Tuesday, November 11, 2008
More bailout talk
The housing news seems to be about nothing but bailouts these days. The latest round of bailout news has been hitting the wire for the last couple of days. The more I look at these bailout ideas the more I believe the bankers and politicians are living in a fantasy world. They seem to believe that people want to stay in homes worth 1/2 what they paid for them. They think people will take on 40 year mortgages with little hope of making any money when they do sell. These bailouts might be of some help in Texas or Kansas. Places where the bubble was not so large and people were actually buying homes to LIVE in. In those locations there is a reasonable chance that prices ay recover before the turn of the next century. In bubble locations like California, Florida, Nevada and Arizona the prices were so inflated that prices may not recover for many decades. In addition many of the buyers were only buying houses because there was a chance of making a large profit. With the profit possibility gone does anyone think these people care to stay in these homes? Would you take on a 40 year loan with a balloon payment at the end just to stay in a house? Financially most would be far better of to default, take the credit hit, rent and buy again in 5 to 7 years. Prices will probably be about where they are today in 5 years. So they can buy low as opposed to taking some crazy low interest 40 year loan on a home worth 1/2 of the loan amount.
I just get more angry every time I hear of another bailout. When do the rest of us get our bailout? Why are current home buyers getting stuck with 6%, 7% or higher loans while those that bought more than they could afford get 0% bailouts. It's not the people that are being foreclosed on that should be screaming. It's the rest of us that should be in the news protesting about these unfair bailouts. It's BS I tell ya!