Hear about how much debt everyone in the US has all the time, curious about some of your stories!
My bad debt is 10k left on a school loan from a for profit school that is now out of business.
Only other debt is house.
So how are you all doing with debt management?
You know what’s neat?
In 2008 the economy tanked because the banks had made a habit of cough approving mortgages that they knew people couldn’t afford in the long run. Then they auctioned off those subprime mortgages to smaller banks, and played hot potato until oopsie, economic depression.
If we’re in this boat, who the fuck is buying a home, who approved their loan, and how the fuck is 2008 not right around the corner again?
Good thing we bailed them out.
Thankfully, we are not at risk of another 2008 housing crash at this time - or at least not for the same reason.
The extremely (almost irresponsibly) abridged version of the 2008 subprime mortgage crisis is that banks were giving out loans to people who could not afford to pay them.
The similarly simplified version of what’s going on today is that people cannot afford to take a mortgage and aren’t getting them. Back in the bad old days loan officers would have given out the mortgages anyway to boost their numbers and the bank would have bundled that loan with others to hide it and started the game of hot potato. That isn’t what’s happening today.
That’s not to say a market crash the size of the '08/'09 crash won’t happen, or won’t happen soon, or won’t be caused by the housing market. It’s just that the circumstances that triggered the 2008 crash aren’t present today.
The extremely (almost irresponsibly) abridged version of the 2008 subprime mortgage crisis is that banks were giving out loans to people who could not afford to pay them.
This is the comparison I’m drawing, because it’s what is happening again.
A 200K home mortgage isnroughly 2000/mo. It’s not doable for median income, and the .median house price is like 380k right now. The math doesn’t check out.
Yes. Today you’ll hear people online talking about how mortgages are unaffordable. If they somehow decided to apply anyway the bank would reject them.
The difference between now and the years leading up to the 2008 crash is that loan officers would have given people those mortgages despite the payments not being doable as you said.
A lot of banks were offering variable rate mortgages that had lower interest for the first few years of the loan and advertised this lower monthly payments. This would get applicants in the door. When they asked about the later interest increases (that would bump the monthly payments higher than they’d be able to afford) they were assured that they’d be able to refinance their debt.
This and other shady sales practices are not happening today largely because federal regulations and oversight placed after the fact.
The TL;DR is that the math on mortgages doesn’t check out for a lot of people. In the early 2000s banks were more than happy to give you a mortgage anyway. That simply isn’t happening right now.
There’s no subprime market ready to collapse. This isn’t a housing bubble. The increase in prices is partially demand and partially inflationary imo.
Interest rates will keep prices level but we aren’t going to see a crash cuz all those companies are cash flush after the ppp fraud and rental Rates skyrocketing. The only houses on the market are ppl who have to sell or ppl who died.
No one wants to jump out of a 3.2% mtg and into an 8% one
I think the interest rate has a lot to do with the declining value of commercial real estate. I think the banks are trying to cover losses. Small businesses going fully remote makes it difficult to sling commercial real estate at the old rates.
I think this is also behind the odd fetish of returning to the office we read so much about.
