Cisneros,Cuomo,Clinton,Waters&Frank vision fails

"bush drive for home ownership fueled housing bubble"

http://www.nytimes.com/2008/12/21/business/worldbusiness/21iht-admin.4.18853088.html

From his earliest days in office, Bush paired his belief that Americans do best when they own their own homes with his conviction that markets do best when left alone. Bush pushed hard to expand home ownership, especially among minority groups, an initiative that dovetailed with both his ambition to expand Republican appeal and the business interests of some of his biggest donors. But his housing policies and hands-off approach to regulation encouraged lax lending standards.

The GOP shouldn't have pushed so hard for homeownership (even though it tends to make people vote GOP). I wonder why they did it ... ?

and the weird thing is, they keep building new houses, because the people who happen to be buying don't want to old ones.

"old" ones -- they're not very

http://www.calculatedriskblog.com/2010/07/home-builders-to-start-building-more.html

wtf?

The old ones don't have stainless steel nor granite countertops... as per HouseHunters. So the ONLY solution is to demolish them... ya know like in Arizona, where you demolish the 50 homes w/o ss refridges then BofA lends $50MM for the next developers to build 50 homes w/ ss refridges...

In AZ the main goal is to demolish the masonry houses that will last forever and replace them with balsa-framed ones that will benefit from termite-obsolescence.

The builders will keep building as long as the cost of selling exceeds the cost of buying. Too bad this includes generous tax breaks that were purchased for the cost of a few well connected lobbyists who got a Democratic led congress to agree THIS YEAR. Your tax dollars hard at work folks.

it's about time the housing industry embraced planned obsolescence. just like you have to buy a new DVD player more times than you can count to keep asia's economy booming, so should you have to replace your home every once in awhile. simple patriotism.

RS, you never stop, do you?

A.R. They already have this. It's called manufactured housing.

expand it, i say. buffett would be happy. crank back up the original subprime market.

http://www.ritholtz.com/blog/2010/07/its-all-bill-clintons-fault/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+TheBigPicture+%28The+Big+Picture%29

If this country wants to expand home ownership. Pre-fabricated housing makes a great deal of sense. Not everyone can afford a seven figure home nor should need to. There are many fine examples of prefabricated housing that is a great deal better in quality than the old mobile home on wheels.

actually, i agree with you. right now there is likely little need in most markets to develop anything, but going forward this would be entirely consistent with the belief that people shouldn't feel compelled to overextend on housing.

until and unless prefab housing prices went through the roof. hey, crappy studios in NYC quadrupled in price over a 10 year period.

my last post was more about the jon stewart video. the comments about manufactured housing were kind of random.

It's also very consistent with looking for market solutions that deliver the best product at the best price. Look what mass production did to the cost of cars...

remember the sears home? we almost bought the cutest one upstate, but i couldn't deal with the lack of bathrooms and we weren't ready to start renovating. oh, lord. i'm conversing civilly with RS.

As long as you are civil, I'm fine with it. It's much better this way.

oh, i don't know. at one point i tried to declare detente with another poster. just try not to misquote your sources. and have sources for the things you claim. for example, there is a stupid bloomberg article that supports your claim that clinton was to blame for much of the housing bubble. it's not factually correct, but at least it would have been better than just listing a vacancy rate and blaming it on clinton and the other dems.

come on, RS. at least make this more interesting as a debate.

As I suspected...

So how low will the home ownership rate drop too? I'm thinking around 65%. Of course things tend to over-shoot in either direction before settling down.

http://calculatedriskimages.blogspot.com/2010/07/homeownership-rate-q2-2010.html

maybe even 64% if the elders can't afford or dont want to buy after selling. but it should go back up as the foreclosed properties enter the market at market-clearing prices.

cycles. equilibrium. distress. movement.

the one component that is almost impossible to predict, but doesn't seem positive, is household creation. yes, i know the article you quoted earlier mentioned a few youngsters wishing to flee the nest, no surprise there and for awhile many parents who have the means will support their kids' housing just to get them out. but there are many returning, and what i'm really interested in and haven't seen is the birth rate numbers for this year. data. i need data.

and you can't take credit when i pointed out a factually flawed bloomberg article.

Goading.. Nice!

oh, how am i goading? really? if you're going to be this sensitive, a virtual flower, i don't know what to say.

i was actually joking. a response to your "as i suspected" which i assumed referenced the bloomberg article.

so much for the effort.

I don't know ... there are those who say that a generation scarred by being underwater, and a newer generation scarred by a terrible job market, will have an enduring fear of mortgages and the like, and will prefer to rent (as was much more common in the 1960s, I'm told and would love to see the numbers).

There is also the media effect. A lot of people just follow the crowd and whats the talking heads say on TV. It could overs-shoot.

