Sep
30
Unreasonable home prices and mortgages will cause a major recession?
Filed Under Renting & Real Estate
KnottedBrain asked:
Having to pay $700,000 (not including taxes, lawyer fees, engineer, and a bunch of things) for a home that is really worth only $250,000 (and really was listed at that price a few years ago) is going to cripple the economy. Taking out loans in huge amounts will result in skyrocketing mortgage payments and massive (and unfair, imo) profits for the banking industry. The banking industry makes an insane amounts of money and does not adjust their interest rates accordingly with the public that has deposited their money into the bank.
PERCY
Having to pay $700,000 (not including taxes, lawyer fees, engineer, and a bunch of things) for a home that is really worth only $250,000 (and really was listed at that price a few years ago) is going to cripple the economy. Taking out loans in huge amounts will result in skyrocketing mortgage payments and massive (and unfair, imo) profits for the banking industry. The banking industry makes an insane amounts of money and does not adjust their interest rates accordingly with the public that has deposited their money into the bank.
PERCY
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3 Responses to “Unreasonable home prices and mortgages will cause a major recession?”
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You have over looked the immigrant factor. To people from china and Europe our prices are cheap. And the United States is one of the few countries in the world where people who are not citizens can buy property.
You are right to blame it on Greedy Realtors, Developers, Banks, and Politicians.
Ha ha…
I get a kick out of responses (like the above) that blame the economy on greedy REALTORS…wouldn’t it be great as a REALTOR to have that much control!
I’m afraid that the rising house prices have nothing to do with REALTORS and more to do with you! The average “joe”!
It is the greed of the homeowner who has to make $100,000 profit on the house they bought 1 year ago, and $20,000 more than the neighbor who sold the exact same house 1 week ago.
It is the greed of the homebuyer that isn’t happy with staying in budget but wants to “keep up with the Joneses” and spends more on a house because of ego.
It is the greed of the “big property owners” (this being the lenders of money) who invent more ways that allow people to spend more than they can afford; Interest only mortgages, 30 and 50 year amortization periods - to name a few.
The Real Estate Market is supposed to be a perfect market. Economics 100 will tell you it’s supply and demand. If the demand is high and supply low the prices will rise. People will only buy what they can afford.
Unfortunately the lenders have changed the playing field by offering these different products, much to the delight of the greedy homebuyers I might add! They can afford to spend more! The Seller can ask more for the house and have a better chance of getting it.
If the homebuyer can’t afford the price - the price will come down.
You don’t HAVE to pay $700,000 for that $250,000 house! Don’t pay it and the price will drop! It’s as simple as that!
Yep you are right. The good new is if the market can crash fast it will stop supper inflation if not a recession and hyper inflation.
What you said is true and this web site tell how they did it.