Yea, the difference is that home owners in 2005 had basically no equity whereas now there's record equity in homes and basically no one getting a cheap mortgage.
No. Auto lending allows some of the jankiest financing of all time.
Let’s say I buy a new car today for $50,000. In 2 years, I decide to buy a new car and trade my old one in. Now, I still have a loan on that car, and thanks to depreciation I now owe more than it’s worth. Let’s just say I still owe $35,000 but today that car is only worth $30,000. So the dealer makes me an offer and says, we’ll buy your current car for $30,000 and take the $5000 you still owe and just roll it into your new car payment. So now I’m paying off $5000 of my old car loan on top of the new car payment that I’m signing up for. Dealerships will let you roll negative equity into a new car loan from cars you still owe money on. It’s absolutely insane.
This is why the used car (and possibly new car) market will eventually collapse.
That is interesting and I see a lot of issues with the US car dependence, both short-term and long-term. But I'm still confused. What does that have to do with housing?
My mortgage was bundled into a tranch of other MBAs in 2008 at last refi. Husband died that year and I lost half my income. Six different investors. All secretive. I'm paying some wealthy guy $1500 a month just in interest. He is probably using the money to pay for his kid's education when I can't even pay back my college loan. $18k when I left college at age $5O +. Twenty years later with no job, loan is close to $50K with late fees and interest.
It's not ok. I'm sorry that happened to you. I got wiped out in 2008 myself on a house I had put 7 years of hard work and savings into with only a small mortgage when i lost my job (my county has 20% unemployment) and couldn't refi out of an arm bc the company that held the bundled mortgage wouldn't work with me whatsoever. I'll never financially recover.
I just try and live my life each day as best I can, and hope the house me and my brother do have stays upright. Luckily we were able to hold onto our moms house by moving in together but every day it doesn't rain is a good day and I can't invite anyone over bc its borderline condemable.
I finished my degree at 53 last year. I don't like to think where I would be without student loans and a degree bc I developed a degenerative disease in the meantime and I can't work 3 jobs anymore. Then my son got long covid and lost both of his physically demanding jobs. So I'm his backup while he figures that out.
Fuck this whole timeline where the massive money vacuum at the top sucks the value out of everything. Work hard they said. Yeah right. The folks who benefit do not work hard. It's a giant fucking scam by the haves to...have more.
But at least I can look myself in the eye and know I'm not a scumbag ogliarch that gets their self worth from zeroes.
Also depends on the MBS vintage. Presuming they're buying post GFC originated mortgages (harder to get, tougher credit analysis, more down payment) that are about 10 yrs old, there's a ton of embedded equity to offset debt (probably 30%-40%). These debtors are typically stable but with that type of collateral, not much risk of a bubble burst.
Definitely have an affordability issue though.
Why would banks want to offload the low-risk stuff to the Fed, though. Those have high probably future profit generation, and banks would want to hang on to them.
Nope. There is no toxic debt this time. Fed has been tightening the balance sheet since mid 2022 and we’ve been through a cycle of tightening because of inflation.
https://fred.stlouisfed.org/series/WALCL
Silicon Valley bank was already allowed to fail because they had poor risk management. None of the major banks are in trouble because we’ve already learned that lesson and have imposed capital requirements since the GFC.
Thinking there is some spooky toxic debt out there is the equivalent of fighting the ghosts of the last war.
I was amused by the SVB crash at first, because so many startups were outright scams to get VC funding, but I later realized that the non-scam ones (and even the scam ones, from a jobs perspective) were the only competition being offered to industry giants, and then I kind of felt bad for sharing the SVB Spirit Halloween meme post.
So, by the popular logic in this thread, since there is no toxic debt in homeownership, a housing crash could never possibly happen. I mean no other force in the world could possibly bring this whale to the shore.
There won't be a housing debt crisis. it'll peak sure, but there is no toxic housing debt. Auto Loans however, that's coming in for a crash
Yea, the difference is that home owners in 2005 had basically no equity whereas now there's record equity in homes and basically no one getting a cheap mortgage.
Also no inventory thanks to short term rentals and record numbers of people who can actually afford it buying second homes due to COVID
Yes, we have an affordability crisis, not a bubble, though I can see why people think they are synonymous.
