The 'Starter to the Mansion' financial dream...a few steps removed from Fannie's theme which was heavy on moving you out from the landlord's clutches. You were supposed to be Happy with that, but no, you weren't satisfied...
Is that it?
Not exactly. No, the lenders/agents could see that you could be led to the next stage of multiple transactions and who could deny those rising house appraisals weren't working way better than your stagnant wages? (God was looking out for you after all, even though your income from employment suggested that somehow you made a pact with the devil.)
I am getting the impression that without a serious disparity in wealth/income, the hollow housing boom never gets launched, you? If wages were keeping up with inflation (that you know, discards the OER crap and looks at real housing costs the way local governments do by looking at assessed values), would there be this climate of desperation on the part of workers to opt for sub-prime loans? If he were compensated fairly, he would not be so vulnerable to exploitation.
The next step in the chain must be a "pulling back" by the firms that finance the specialty lenders that provide capital to the "subprime" corporate debt market. If Wells Fargo Foothill, for example, pulls back leverage from the BDC, mezz and venture debt funds...things could get ugly across the board.
This series of pictures simply verifies my long-held GVE theory of homeowner aspiration. (I suspect our friend dryfly would really appreciate this one, given how he has described the neighborhood he lives in. And where's he been the last couple of days? Working or something?)
The Garage Visibility Effect theorem states that homeowner aspirations incline toward maximum invisibility of the garage. A corollary is that the more visible the garage, the closer toward entry point is the homeowner. Clearly, we have added a further observation here, that garage visibility correlates with amount of purchase price financed.
No, I have not yet gotten used to this architectural excresence, nor do I plan to. I was an old fart before I became an old fart.
Subprime woes --> defaults/foreclosures --> liquidity crisis --> prime lenders go into 'prevent' mode and tighten lending standards --> purchasing power restricts --> consumer spends less / cash's out equity in home to maintain lifestyle --> stocks see risks and price into equities ---> corporations cutback spending / hiring ---> economy slows --> job losses ---> housing loses more steam
This series of pictures simply verifies my long-held GVE theory of homeowner aspiration. (I suspect our friend dryfly would really appreciate this one, given how he has described the neighborhood he lives in. And where's he been the last couple of days? Working or something?)
Yup - way up in NW Minnesota & eastern North Dakota. Those pictures CR shows don't exactly fit my world... no fishing boats, snowmobiles or ATVs in any of the front yards. We have a similar 'move up' concept though... except maybe you move up into a better fishing boat or snowmobile (via MEW) prior to buying a 'better house' - and even then buy the house only so you have more MEW to buy better boats, ATVs & snowmobiles.
Priorities, you know.
On a similar theme (straight from 'Grumpy Old Men')... a radio station was advertising the give away of a lifetime... a fully furnished, DREAM ice fishing shack. For the Californians who wonder what the heck those people were smoking... this image might help. I didn't see any thing like it in CRs chain of homes...
I thought Subprime meant poor credit risk, not low wage earner. How are subprime borrows distributed across the economic scale. I assumed evenly distributed with a higher concentration at the bottom.
But what of the effect of ARM's in the Alt-A and prime market? If the borrowers were only qualified at the teaser rate and can not afford the adjusted rate, then defaults are a given.
Now, the sub-prime market has fewer buyers which affects the ability of owners to move up and many of the ARM's market wide will default... What then?
Nah, this is not going to spread to other markets. Got that tip from the tooth fairy.
I thought MSM's (Bloomberg) broader view of the housing market crisis was worth the read: Fed, OCC Publicly Chastised Few Lenders During Boom (Update1) - Bloomberg.com
Important to note that these remarks about who was responsible and how much, does not mention the media's role, Bloomberg's role in particular, or it's record of performance. The messenger is far from innocent, far from neutral, in this debacle. This denial is not helping.
calvert's right about Glover Park (in DC right? very walkable) but then most neighborhoods in DC have garages in the back if they have the alley ways. Hell, probably most cities in general. There are $400,000 neighborhoods with garages in the back, not just Glover Park (700-800+)
Oh!!! Pretty!!!
Oh, wow! Chain reactions and subprimes make me think of...
YouTube - Dr. Strangelove
Nah, who needs a starter home when you go straight for a mcMansion - if I end up in foreclosure, oh well, everything will be JUST FINEDobbs said so
LOL mp, hurrylets get on the rooftops to see all the pretty lights!
The 'Starter to the Mansion' financial dream...a few steps removed from Fannie's theme which was heavy on moving you out from the landlord's clutches. You were supposed to be Happy with that, but no, you weren't satisfied...
Is that it?
Not exactly. No, the lenders/agents could see that you could be led to the next stage of multiple transactions and who could deny those rising house appraisals weren't working way better than your stagnant wages? (God was looking out for you after all, even though your income from employment suggested that somehow you made a pact with the devil.)
