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Post in 'The Inglenook' started by papa bears stove, Aug 30, 2012.
Its my best year ever already with well over a 1/4 left.
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Now THATS what I am talking about.
Kick arse, SJ
Actually the education loan situation is:
1. getting worse
2. tying up dollars
3. preventing those with them from being able to either afford that housing (that someone thinks is coming back),
4. screwing up their credit ratings to the point they won't even qualify for sub prime loans (you remember them don't you).
That is provided the holders of those loans actually can find a job (want fries with that) that pays a decent wage.
There are a lot more foreclosures that will hit the market.
I've seen several real estate bubbles and they pale in comparison to the current mess however I don't think most people understand how bad the current mess still is.
But it isn't just real estate bubbles that cause issues, consumer and commercial loan missteps can also dump the economy.
Slowly, but factually accurate.
The big shake up is done. Not that there couldn't be small tremors, but we are essentially at the bottom and starting to climb back out. The board feet of drywall being made/purchased is slowly increasing. This doesn't happen unless construction is consuming.
Well let's see:
Through 2011: http://www.statisticbrain.com/foreclosure-home-sales-statistics/
and the July 2012 foreclosure rate heat map: http://www.realtytrac.com/trendcenter/trend.html
Still no look all that good Jags.
Very available student loans drive UP the cost of education. When students are more likely to take a big loan, colleges will charge more.
It ain't all homes, Smokey. Commercial is trending up.
Ah the commercial side still needs customers and those customers have to have a reason and the means to purchase.
I've been watching the parking lots (and spend a bit of time) at a number of places and wondering who is going to close first if not at the same time.
Now I understand that I'm in Maine and may not be seeing the entire commercial picture but I also haven't been hearing any long glowing screeds from the MSM either.
I'm not doubting that it is a real problem - and, in fact, it is being addressed (or attempted to be) in various ways - BUT, I'm failing to see the scale thing. In a country worth 200 Trillion - with a yearly turnover of 15-20 Trillion, it seems difficult for 1 trillion in (mostly) good debt to create a crash.
IMHO, the real problem was again the unleashing of "private sector" loan sharks onto the unsuspecting public. That is, there has been an explosion in for-profit colleges and schools of all types, and they took advantage of the Fed. Loan guarantees to hang balls and chains on a generation...
Lots of these schools targeted veterans (lots of them with access to GI bills) to obtain $$$ from the Gubment.
Be all that as it may, it sounds like a lot of misery, but not earth shattering when compared to the vastness of the US Economy.
Foreclosures are a FAR lagging indicator.
I remember right here on Hearth.com - long discussions in 2007 and 2008 when many of our buddies here claimed things were not so bad because the foreclosure rate was so low. This was well after the crash had started, but it took a couple years for folks to know about it.
The same happens on the far end. Those who have hung on in the ridiculous hope that things would improve vastly (they did improve, just not vastly...nor can they even do so) now have to bite the bullet.
Also, banks and other institutions delayed foreclosures - it looks better on the books to let them stay as "good" loans and only clamp down on a percentage of them each year.
I think you are about spot on, Craig. The crash started at the end of 2005 and into 2006. 2006 was the biggest year we have had in history (my co.) - and we KNEW is was about to tip over the edge (had actually been prepping since 2005 - saw it coming).
We (my company) are at the leading edge of what is coming at us for the housing/commercial markets. We are looking at a slow climbing hill in front of us.
Actually webbie the foreclosure mess was a well known entity in 2006 while folks were still trying to get everything they could from the real estate market, it was during 2006 that home sales started to slow and prices started to correct.
You wouldn't have gotten me to say that things weren't so bad in 2006.
You have to play out the educational loan situation in light of current economic possibilities (student loans have traditionally had a problem with defaults) first the loans remove money that can be used for other purposes from the money supply, then they can make it difficult and in some cases impossible for the person with the loan to participate in the one activity that drives a very large fraction of the economy, the purchase of living quarters. Then since it is so easy to get them (sound familiar?) schools have no incentive to control what they charge (this starts the spiral).
Sort of like the US debt situation, eventually it becomes real money.
It wouldn't pain me to see the "every person should own a house" model of America transition to a more reasonable one. It will be painful while it occurs, but so many young folks move around these days that owning is sometimes a detriment to their finances in many ways.
If we could just get rid of oversized mortgage deductions at the same time, we'd be on a more solid footing.
You are correct in nothing what our economy WAS based upon...the larger question is what is will be in the future. Sure, everyone needs somewhere to live, but the House As ATM is over....and hopefully the era of McMansions and 0% down also.
Nope both zero down and McMansions are still around. Places are still soliciting home equity loans (which by themselves isn't really a problem see below last sentence).
Live well within your means and don't count your chickens before the eggs have hatched.
Now just what are you going to base the economy on? So far all I've seen lately is smoke and mirrors.
There will be a problem (related to the use of loans) every decade or two. People never learn from history and for sometime now the I want has overpowered the I need.
Agreed. A good sign going forwards is a move back to more modest housing with energy efficiency very high on the list. Also, smaller homes with more high end interiors are getting the nod. Who the heck wants to clean 3500 sqft?
The "House as an ATM" was a facade anyhow. The theory of "its worth what ever somebody is willing to pay" is part of what got us in this jam. It was a hyped up market. I purchased my home a few years before the bubble. I could have sold it for double what I paid. My home is NOW valued about 5000 over what I purchased it for. Basically inflation. It appears that I paid an honest price. Not everybody followed that logic.
I purchased my home a number of years ago for about $68,000 . . . a few years back I had a couple of realtors come through and they said with the renovations we had made it could easily sell for $150,000-$180,000 (less based on the renovations done . . . more based on the renovations we had planned which included a kitchen renovation and several other projects.) Hard to say what it would sell for now of course.
I do know that my wife and I are about 3 years out from paying it off . . . and about 9 or 10 years from my "soft" retirement (I can retire at that point . . . but will in reality either continue to work or will find a new career as I will need health insurance). At that point we plan to consider "down-grading" in size . . . and we've already started talking about our "retirement home" -- keeping in mind that we want it smaller for ease of cleaning, heating, taxes, etc.