Armageddon for Home-Owners?

in case you haven't caught on yet, the treasury wants to kill the US economic system???

I don't think it was fannie, or freddie that caused the most recent collaspe, I think their standards were high enough that they avoided those riskier loans (till the gov't decided they should buy them to bail out their banker and wall street friends) that ended up being bundled up and securitized

but, I could be wrong.

reply to post by dawnstar


Actually it is the CFR/Trilateral/Bilderberg et all globalists who run the country that want to implode the U.S.

Nationalism is their enemy in globalism. I can pull out a ton of quotes... I keep one handy in my Signature you can check out...

We need to have some housecleaning and kick out the whole lot of them.

Originally posted by MRuss


Hey, I lived in Atlanta more than 20 years ago at the crest of the building boom. They were slapping up mini mansions while you slept. You could buy a beautiful four bedroom home for a bit less than $100,000 then.

It's a different world now, isn't it?

It is. And all for the better too...

reply to post by the.lights


actually, about 20+ years ago could put it just before the big S&L implosion. in which case, it was just another overinflated balloon designed to put money into the right hands and ended up hurting most when the thing popped!
by the way, alot of people, big fishies went to jail for that one....
where's the big fishies behind bars in our current one???

reply to post by dawnstar

Oh well the big fishies have all the money from those nice bonus checks they got when they propped up their profit numbers using the bailout money we gave them so they can pretty much buy their way out of justice, or at least postpone, postpone, postpone until it no longer matters?

Originally posted by brokedown
This is a market correction.

I can understand those who purchased their homes when they were vastly over priced would think that the bottom has dropped out.

This is a PUMP & DUMP scheme and we are witnessing the Dump side right now.

Think this through.

What is the TRUE value of the Lot the home is built upon ?
$30,000 ? $40,000, more, or is it in reality much, much less.

At $30,000 for one third acre lot puts the land value at $90,000 per acre. Come on who in their right mind would pay $90,000 per acre for subdivision land? Subdivision land is not worth more than $10,000 per acre, so right off we have these people who are willing to pay 9 times its value, what are they thinking ?

Next is the construction cost. If you have the skills and time a lone person can construct a home start to finish for between $10 to $25 dollars a square foot. This puts the construction cost for a normal 1500 sgft home at $37,500. WHY would someone pay $75 to $150 dollars per sgft running the cost well in excess of $200,000 for something that cost less than $40,000 to build ?

What are the thinking ?

I did build my own home, I did 100% of all the work, I spent $37000 for 10 acres and had $25,000 in construction cost. I have a 1200 sgft home on 10 acres for $62,000.

Sure, not everyone can take the time or has the skills to do what I was able to accomplish.

BUT, Don’t over pay for a home and then say the market crashed when you can not get someone else to make the same mistake.

Home buying Rules:

1, Never, Ever pay over $10,000 for a home lot.

2. Material cost will not exceed $25 dollars a sgft for a NORMAL home. ADD 10% for a brick home.

3. Contractors usually work on the Cost plus basis. That is normally 12-15%. But watch this as the contractor raises the Cost so he raises his share.

4. Rule of thumb is Double the material cost, this will pay the labor. i.e. materials $100 labor is $100. Any more than that you are getting taken.

4. NEVER, EVER pay more than $53 dollars a sgft for the TOTAL cost of a normal home. Anything more and YOU have overpaid.

As you can see the Home Market is way over valued.

People are waking up and the Smart ones are refusing to over-pay for homes. It is getting harder to find people who are willing to OVER-Pay by three or Four times the TRUE value of a home.

Great Post Brokedown

I would like to add to this with some research I did, in order to ascertain where the median house price in this country should be.

This is a graph of the average housing prices dating back from 1970 to 2010.

mysite.verizon.net...

And here is a graph of the median household income dating back from 1975 to 2009

www.davemanuel.com...

The general rule of thumb when buying a house is that it should be between 2x to 3x your annual income.

Looking at both graphs, it looks like the majority followed that rule until we hit about 2003 and then rocketed from there. Which corresponds with the end of the dot com bubble coincidentally. Makes it seem all planned

So, because wages have stagnated and not grown, I predict house prices to fall even further than what they normally would even at this point.

The household wage graph shows wages falling off a cliff in 2009 which is where the graph stops.

I'm sure 2010 was not any better.


Based on the 2-3X rule, the median house price should be around 120,000 dollars, and the 2010 housing graph shows the median price is still at 175,000 dollars

But, as household income continues to fall, that will also lower what the average household price should be.

We can't go back to before the bubble started, because wages have fallen before that point even.

Thoughts anyone?

It has begun.

www.smartmoney.com...

UPDATE:US Taking First Steps To Wind Down Fannie, Freddie-Official

WASHINGTON -(Dow Jones)- The Obama administration plans an immediate, if gradual, increase in fees, capital standards and down-payment requirements as it looks to wind down mortgage giants Fannie Mae (FNMA) and Freddie Mac (FMCC), a senior Treasury Department official said Monday.

"There are a number of policy levers the administration can use to wind these two institutions down," Jeffrey Goldstein, the Treasury Department's under secretary for domestic finance, said in prepared remarks to credit unions. "We will work with the [Federal Housing Finance Agency] to begin this process immediately."

The FHFA regulates Fannie Mae and Freddie Mac, which the government took over in 2008.

The Obama administration earlier this month outlined its plans to begin shrinking the government's broad support of the nation's crippled mortgage market, a process that officials said could take several years and would include phasing out the mortgage giants.

Goldstein highlighted raising the fees that they charge for guaranteeing home loans sold to investors, increasing the amount of capital they must hold to protect against potential losses and higher down-payment requirements on house purchases.

Together with federal agencies, Fannie and Freddie have accounted for nine of 10 new loan originations in the past year.

-By Jeffrey Sparshott, Dow Jones Newswires; 202-862-9291; [email protected]

--Nick Timiraos contributed to this article.

(END) Dow Jones Newswires
02-28-11 1042ET