Rising home mortgage rates, almost a full percent from their lows. Home foreclosures, still over 18% more than a year ago. Do you really think the US economy is at a bottom?
httpv://www.youtube.com/watch?v=O9fim4IZJ5Y
3 thoughts on “Is The Worse Over For the US Economy?”
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Homes will always be unaffordable to the average person in high priced CA as long as government subsidize home owners in the form of mortgage tax deductions, and Fannie Mae bailouts. Remove the interest tax deduction and watch the prices correct 50%. This place a bottom on home prices and increase home ownership than further government meddling. The issue is affordability, not unemployment. Prices are still too high due to government tax policies and bad lending practices.
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In any case it is NOT a plateau – it ‘may’ be a bottom! I am not a doom-and-gloom guy, but real estate is not the investment of the future. ONLY if you can afford a house, even with lost income for several months, and you expect to live in the same area for MANY years should you buy. And an concrete example (my experience renting): the owner bought in San Carlos (public record) in 1998 for $1.4M, sold in 2007 for $1.8M — having collected ~$400K in rents, paid $110 in selling commission, 120K in taxes, $25K in insurance, and about $50K in maint. >> net in (400-110-120-25-50=95K) >> Assuming 100% interest-only loan at 6%: > interest payment: $84K/year> $672K > even at 50% tax savings (net of rent) cost= $536K (part of which will have to be paid at sale IF there is any gain) >> so 95K-536K > net expenses $440K >> IN ESSENCE NO GAIN (if not a loss) >> AND that in a time when prices were RISING rapidly.
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OK People, for those too dopey to attend Freshman Economics: Since 2001, the Federal Government has created a deficit of $3 Trillion. We’ve devalued the dollar and borrowed money from China; thus creating an inflationary, recessionary economy. While interest rates were artificially low, people borrowed mortgage money at the going rate. Mr. Berneke and his buddies created this situation and now they need to fix it. $25 Billion is only 2.5 months of budget for the Iraq war. Small potatoes
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