SorryCharlie

3 Comments

    • Fast and Easy Fannie [view article]
      I am with "Details" - It is mind boggling that people are still writing about the same old stuff. It is even more bewildering to see people slinging arrows and passing blame.

      The blame is everywhere - including any investor who turned a blind eye while ridiculous returns were paid out. Bottom line is that the incentive was and still is to sell the most profitable product one can. Think about what you do for a living - does the company you work for try to maximize profit? Do your sales people tell their own customers how to negotiate harder? Do you expect your company to provide your client advice on how to reduce the price they pay for what you offer? Does any investor these days want to put money in a company that like that?

      The only difference here is that the product is "money" instead of cars or furniture or soap. Brokers, LO's, Lenders, realtor's are all just salesmen. They are motivated by the same thing that motivates anyone who is working for a living - they are trying to make money.

      Until you monetize the incentive to provide the consumer the best solution instead of the most profitable solution - you will continue to have the same cycle over and over. Not easy to do in a capitalistic society - where the consumer is short sighted and no longer willing to pay for quality service.

      Until someone figures out that rule we all must live by another - Caveat Emptor (buyer beware)!       May 08 11:01 PM
    • Fast and Easy Fannie [view article]
      I am with "Details" - It is mind boggling that people are still writing about the same old stuff. It is even more bewildering to see people slinging arrows and passing blame.

      The blame is everywhere - including any investor who turned a blind eye while ridiculous returns were paid out. Bottom line is that the incentive was and still is to sell the most profitable product one can. Think about what you do for a living - does the company you work for try to maximize profit? Do your sales people tell their own customers how to negotiate harder? Do you expect your company to provide your client advice on how to reduce the price they pay for what you offer? Does any investor these days want to put money in a company that like that?

      The only difference here is that the product is "money" instead of cars or furniture or soap. Brokers, LO's, Lenders, realtor's are all just salesmen. They are motivated by the same thing that motivates anyone who is working for a living - they are trying to make money.

      Until you monetize the incentive to provide the consumer the best solution instead of the most profitable solution - you will continue to have the same cycle over and over. Not easy to do in a capitalistic society - where the consumer is short sighted and no longer willing to pay for quality service.

      Until someone figures out that rule we all must live by another - Caveat Emptor (buyer beware)!       May 08 10:59 PM
    • The Impending Mortgage Crisis [view article]
      Interesting analysis - but flawed in a couple key areas. First, as several have already pointed out, real estate will never move in national unison. I live in AZ, where we have an influx of over 100 people per day. Compare that to say...Detroit. I do not know the exact figure for their population trend, but my point is Demand for housing will always be a local phenomenon. Supply and demand.

      The author points out that heyday prices were not supported by rents - which was very true. But as former "owners" turn into "renters" and the inventory burns off in some of the "destination"... locales around the country, equilibrium will eventually be reached that will ultimately support housing prices. People need to live somewhere. At some point homes will present a desirable CAP rate to someone.

      While I believe the reset figures provided correctly show that inventory will be fed fairly consistently over the next 1-2 years buy "option arm/alt-a" foreclosures. I also believe builders have and will cut back substantially. It makes no sense to flood an ocean.

      Where is the bottom? The historical consensus has been housing should hover around 3 times household income with some variation added for level of desirability to location. So look at the local median household income for your answer. Or - what CAP rate would be attractive to a fixed income oriented investor whose only other option right now is a 3.5% CD, etc? Do the math, and there is another answer. And yes - that investor mat be from outside the country.

      Ultimately - housing is the dead horse. The bubble burst and it is deflating back down to fundamentals. There is the crux...while it may have been the catalyst - the fate of housing is now back in the hands of the economy. The cart is back behind the horse - the only pertinent question is "how sick is the horse"?

      If you believe Oil and Food cannot be contained...then the horse might already be dead - in which case who cares about housing costs as we will all be fighting one another to the death for a bag of rice at Wal-Mart.

      Or maybe there is a solution and American ingenuity will come up with some way to lower energy/food prices and pull ourselves out of this mess. I hope for the latter - but to be honest feel like it is a coin toss. I am just sick hearing about the "mortgage crisis". Please - that was like two crises ago. Now I am off to get back in line at Costco for my next 20lb bag and some bottled water.       Apr 23 11:47 PM
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