On Saturday, August 30, 2014 6:40:45 PM UTC-4, nestork wrote:
'Bob[_66_ Wrote:

;3278158']

Never give up control of something you own. Run away as fast as you can.



That's exactly why I don't like these "reverse mortgages" you hear

advertised on TV. Basically, you sell half of your house back to the

reverse mortgage company for whatever the price is NOW. Then 20 years

from now, when you pass away, your estate only collects half of what the

house sells for. The reverse mortgage company you deal with pockets the

other half.



When I was a kid, people built houses for $25,000 dollars. Those same

houses are now selling for 10 to 15 times as much.



People buy houses now presuming they're going to increase in value, and

it's exactly that presumtion that causes prices to go up on houses.


IDK about that. The price of a hamburger, gas, cars, and the vast
majority of all items we buy have gone up 10X too. They didn't go up
because people wished them higher. It's mostly inflation, ie the dollar
being worth less.




Each buyer figures he'll get more when he sells it than he paid, and so

the prices continue to rise with every flip. But, that situation is

unsustainable. Once the baby boomers that were born after WWII start

going into the nursing homes and cemetaries, their homes are going to go

on the market, and there will be a glut of houses flooding the market.

Then, prices will start falling, and all of the people that bought

houses as investment will try to sell them for what they can get, and

that will cause the situation to get even worse.



I thought we just had the real estate debacle of the century in 2008.
You mean it's coming again?



If people considered houses to be a commodity, which is what they are,

which is something you buy as you need it, like food, clothing and fuel,

there wouldn't be the steady increase in housing costs that attracts

investors, and there wouldn't be the volatility in housing prices that

we see.


The fact that everything it takes to build a house has gone up
isn't a primary driving factor? That in many urban areas, the supply
of land has gone down? If housing prices are high just because of
speculation, then you should be able to build houses and make a killing,
because the margin should be huge. Seems like that isn't happening.

I agree there is some truth to what you say. The debacle in 2008 was
due to a bubble and that bubble is driven to a great extent by govt
policy. If you work in a job, you can get taxed as high as 39%
federal and then state on top. If you speculate with the house you
live in, it's tax free for most people. And if you speculate on other
houses, it's still only taxed at 15%.





Back in 2008, there were thousands of people that bought houses on a

"teaser" zero percent mortgage. The mortgage would stay at 0 percent

for three years, and then jump up to 6 percent. Lots of people figured

"Great, I'll just keep this house and let it appreciate in value for

three years, and then sell it." It was those same people that are now

deeply in debt because their mortgage went upside down. The value of

their house fell below what they bought it for, and now they owe the

banks money on a house that's been foreclosed on them. Terrible

investment.


I guess that's what bankruptcy is for.