Re: Meg Munn chunters on...


>"Mark Sobolewski" <mark_sobolewski@xxxxxxxxx> wrote in message
>news:mark_sobolewski-8BFAAF.19121124092005@xxxxxxxxxxxxxxxxxxxxxxx
(snip)

>> >Mark wrote:
>> > Indeed! And home _building_ is growing as well. So even though
>> > there are many new homes being built in record number in my area,
>> > why are the prices still skyrocketing?

>> Heidi wrote:
>> Because there are city *limits*...boundaries. There is only so much
>> *land*
>> available for development within each city, town, district, etc. The
>> more
>> people move in, the more land is needed. The scarcer land becomes, the
>> more
>> valuable it becomes. Real estate prices rise as the demand grows.

> Mark wrote:
> Yet, new homes are being built even there are city *limits*.

Yes. In some cases, old houses are torn down and new ones built. In other
cases the city's or town's reserved vacant lands are released at market
value as building lots so they can be built upon. Existing land within a
city and town can also be redesignated from parkland to residential. In
other cases the city can negotiate expansion, making more land available to
be built upon. And again, pricing the land at market value.

> See, just because you put *limits* in astericks doesn't mean new
> homes aren't built. Strange.

I use astericks for emphasis. There tend to be boundaries for towns and
cities. The Crown, or State, can at times make more land available for
development. But even this land is not usually given to people for free!
Those days are long gone.

Nowadays, more often than not, you'll find big developers negotiating for
the release of land held in reserve. The developer then sells lots with the
houses on it. None of these new developments are cheap...unless they are
for social and subsidized housing at general tax-payer's expense.

>>Heidi wrote:
>> Or let's take the number of high-rise condos. Only so many buildings
>> exist.

> Mark wrote:
> Did you ever hear of something known as construction?
> They that this substance known as cement. Check it out!

Yes... see below:

>> As more and more people demand condos, being available only in limited
>> amounts, those condo prices rise. Sometimes the rate of building new
>> condos
>> is slower than can meet the demand of an influx of people. Sometimes
>> availability is calculated specisely in such a way that the prices remain
>> high on purpose, especially where demand is steady, ongoing and regular.

Did you even read the above paragraph?

>> >Mark wrote:
>> > A few things: Many home investors are buying interest only
>> > loans in the hopes of turning around the property later
>> > at a profit. This has given Greenspan some concern because
>> > all of those are coming due, SOON and they'll have to dump
>> > those homes ASAP or take a hit.

>> Heidi wrote:
>> And you're counting on massive numbers dumping their homes, rather than
>> take
>> that hit and carry on?

> Mark wrote:
> People get interest-only mortgages usually because they
> cannot afford to pay down the principle from the start.

Yes...so?

>>Heidi wrote:
>> What if that doesn't happen? Or, what if the
>> dumping happens, but the prices remain high anyways because enough other
>> people are still buying that will allow those prices to remain high?

> Mark wrote:
> THEN, by definition, there is no dumping since those people
> with the interest only mortgages would replaced by others
> doing the same thing: buying a property only to turn it around
> later.

I see. By dumping you mean abandoning...leaving behind the house? Not
bothering to sell it....just walk away from it? Is that right?

>>Heidi wrote:
>> Even
>> if bankruptsies occur and the banks repossess the houses, the bank will
>> still want to see a return on *their* investments.

>Mark wrote:
> Absolutely. HOWEVER, banks are not going to be patient such
> as homeowners who are willing to eat a 50 grand loss because
> they're going to live in the home anyway and wait for
> the price to come back up.

Banks actually don't want to repossess houses. They'll avoid it as much as
possible. They'd rather try working with the person who's caught short.
This may mean consolidating the debts so that the mortgage holder can
continue to own and live in that house.

> Mark wrote:
> I'll address this below when I discuss my situation as a renter.

>>Heidi wrote:
>> If the bank handed out
>> interest only mortgages then they're *not* going sell those homes for 30%
>> less! They'll hang onto the real estate until they get back what they
>> invested.

> Mark wrote:
> Yes, investment banks and institutions are well known to
> hold onto capital and ride losses to the bottom rather
> than liquidate and buy into a different market where they
> can make money IMMEDIATELY! :-)

Banks aren't too keen on having loads of houses to get rid of either.
They'll do anything to avoid such a situation to occur in the first place.
And to avoid that, they'll either consolidate the client's debts, offer a
reduced interest rate...anything...anything at all that would allow that
mortgage holder to hang onto that house. Only as an absolute last resort
will the bank take that house.

How many houses to you foresee the banks wanting to take back? Hundreds?
Thousands? Tens of thousands? How many? Whole suburbs? Is that what
you're waiting for? A great big rush for banks to seize houses and whole
neighbourhoods? Banks will never allow such a "dumping" to happen. It's
not profitable for them to do such things!

(snip)

>> >> Heidi wrote:
>> >> ...as opposed to what? Paying down your landlord's mortgage? Why
>> >> increase
>> >> his equity, when you can be building your own? Nothing irked me more
>> >> than
>> >> to be paying rent! I begrudged my landlord every penny! ;-)
>>
>> > Mark wrote:
>> > Actually, I'm not paying her mortgage.

>> Heidi wrote:
>> That doesn't matter. Any money you pay a landlord is *not* money you're
>> using to building something of value for yourself.

> Mark wrote:
> So you emphasized I was paying her mortgage and now it doesn't
> matter that I'm not.

It really doesn't matter what the landlord spends your money on. She could
be paying down her mortgage, she could be buying new furniture, she could be
burning it. The point being: The rent money is not money you're using to
invest into something for yourself.

>Mark wrote:
> And you're mistaken: I AM building something of value: I sock
> away about 300 bucks a month.

.....while spending $1,000 per month on rent. You're wasting $1,000 to keep
$300. That makes absolutely no sense at all..none!

Hey, but suit yourself, Mark. It's *your* money! *You* get to decide how
you want to spend it. ;-)

Good luck to you! ;-)

Heidi


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