Traditional Values

[pgwenthold]

Yep, marriage is indeed the chief cause of divorce.

 

[Just thinking]

... If this article is to be believed housing prices in the US have spiraled upwards because of speculation by a few large financial institutions.

It includes a lot of hard figures too:

"During this time, the median home price increased at a compounded annual rate of 15%."

Thank you ... I really find it confusing when in the face of such hard data there are headlines claiming that home buying is more affordable than ever before. Perhaps more people are buying them, but let's balance that against foreclosures, OK? Or let's look at buyers as a percentage rather than as a raw number. Or single family buyers -- the home right next to my mom's is occupied by at least 2 families. It's a one family house and this is clearly illegal, but what tax collecting local government is going to stop it?

 

[The Don]

I just came across this article: http://www.larouchepub.com/other/2002/2924fannie_mae.html
Very interesting reading.
If this article is to be believed housing prices in the US have spiraled upwards because of speculation by a few large financial institutions.

It includes a lot of hard figures too:

Very interesting article especially the title and the date

This article appears in the June 21, 2002 issue of Executive Intelligence Review.
'Fannie and Freddie Were Lenders':
U.S. Real Estate Bubble Nears Its End

If you keep predicting the collapse of the property market, eventually you'll be correct.

I the UK, the rise in the property market IMO has been due to some or more of the following:

- Restricted supply of housing especially in high demand areas
- Increased income
- Low interest rates
- High demand due to family break-ups

Which has caused people to

- Buy property as an (sometimes their only) investment

 

[The Don]

Thank you ... I really find it confusing when in the face of such hard data there are headlines claiming that home buying is more affordable than ever before.

A number of reasons:

- The hard data in question may have been carfully chosen to make a point (the previous link I supplied presumably chose its data carefully to demonstrate how affordable houses are)
- Interest rates are currently very low from an historical perspective, it's relatively cheap to borrow money
- Incomes have done pretty well over the years as well
- People are finding different ways to finance homes
- An increasing number of people are inheriting money or getting help from parents

The other problem we have at the moment is low inflation. Back in the day when inflation was 10-15%, so long as your income kept pace your house payment would halve in real terms every 5-7 years so even if the payments weren't that affordable to begin with, they soon became so. Nowadays, with inflation at 2-3% it'll take forever for your payment to halve in real terms (or 25-25 years).

 

[Just thinking]

The other problem we have at the moment is low inflation. Back in the day when inflation was 10-15%, so long as your income kept pace your house payment would halve in real terms every 5-7 years so even if the payments weren't that affordable to begin with, they soon became so. Nowadays, with inflation at 2-3% it'll take forever for your payment to halve in real terms (or 25-25 years).

Ahhh, there's the rub, as you-know-who would say.

Back in the '80's I really tried to save for a home on my own, but inflation on home costs exceeded my ability to make the down payment (and mortgage payments). As time progressed the amount I needed was becoming more and more out of reach ... my income and savings did not keep pace with it.

Then, later on banks become savvy ... 5% down (or even 0%) and eventually interest only payments, as the risk for them to lose money was remote. If the owner's defaulted it was OK, even with no equity in it from them, because the home increased in value enough for the bank to still make money -- good money.

 

[egslim]

Thank you ... I really find it confusing when in the face of such hard data there are headlines claiming that home buying is more affordable than ever before.

Keep in mind though, the article points towards clear financial mechanisms as the cause, it makes no mention of social changes doing for this.

If you keep predicting the collapse of the property market, eventually you'll be correct.

That really doesn't matter. What the article does is point out that the housing price has become, among others, a function of speculation. It mentions the specific mechanisms responsible for this - MBS and REMIC, for example.

I the UK, the rise in the property market IMO has been due to some or more of the following:

From the article:
"In 1982, the disastrous Garn-St Germain law, which deregulated the banking system, was approved, removing the wise and longstanding restrictions which had severely limited the amount of money the S&Ls could invest in commercial real estate."
"In 1986, the Tax Reform Act was passed, which created tax breaks for speculative shelters in real estate."
Do those laws have equivalents in the UK?

From your link:
"“Although affordability conditions for first-time buyers have always lagged repeat buyers, they’re in a better position today, given historically low mortgage interest rates,”"
So the way I'm reading this, 'affordability' doesn't mean the ratio between their income and the price of an house has become any better, only that it has become easier to borrow the necessary money.
That doesn't contradict the statement that housing prices are on a steep rise - since such a rise decreases the risk run by the bank.

 

[jj]

Traditional Values - Buzzword - - Whatever can be used to inspire a "back to the future" regression to the bad old days, or to further the politicians' control of the population.