wabmester
Thinks s/he gets paid by the post
- Joined
- Dec 6, 2003
- Messages
- 4,459
MasterBlaster wanted to see housing prices overlaid with a graph of interest rates. Shiller has one that goes back to 1890:
MasterBlaster said:what I really wanted to see was the red curve divided by the gray curve.
Actually though the gray curve isn't quite the right data being only the 10-year data.
wab said:I know what you're saying, but mortgage rates are based on the 10-year treasury (something to do with the way banks hedge -- brewer can probably fill us in).
semtex said:So the biggest bubble is credit bubble. See how many credit cards I have and how easy to get 10K+ credit line.
brewer12345 said:Yup. Scary, isn't it? What I can't figure out is why the bank regulators let the banks get so loose with mortgage money. Didn't they have at least some seior people with painful memories of the Resolution Trust Co. and the disastrous mess that was the S&L bailout?
BTW, there is a whole school of economic thought that says that creation and destruction of credit availability is pretty much the driving force behind economic expansion and contraction. IIRC, it is most often associated with Schumpeter. I'm not sure I swing quite that way, but it sure looks like credit has been driving the housing market bubble.
al_bundy said:it's not the bank's money. if you have a bond fund in your 401k, look at the investments. chances are part of it going into mortgages. they set up legal entities, get investors, pay out the PITI to the entities and skim off anything extra beyond what they have to pay. Forgot the exact name for it. goal is to spread the risk. credit cards are the same. it's investors' money and not the bank's money.
New Thinking said:Semtex - Everyone is different and has different desires for their lifestyle both while working and their (hoped for) retirement. I live in Montclair and love the town. Sure it has high taxes and it is not pleasant paying that much. But most taxes result from the excellent schools. If you have children, you will get your money's worth. I grew up in the Midwest and wanted to move to the east coast. It costs money to live here but that is my preference. I mentioned to my wife last weekend how much I love living here.
The taxes have gone up as more and more families move into town and schools are expanding. It is self-perpetuating..Seniors are moving out. But for us, we have kids up and down the block and my children have a great quality of life. For me, that is the big reason why I work. One has to live for today too and not sacrifice everything for the future - especially when the alternative is spending 3 hours or more of your day away from your family commuting.
As for a real estate bubble - perhaps, but I don't believe so. I think prices will come down a little but not much. My theory is that you will always see many young individuals leave other parts of the USA to head to the coasts (NYC, San Francisco, Boston, LA, etc)..These singles grow older and marry and move to the suburbs....Many will retire elsewhere eventually but (while working) they will create a demand for housing in the suburbs within commuting distance and good schools. My two cents. Good luck.
semtex said:One thing shocked me is that property tax is nearly 15000.
MasterBlaster said:Looking at the charts you showed it looks like inflation has been constant since 1970.