Everybody Panic Over Home Prices

by Hal_10000

Posted by on 12/15/08 at 10:48 AM from

CNN is apparently incapable of any critical thinking these days.

All the Major cable news outlets seem to have that problem these days, Hal.

Posted by Miguelito on 12/15/08 at 05:09 PM from

It is inconceivable that a news site like CNN would make it their headline.

Scaring people sells… it’s not a shocker to me.  Definitely not inconceivable.  Most of the MSM gave up on any real journalistic principles, in favor of maximizing profits, ages ago.

But more importantly, houses were never worth what they were at that the top of the bubble.

I still love the morons that whined about any projects being built in our neighborhood that might lower the value of their “$1/2 million homes” they were stupid enough to overpay for. 

According to zillow, my house is still worth ~$90k more then I paid for it.  Then again, I didn’t get suckered into buying a massively over-valued home.

True, some people bought at the peak of the market and are hurting now.  But if they hold on to those properties for long enough (and granted this might be decades), they’ll recover some, if not all, of their value.

If it’s your actual home (vs an investment/rental property) it shouldn’t really matter anyway.  Unless an unplanned move comes up, you’re going to continue living there, so who really cares what mythical “value” it has… you’re not selling.  Note that even insurance doesn’t massively rise according to market bubbles (at least mine didn’t) because the cost to actually replace the home is more realistic, based on the needed supplies and labor, vs what it might sell for.

Posted by on 12/16/08 at 12:06 PM from

You are forgetting about the “free market” developed noose on which they currently swing, the No-doc+ARM mortgage. Free of government regulation to tell them they were not operating in their best interests, Greenspan and the rest of the Ayn Rand dittoheads clutched their risk models and credit ratings like a security blanket through the Bush-Clinton years.

Without the Alt A or option ARM mortgage, this boom never would’ve occurred.”

It never would have occurred because without the Alt As and the option ARMs, many buyers never would have qualified for a loan. The banks and brokers were getting their money up front in fees, so the more they wrote, the more they made.

“They stopped checking whether the income was even real. They turned to low and no-doc loans, so-called ‘liar’s loans’ and jokingly referred to as ‘ninja loans.’ No income, no job, no assets. And they were still willing to lend,” Tilson says.

“But help me out here. How does that make sense for the lender? It would seem to be reckless, in the extreme,” Pelley remarks.

Why did the banks shoot themselves in the face? Because the CDS markets (unregulated) and the credit agencies (unregulated) made it look safe on paper. There was always a market for the mortgage, mine was bought-and-sold thrice in the first two years.

Government did create this bubble, but not in the way your talking points seem to be telling you. Rather than “loans to brown people”, the government failed to regulate a series of markets, layered on top of each other, which were easy for big investment houses to game. The only silver lining is that that it killed the entire industry (no pure-play investment houses left).

In other words, more government was needed. Not less.