Join Early Retirement Today
Reply
 
Thread Tools Display Modes
2008: The Yard Sale Economy?
Old 12-23-2007, 09:17 PM   #1
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
2008: The Yard Sale Economy?

According to columnist Scott Burns, a byproduct of the residential real estate mortgage crunch could be a national yard sale.

"Query: Where do you find the money to cover your mortgage when it resets to, say, 7 percent and a new monthly payment of $1,331? That’s another $257 a month.

Answer: You cover the increased payment by selling a car. You replace it with a less expensive car. Hopefully, a no-payment car. That can reduce monthly debt service by as much as $495.
-----
Will everyone do this? No way. But enough will do it to shift the supply/demand balance and make it a buyer’s market."

Cars, boats and other “stuff” eventually depreciate to zip. But houses usually appreciate. Millions of financially strained households will empty their closets and garages before they give up their houses. That’s why I think a substantial portion of the ongoing real estate story will play out in other markets. That’s where the solutions are. Those with cash get the silver lining: 2008 will be a good year for bargain-hunting."

Craigslist.org anyone?
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 01-01-2008, 08:21 AM   #2
Moderator
Walt34's Avatar
 
Join Date: Dec 2007
Location: Eastern WV Panhandle
Posts: 25,299
I think he worries too much. Or maybe I don't understand why anyone would use an ARM to buy a house if they're not planning on moving before it reset.

But then again, I don't understand the mind set of someone who would take out a home equity loan to take a vacation - if they don't have the cash they can't afford it. I always thought the object was to eliminate debt, not dig the hole deeper.

Admittedly when I was in the fraud section all of us were sometimes amazed at how creative people can be at screwing up their lives.
__________________
When I was a kid I wanted to be older. This is not what I expected.
Walt34 is offline   Reply With Quote
Old 01-01-2008, 08:30 AM   #3
Give me a museum and I'll fill it. (Picasso) Give me a forum ...
REWahoo's Avatar
 
Join Date: Jun 2002
Location: Texas: No Country for Old Men
Posts: 50,003
Quote:
Originally Posted by Walt34 View Post
Admittedly when I was in the fraud section all of us were sometimes amazed at how creative people can be at screwing up their lives.
And those were just the ones who came to your attention by committing a crime. Imagine the many thousands of creative citizens who screw up their financial lives without ever breaking the law!
__________________
Numbers is hard
REWahoo is offline   Reply With Quote
Old 01-01-2008, 07:23 PM   #4
Thinks s/he gets paid by the post
JPatrick's Avatar
 
Join Date: Jun 2005
Posts: 2,610
Yep, it's happening. I'm boat shopping and I saw one the other day that said, "HELP ME SAVE MY HOUSE--BUY MY BOAT."
Sadly, this was not the boat I am looking for.
JPatrick is offline   Reply With Quote
Old 01-01-2008, 10:06 PM   #5
Full time employment: Posting here.
old woman's Avatar
 
Join Date: Dec 2005
Posts: 567
My nephew isn't stupid but you wouldn't know that from the way he treats money. He had a gambling problem when young but stopped that over ten years ago. He got married and bought a house 10 years ago spending 125K on the house using money borrowed from his grandma for the down payment. Now he has refinanced several times, tells me he is still sub prime and owes 200K now. The rate resets next August to over 10% and he has a prepayment penalty until then. I asked him if he hadn't improved his credit since he got his mortgage and he said it went down because he spent too much. They have two new vehicles and other debts. He asked me if he could borrow 50K to pay off cars and things next August so he could get a better rate refinancing but I told him no.
At least he knows what if mortgage is, nobody tricked him, he has steady work, his wife has a job but lost a couple of months work at the end of 2006. He is putting a little in his 401K plan in international funds that grew good last year but no other savings.
He will need to think through his problems but at least he knows they were caused by overspending so maybe soon he can think up the idea of spending less than they earn. You would think a bright 38 year old could think up the concept of living below your means.
old woman is offline   Reply With Quote
Old 01-01-2008, 10:29 PM   #6
Thinks s/he gets paid by the post
Spanky's Avatar
 
Join Date: Dec 2004
Location: Minneapolis
Posts: 4,455
Quote:
But then again, I don't understand the mind set of someone who would take out a home equity loan to take a vacation.
This may sound silly - how about taking out a home equity loan from Penfed at 4.99% as part of the down payment for bargain hunting on houses? Rent it out and wait for the recovery. However, it's hard to know when will the bottom occur based on the home-price index: Image:Shiller IE2 Fig 2-1.png - Wikipedia, the free encyclopedia.
Spanky is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Friend/neighbor cut down ALL trees in her yard Tracker FIRE and Money 30 04-30-2007 08:15 AM
snapshot of the economy Martha Other topics 9 06-09-2005 01:08 AM
Yep, the new economy laurence Other topics 15 06-07-2005 09:25 AM
Junk yard dogs? MRGALT2U Other topics 0 06-04-2005 05:50 AM
Yard sale methodology and etiquette cute fuzzy bunny Other topics 28 03-15-2004 12:59 PM

» Quick Links

 
All times are GMT -6. The time now is 07:29 AM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2024, vBulletin Solutions, Inc.