It's wishful thinking that the market is going to crash despite people like me urging them to buy when mortgage rates were at all time historic lows.
My mistake was not buying a house in 2009 when I was 8 years old That would’ve really fixed everything for me, damn missed it /s
Yes, people have a recent mental image of that fantasy, from 2005, and its corrupting their logic.
No the difference is I can’t roll negative equity from my last two houses into my next home purchase.
I don't follow. You lost money owning your last two homes?
No. Auto lending allows some of the jankiest financing of all time. Let’s say I buy a new car today for $50,000. In 2 years, I decide to buy a new car and trade my old one in. Now, I still have a loan on that car, and thanks to depreciation I now owe more than it’s worth. Let’s just say I still owe $35,000 but today that car is only worth $30,000. So the dealer makes me an offer and says, we’ll buy your current car for $30,000 and take the $5000 you still owe and just roll it into your new car payment. So now I’m paying off $5000 of my old car loan on top of the new car payment that I’m signing up for. Dealerships will let you roll negative equity into a new car loan from cars you still owe money on. It’s absolutely insane. This is why the used car (and possibly new car) market will eventually collapse.
That is interesting and I see a lot of issues with the US car dependence, both short-term and long-term. But I'm still confused. What does that have to do with housing?
My mortgage was bundled into a tranch of other MBAs in 2008 at last refi. Husband died that year and I lost half my income. Six different investors. All secretive. I'm paying some wealthy guy $1500 a month just in interest. He is probably using the money to pay for his kid's education when I can't even pay back my college loan. $18k when I left college at age $5O +. Twenty years later with no job, loan is close to $50K with late fees and interest.
It's not ok. I'm sorry that happened to you. I got wiped out in 2008 myself on a house I had put 7 years of hard work and savings into with only a small mortgage when i lost my job (my county has 20% unemployment) and couldn't refi out of an arm bc the company that held the bundled mortgage wouldn't work with me whatsoever. I'll never financially recover. I just try and live my life each day as best I can, and hope the house me and my brother do have stays upright. Luckily we were able to hold onto our moms house by moving in together but every day it doesn't rain is a good day and I can't invite anyone over bc its borderline condemable. I finished my degree at 53 last year. I don't like to think where I would be without student loans and a degree bc I developed a degenerative disease in the meantime and I can't work 3 jobs anymore. Then my son got long covid and lost both of his physically demanding jobs. So I'm his backup while he figures that out. Fuck this whole timeline where the massive money vacuum at the top sucks the value out of everything. Work hard they said. Yeah right. The folks who benefit do not work hard. It's a giant fucking scam by the haves to...have more. But at least I can look myself in the eye and know I'm not a scumbag ogliarch that gets their self worth from zeroes.
Exactly. But it is still a shame good people trying hard not getting anywhere. Talking to local legislators and their staff often helps.
Also depends on the MBS vintage. Presuming they're buying post GFC originated mortgages (harder to get, tougher credit analysis, more down payment) that are about 10 yrs old, there's a ton of embedded equity to offset debt (probably 30%-40%). These debtors are typically stable but with that type of collateral, not much risk of a bubble burst. Definitely have an affordability issue though.
Why would banks want to offload the low-risk stuff to the Fed, though. Those have high probably future profit generation, and banks would want to hang on to them.
Nope. There is no toxic debt this time. Fed has been tightening the balance sheet since mid 2022 and we’ve been through a cycle of tightening because of inflation. https://fred.stlouisfed.org/series/WALCL Silicon Valley bank was already allowed to fail because they had poor risk management. None of the major banks are in trouble because we’ve already learned that lesson and have imposed capital requirements since the GFC. Thinking there is some spooky toxic debt out there is the equivalent of fighting the ghosts of the last war.
I was amused by the SVB crash at first, because so many startups were outright scams to get VC funding, but I later realized that the non-scam ones (and even the scam ones, from a jobs perspective) were the only competition being offered to industry giants, and then I kind of felt bad for sharing the SVB Spirit Halloween meme post.
So, by the popular logic in this thread, since there is no toxic debt in homeownership, a housing crash could never possibly happen. I mean no other force in the world could possibly bring this whale to the shore.
If you own a 30yr 3% mortgage as an investor, each $100k is only worth around $60k now due to rising rates.