50 Year Mortgage

[djd09]

 

[shrubberyvaluation]

Any mortgage is simply a means to consume today what might be earned in the future. Rewarding consumption leads to more consumption. As shortfalls in those future earnings increasingly become someone else's cost, more borrowing will occur to consume now, further leveraging already inadequate future earnings. Government involvement in anything simply fuels this fire. Anyone who thinks all the "affordable" and "workforce" housing programs, Section 8 rents, and low-income tax credits lower costs are simply omitting some of the costs to sell their agenda.

Supply vs Demand, this will also increase property prices, as people can afford it. If someone pays say $4,000 for a mortgage per month now, eventually it will be the same with a 50 year mortgage (well more with inflation) and property values will shoot up. Short term maybe it will do something, but when the market adjusts it will be worse.

 

[Fernando]

Tying the original costs of a property when bought, to its ultimate value 30, 40, or 50 years later is nonsense in the discussion of mortgages. Very few things don’t increase in value over that time period. Heck, a new car bought in 1975 that was kept in a pristine condition and never driven would be worth quite a number today too, but I don’t think any of us would suggest a 50 year loan to buy it would have been a good financial move back then. Jewelry, guns, etc. Pick your poison.

Different assets increase more than others. If I only believed Apple and Google was going to change the world when they first started, I'd be richer.

To pay rent (interest) to borrow the funds to buy something should be an avoided expense, or as limited as possible if necessary.

 

[TerryRohrer]

There is a time to buy and time to cry.

View attachment 104769

I think the FED is minimizing us. Their index of 367.38 in 2015 to 802.22 last month suggests an increase of 2.18 times, but we bought some lots in 2015 and 2017, and received an unsolicited offer in the mail last month for 7.82 times the price we paid.

The party is over now, though. The obvious inflection point in Q2-22 coincides with the legalization of recreational pot in the state. The future seems clouded and diminished since. I took a load of crap to the dump last week and counted about 8 "dispensaries" along the way, and found several more within a block or two of the same route in the following week. I next project is to investigate the feasibility of growing it... I should be able to squeeze a couple of plants into 8.5 acres and about half that was an old cornfield.

 

[TerryRohrer]

Supply vs Demand, this will also increase property prices, as people can afford it. If someone pays say $4,000 for a mortgage per month now, eventually it will be the same with a 50 year mortgage (well more with inflation) and property values will shoot up. Short term maybe it will do something, but when the market adjusts it will be worse.

The problem is, we are being told that the price of homes is due to lack of supply of homes as lenders and governments ramp up the supply of money. If the money supply stopped growing unchecked, we would likely return to a period where supply and demand of homes were in balance and a scenario where prices were rather stable. But then, the populace would be much harder to manipulate, so not likely to happen.

 

[cashcatz]

The problem is, we are being told that the price of homes is due to lack of supply of homes as lenders and governments ramp up the supply of money. If the money supply stopped growing unchecked, we would likely return to a period where supply and demand of homes were in balance and a scenario where prices were rather stable. But then, the populace would be much harder to manipulate, so not likely to happen.
View attachment 104770

Bingo. Why is the government solution to everything always about addressing the "effect" rather than the actual "cause"?

 

[Fernando]

Price of homes has always been high here with demand greater than supply. And with high income tech jobs here, many can qualify for to buy $2 million homes.
Zoning and NIMBY have restricted new housing. CA liberal politicians have over recent years forcing communities to build more affordable units or face penalties.
Rather late in the game when CA population not growing as fast as before.

 

[gregb]

but we bought some lots in 2015 and 2017, and received an unsolicited offer in the mail last month for 7.82 times the price we paid.

That FRED graph relates to Home Price Index, presumably not lots.

 

[Fernando]

That FRED graph relates to Home Price Index, presumably not lots.

Many readers will not understand and interpret the graphs in our appraisal report.
With the new UAD form, readers always look straight to the point value.

 

[TerryRohrer]

Bingo. Why is the government solution to everything always about addressing the "effect" rather than the actual "cause"?

View attachment 104771

Much of the time, because they were the cause of the effect. A set of policies to buy off one constituency screws all others, so additional policies are needed to appease the adversely effected, which in turn screw the original constituency who immediately begin screaming for "releif", on and on and on.