The current system is rather one-sided. If a borrower is underwater and gets foreclosed on, they still owe the difference between the sales price and the value of the loan, but it is extremely unlikely that the borrower will ever be able to pay that debt. On the other hand, if the sales price is higher than the value of the loan, the borrower gets to pocket the surplus. This asymmetry means all borrowers have to pay a higher interest rate.

[your earnings increase the longer you're in the workforce]

#6

Off-Topic / Re: Mortgage Payments should b...

Last post by 1995hoo - Today at 11:31:14 AM

I find it annoying enough under the existing system when the mortgage payment goes up because of real estate tax, which in turn raises the escrow payment. Over the years I've figured out how to come close to estimating what the new escrow amount is likely to be and then making a lump payment in advance to minimize the increase in the monthly amount, but it's almost impossible to avoid some sort of increase except in a year when the real estate assessment decreases—which has happened exactly once and the monthly payment dropped by $21 that year. (I kept on paying the same amount anyway—reduce the outstanding principal.)

My house's assessed value has gone up by about $460,000 since I bought it, although most houses around here sell for more than the assessment such that the current assessment is likely a bit low. Why should the mortgage company be entitled to anything more than the interest I contracted to pay them when I took out the loan? If the payment had shot up just because of a hot real estate market, I'd have lost the house in 2009 when I was out of work for a while and living off money I had saved up at my previous job.

... In 30 years a lot changes; the general price level rises thanks to inflation, your earnings increase the longer you're in the workforce, ....

The boldfaced is an unwarranted assumption.

#7

Off-Topic / Re: Mortgage Payments should b...

Last post by JayhawkCO - Today at 11:28:22 AM

And reduce by 75% the amount of people willing to build a house since they wouldn't have any idea how much it would cost in five years.

The only thing that's certain in life is death and taxes. By taking away much of the potential profits from speculation, this type of mortgage should dampen changes in home prices.

Why is that a good thing? I'm not exactly a capitalism absolutist, but appreciation in and if itself is not something to avoid.

It is something to avoid if you're a first time homebuyer who doesn't have an existing house to sell at an inflated price to finance the purchase of another one.

While I understand that home ownership is a large contributor to the wealth gap, there are plenty of places in the country where you can move and be able to afford a house if that's what you want to do.

And there's nothing "inflated" about the price. Prices change based on market conditions. Sometimes the prices of homes go down, too. My house is down about $40k from its peak value in 2021.

#8

Off-Topic / Re: Mortgage Payments should b...

Last post by kernals12 - Today at 11:21:42 AM

And reduce by 75% the amount of people willing to build a house since they wouldn't have any idea how much it would cost in five years.

The only thing that's certain in life is death and taxes. By taking away much of the potential profits from speculation, this type of mortgage should dampen changes in home prices.

Why is that a good thing? I'm not exactly a capitalism absolutist, but appreciation in and if itself is not something to avoid.

It is something to avoid if you're a first time homebuyer who doesn't have an existing house to sell at an inflated price to finance the purchase of another one.

#9

Off-Topic / Re: Mortgage Payments should b...

Last post by JayhawkCO - Today at 11:13:41 AM

And reduce by 75% the amount of people willing to build a house since they wouldn't have any idea how much it would cost in five years.

The only thing that's certain in life is death and taxes. By taking away much of the potential profits from speculation, this type of mortgage should dampen changes in home prices.

Why is that a good thing? I'm not exactly a capitalism absolutist, but appreciation in and if itself is not something to avoid.

#10

Off-Topic / Re: Mortgage Payments should b...

Last post by jeffandnicole - Today at 11:06:57 AM

That's what my brother did in Indianapolis.  I kept calling him a slim lord for years after he sold.  Can't deny the fact that he made some money off of, even though it was a questionable act.

If they have some insight into the future and can see an area that may gentrify, they can make some money.  But in the meantime, they just hope their asset isn't destroyed.