No idea what people who had a 2-3 year time horizon were doing buying anyway. But buying is pretty ingrained. I still see parents telling their kids not to throw their money away and buy.

so much has changed, and yet nothing has changed.

rent/manufactured homes. not terribly different, really. rent/buy probably works.

i don't know about the newer generation. i suspect they'll largely be disengaged, for how long i don't know. i suspect large numbers of units will go rental. and i think a lot of retired people will catch on to renting someplace that's very cheap, if renting at all and not relocating overseas, and travelling to take advantage of the huge glut of seasonal rentals that can be had for very cheap, particularly compared to manhattan prices. that's the local market obviously.

RS, there are any number of units on the market today where the buyers purchased in 2009. much of it is unforseen circumstances, but those happen more frequently these days.

some things have changed. prime, jumbo mortgages require decent underwriting. that's about it. and i was never one to think that you had to preclude all mortgages that were lacking one element of the underwriting standards. but we're still allowing huge numbers of shitty mortgages to be written.

you may blame that on obama, not bush. i blame it on both of them. more bush than obama, but i've said from the very onset that i have zero love for obama's economic team or policies.

Yea, I disagree. I think it's a slippery slope not to fully disclose the details. In mortgages you have the 4 C'S Credit, Collateral, Character and Capacity. Everyone kept coming up with ways to disclose less and play guessing games for it. How does anyone expect proper pricing when you leave stuff out. At the end of the bubble the only C that we had was collateral, and we saw where that got us....

Some will justify omitting income and say self-verified income makes sense and substituting a thin file FICO. It didn't work.

rs, you know the difference. not disclosing the details was a specialty that really didn't start occurring until the 2000s. sorry. if you want proof, i'll go get proof. and where have i ever advocated liar loans? really?

character is the fourth c, and you've added it, and how it could possibly be discerned during the bush credit bubble i have know idea. or any recent time really. back in the day one knew one's banker, but that has not really been the case for years for most people. only the rich have personal relationships with bankers.

read the calculatedrisk article i posted on subprime earlier. people tried to extrapolate the success of the 5% down programs to the general market, with horrible results.

I do think we've learned nothing, and the system will ease back into lower lending standards. Already seeing less than than two years of standard income verification. It starts small and builds. The bankers can't make the economics of only doing Full doc low LTV mortgages work. All we can hope for is that the SEC's new disclosure requirements help the ultimate investors figure this stuff out.

Character is non-sense. It has no place in the shadow banking system. It cant be measured. It works for Bailey Savings & Loan not loans that get bought and sold.

Don't really care to debate at this point when it started. Feels like goading, because you know how the discussion proceeds , who joins etc etc, so I thank you I don't want or need proof. It's not important when it began but what it's effect was.

And low down payment loans are funny. Current loan to value is the single best indicator of default especially in weaker credits, so if home prices were fortunate enough to increase the bad loan becomes good. So 5% down does work, if you happen to lend 95% when the market is rising. High LTV lending was another sign of Minsky Economics.

i agree that it seems that we've have learned very little and lower lending standards are occurring, at least at the conforming and particularly fha levels.

but that's happening because we made it extremely easy for banks to make a shitload of money and repair their balance sheets. they're just starting to gamble again. issued a loan to a developer for land and clean up and they're a year or two in arrears? give them more money to start building. it will keep you from taking the loss and hell, maybe in two or three years, things will be better. in the now, money is cheap, and the tricks are almost free.

and as much as i disagree with the policy, like inonada i have no interest in seeing what would have happened tp the economy if all life-support had been pulled. it's a problem, no?

they're just starting to gamble again

Yes, this is unfortunate, and wont stop until after Banks bear the full risk of profit and loss. One thing that has changed is he nature of Wall Street. It used to be partnerships and agency transactions. The partners kept on top of risk because it was their money. Today it's the shareholders money and the Tax payer's money.

Big reason why I think we need to break up the large banks and turn the large money center banks into utility type lenders who only peform basic essential services in exchange for Fed privileges and FDIC insurance. If they want to gamble,, by all means, declare yourself a hedge fund. I'm fine with that.

By the way... we've had this conversation before....
Are you looking for new conclusions?

aboutready
about 1 hour ago
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remember the sears home? we almost bought the cutest one upstate, but i couldn't deal with the lack of bathrooms

seriously? aboutready, did someone else log in under your name?

rs, we've had these conversations to the point of puking. what's your point? i've always agreed with you that the big banks should be commercial, within the earlier definition of commercial. and you know that.

looking for new conclusions? like they'll just slap me upside the head one day? so far i've seen little change, and have sadly reached few new conclusions. but i'm always looking.

sadly, so many times aboutready posts with the word "sadly"

oh stop, your wit overwhelms me.

sadly?

http://www.youtube.com/watch?v=Cs4Gj7JsET4

It's clear both parties screwed up. Short-term votes for long-term pain, isn't that how politics work

columbiacounty ,you seem upset. Is it because aboutready wished us farewell? Conveniently timed the morning she was going on vacation?

She'll be back. She wished streeteasy farewell two years ago. Jsmith posted the link to her farewell, didn't you see it?