Foreclosures And Me
I was just solicited by a French woman seeking my support to stop home foreclosures for all the poor people who took out loans they can't really afford. Perhaps you've heard about the subprime loan market meltdown, the immediate threat of millions of hardworking people facing foreclosure on their little piece of the American Dream. Evict away, I say.
You see, as much as I sympathize with the simpletons who went out and purchased their dream home with little or no money down, a variable rate mortgage, and a subprime loan, I really see no reason why these folks shouldn't pay up or move out. The reason is fairly simple. This group of people artificially ran up the price of real estate. They were fueling the bubble that inflated real estate prices across the country making home ownership that much more difficult.
But at the same time, if hundreds of thousands of homeowners suddenly are evicted and banks and other lending institutions are left holding vacant properties, they'll need to sell them off pretty fast. And how will they sell these properties quickly? By cutting the asking price. This ultimately means that all this cheap real estate will drive down the cost of all real estate. Suddenly the market will have corrected itself, or more accurately, real estate will be a lot less expensive to buy.
The Fed has cut rates in the last two sessions, and likely will keep cutting rates in the near future. That means interest rates on mortgages are starting to come down. Low mortgage rates with a real estate market flooded with vacant properties means housing will suddenly be a lot more affordable for people like me who were smart enough to not out a mortgage I couldn't really afford at the height of a real estate bubble.
On the other hand, if the government bails out all these hapless fools who bought property during the real estate run up on credit they didn't deserve, that's rewarding the fiscally incompetent. Where's my bail out for being fiscally responsible?
You see, as much as I sympathize with the simpletons who went out and purchased their dream home with little or no money down, a variable rate mortgage, and a subprime loan, I really see no reason why these folks shouldn't pay up or move out. The reason is fairly simple. This group of people artificially ran up the price of real estate. They were fueling the bubble that inflated real estate prices across the country making home ownership that much more difficult.
But at the same time, if hundreds of thousands of homeowners suddenly are evicted and banks and other lending institutions are left holding vacant properties, they'll need to sell them off pretty fast. And how will they sell these properties quickly? By cutting the asking price. This ultimately means that all this cheap real estate will drive down the cost of all real estate. Suddenly the market will have corrected itself, or more accurately, real estate will be a lot less expensive to buy.
The Fed has cut rates in the last two sessions, and likely will keep cutting rates in the near future. That means interest rates on mortgages are starting to come down. Low mortgage rates with a real estate market flooded with vacant properties means housing will suddenly be a lot more affordable for people like me who were smart enough to not out a mortgage I couldn't really afford at the height of a real estate bubble.
On the other hand, if the government bails out all these hapless fools who bought property during the real estate run up on credit they didn't deserve, that's rewarding the fiscally incompetent. Where's my bail out for being fiscally responsible?
Labels: Real Estate
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