I am getting the impression that without a serious disparity in wealth/income, the hollow housing boom never gets launched, you? If wages were keeping up with inflation (that you know, discards the OER crap and looks at real housing costs the way local governments do by looking at assessed values), would there be this climate of desperation on the part of workers to opt for sub-prime loans? If he were compensated fairly, he would not be so vulnerable to exploitation.
Is this an explanation for the "Banker"s?
It's hilarious how the "subprime" house photo looks exactly like a $1.2 million dollar house in the SF Bay Area.....
I just stayed in my "starter" house and waited for the prices to go up... now I live in a half million dollar house!
My favourite would be home number #3 till the last kid is gone then move to home #2.
This is exactly the "plankton" premise from the PIMCO article last week. Everything feeds off the plankton.
The next step in the chain must be a "pulling back" by the firms that finance the specialty lenders that provide capital to the "subprime" corporate debt market. If Wells Fargo Foothill, for example, pulls back leverage from the BDC, mezz and venture debt funds...things could get ugly across the board.
Wellington Financial Blog - News, Views & Purviews » Blog Archives » US mortgage liquidity crisis at hand
This series of pictures simply verifies my long-held GVE theory of homeowner aspiration. (I suspect our friend dryfly would really appreciate this one, given how he has described the neighborhood he lives in. And where's he been the last couple of days? Working or something?)
The Garage Visibility Effect theorem states that homeowner aspirations incline toward maximum invisibility of the garage. A corollary is that the more visible the garage, the closer toward entry point is the homeowner. Clearly, we have added a further observation here, that garage visibility correlates with amount of purchase price financed.
No, I have not yet gotten used to this architectural excresence, nor do I plan to. I was an old fart before I became an old fart.
Huge garage doors there...why do so many new houses look like Jiffy Lubes? "My car lives here and it lets me sleep in the back."
Or this chain reaction:
Subprime woes --> defaults/foreclosures --> liquidity crisis --> prime lenders go into 'prevent' mode and tighten lending standards --> purchasing power restricts --> consumer spends less / cash's out equity in home to maintain lifestyle --> stocks see risks and price into equities ---> corporations cutback spending / hiring ---> economy slows --> job losses ---> housing loses more steam
what? it could happen!
This series of pictures simply verifies my long-held GVE theory of homeowner aspiration. (I suspect our friend dryfly would really appreciate this one, given how he has described the neighborhood he lives in. And where's he been the last couple of days? Working or something?)
Yup - way up in NW Minnesota & eastern North Dakota. Those pictures CR shows don't exactly fit my world... no fishing boats, snowmobiles or ATVs in any of the front yards. We have a similar 'move up' concept though... except maybe you move up into a better fishing boat or snowmobile (via MEW) prior to buying a 'better house' - and even then buy the house only so you have more MEW to buy better boats, ATVs & snowmobiles.
Priorities, you know.
On a similar theme (straight from 'Grumpy Old Men')... a radio station was advertising the give away of a lifetime... a fully furnished, DREAM ice fishing shack. For the Californians who wonder what the heck those people were smoking... this image might help. I didn't see any thing like it in CRs chain of homes...
Tanta, Come to Glover Park where the garages are all in back and people are in front - walking!
I thought Subprime meant poor credit risk, not low wage earner. How are subprime borrows distributed across the economic scale. I assumed evenly distributed with a higher concentration at the bottom.
But what of the effect of ARM's in the Alt-A and prime market? If the borrowers were only qualified at the teaser rate and can not afford the adjusted rate, then defaults are a given.
Now, the sub-prime market has fewer buyers which affects the ability of owners to move up and many of the ARM's market wide will default... What then?
Nah, this is not going to spread to other markets. Got that tip from the tooth fairy.
CR
The pretty graphs are just that, no more. I, for one, look forward to the pretty charts & the even prettier writing ( hello tanta! )
I thought MSM's (Bloomberg) broader view of the housing market crisis was worth the read:
Fed, OCC Publicly Chastised Few Lenders During Boom (Update1) - Bloomberg.com
Important to note that these remarks about who was responsible and how much, does not mention the media's role, Bloomberg's role in particular, or it's record of performance. The messenger is far from innocent, far from neutral, in this debacle. This denial is not helping.
calvert's right about Glover Park (in DC right? very walkable) but then most neighborhoods in DC have garages in the back if they have the alley ways. Hell, probably most cities in general. There are $400,000 neighborhoods with garages in the back, not just Glover Park (700-800+)
You are so catty. That first home, so called 'subprime,' is $1.2MM here in La Jolla.
Rats, I missed a couple of links in the chain!
"I thought Subprime meant poor credit risk, not low wage earner."
In practice, it means both.