Things We Read Today (21), Weekend
Bob Plain’s petit four of class warfare; CA’s bid for more pension fund dollars; a martial metaphor for regionalization; a downturn for the never-recovered; Coulter v. View mention of RI.
Continue reading on the Ocean State Current…
Bob Plain frequently writes about how rough his class has it, yet as far as I can tell (please correct me if I’m wrong, Bob), he hasn’t held a real paying job for an extended period of time and manages to live quite well while running his political blog, hanging around the statehouse, and going kayaking and bird watching during his ample leisure time. Do we have an answer yet as to whether he has been collecting unemployment this entire time? If that is in fact the case, how does everyone here feel about bankrolling RIFuture’s partisan political activity with their tax dollars?
“rents” and housing. During the great run up in housing prices one of the things which disturbed the “experts” was the disparity between housing prices and rents. The theory was that there was an equilibrium, when rents reached a certain level people would make the reach to buy house. During the great run up, rents remained relatively low; there was no real push to buy and control monthly housing costs.
Whole new concepts entered the thinking, “starter home” and “house as an investment”. The idea of re-financing to hold monthly costs down replaced paying off the mortgage. A whole generation adopted the idea of buying a “starter home” then periodically “re-financing” it to hold costs down while the value of the property soared. Eventually you “made” so much on the house you could “flip it” and secure a down payment on the shoddily built McMansion that you would never be able to afford. Idiotic explanations gained currency, “Prices are rising because we are catching up with California”.
Before we can expect “economics” to work its magic, a whole generation will need to rethink of a “house as a home” and not an investment. Everyone is waiting for “prices to recover” and bail them out. When you see a guy mowing the lawn of his McMansion, that is evidence that he can’t afford it.
“Finding More Buyers-In to the Pyramid”
Just a new tactic to trap more people into voting left. We’ll give you a pension even though we can’t pay for it but watch out for those nasty Republicans who want to steal your pension with their right wing radical pension reform ideas.
More years ago than I can remember, I read a study on real estate values in the Great Depression. The short is that real estate values were the last things to fall, and the last things to recover. The study focused on Atlanta, GA. I don’t recall if there were national metrics.
When hearing of foreclosures inthose days, it is well to remember that the “self amortizing” mortgage that we know today was a “reform” of the lending laws. Similiar to modern day commercial loans, home loans were for two, or three, years. Typically they were “rolled over” by the bank, but they didn’t need to be. If the bank needed cash, they refused to renew and called the loan. Failing banks calling loans caused as many foreclosures as did borrowers unable to pay.