http://www.mybudget360.com/california-median-home-price-373000-maximum-federal-government-loan-limit-of-729500-does-that-make-sense/ Investing ideas for preserving wealth in a fluctuating market. Tue, 16 Mar 2010 08:10:39 +0000 http://wordpress.org/?v=2.9.2 hourly 1 http://www.mybudget360.com/california-median-home-price-373000-maximum-federal-government-loan-limit-of-729500-does-that-make-sense/comment-page-1/#comment-251 Jeff Thu, 17 Apr 2008 08:06:44 +0000 http://www.mybudget360.com/california-median-home-price-373000-maximum-federal-government-loan-limit-of-729500-does-that-make-sense/#comment-251 While the amount may not seem high in the high-cost Northern California areas $730K doesn't buy too much. I rent a house that would sell for around that- the problem is I rent for $2K/mo- so why on earth would I buy for $5K/mo after all expenses (albeit before tax deductions)? While the amount may not seem high in the high-cost Northern California areas $730K doesn’t buy too much. I rent a house that would sell for around that- the problem is I rent for $2K/mo- so why on earth would I buy for $5K/mo after all expenses (albeit before tax deductions)?

]]> http://www.mybudget360.com/california-median-home-price-373000-maximum-federal-government-loan-limit-of-729500-does-that-make-sense/comment-page-1/#comment-245 timjowers Tue, 15 Apr 2008 18:36:20 +0000 http://www.mybudget360.com/california-median-home-price-373000-maximum-federal-government-loan-limit-of-729500-does-that-make-sense/#comment-245 Its not too amazing consider the entire mortgage credit system is build on fractional banking. This means no party along the way actually has enough money to pay for their outstanding loans. That's like a house of cards. When an economic contraction comes then loans are called; but each party never really was able to pay what it loaned. In the basic case you might think about people buying houses they could not afford. They might hope the government will let them continue to live a lavish lifestyle they did not earn. In the important case you have to realize the banks and mortgage companies simply loaned out fiat or fractional money. Sure, they have some money and can pay for some houses but if we see 20% drops in values or more then times will be very tough. It's simple math. If a government funded mortgage backer puts down only 5% cash then if the house drops 10% they are in trouble. They are working their spreadsheets and see many people have 20% or 30% equity so they are OK. But what we see now such as the most recent mega-bank is they are now revisiting their spreadsheets and finding out the numbers are not as rosy. Imagine a 20% drop in home values. Now a much larger portion of the mortgaged public will justwalkaway. The bank was given a very profitable spread and the privilege of loaning money they did not have (fractional banking) in exchange for managing the risk, In the case of Bear, we see congress willing to steal from the taxpayers to give to bankers who already were given very profitable and special privileges. A similar thing is happening with the homebuilders. The big question now is how much money Congress can steal from the [future] taxpayers and give to the banks, homebuilders, reckless mcmansion holders, and such before the responsible middle class has had enough. Can Congress restore the housing bubble? They are trying and are slowing the pop but the reality is the average American is worse and worse off each year so the housing bubble in not sustainable. Down she goes. Only now she'll take the US economy with her. Its not too amazing consider the entire mortgage credit system is build on fractional banking. This means no party along the way actually has enough money to pay for their outstanding loans. That’s like a house of cards. When an economic contraction comes then loans are called; but each party never really was able to pay what it loaned. In the basic case you might think about people buying houses they could not afford. They might hope the government will let them continue to live a lavish lifestyle they did not earn. In the important case you have to realize the banks and mortgage companies simply loaned out fiat or fractional money. Sure, they have some money and can pay for some houses but if we see 20% drops in values or more then times will be very tough. It’s simple math. If a government funded mortgage backer puts down only 5% cash then if the house drops 10% they are in trouble. They are working their spreadsheets and see many people have 20% or 30% equity so they are OK. But what we see now such as the most recent mega-bank is they are now revisiting their spreadsheets and finding out the numbers are not as rosy. Imagine a 20% drop in home values. Now a much larger portion of the mortgaged public will justwalkaway. The bank was given a very profitable spread and the privilege of loaning money they did not have (fractional banking) in exchange for managing the risk, In the case of Bear, we see congress willing to steal from the taxpayers to give to bankers who already were given very profitable and special privileges. A similar thing is happening with the homebuilders.
The big question now is how much money Congress can steal from the [future] taxpayers and give to the banks, homebuilders, reckless mcmansion holders, and such before the responsible middle class has had enough. Can Congress restore the housing bubble? They are trying and are slowing the pop but the reality is the average American is worse and worse off each year so the housing bubble in not sustainable. Down she goes. Only now she’ll take the US economy with her.

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