Housing price conundrum (part 2)

[dadac123]

What you said in this series, made me think about all the house stuff in my country, and now I start to think about 'rent vs buy'.

For me,it's such a complicated problem I can't figure out, I don't even have a clue. But after all these videos you made, I know that it's the time I face it, and try to understand it.

I never know how the world works, but you give me another sight, and lead me to see the lines behind that.

It is always a good time to stay with you. Mr.Khan,thank you!

[iBlameAnonymous]

This is crazy!!!! Thanks Khan for your great videos!

[spacekillers123]

thank you for helping me understand the housing crisis :D

[theporksicle]

If you're making $40k a year and are buying a $1 million house I have no sympathy for you. Reasonably intelligent people, whatever their income, would have been capable of seeing growth cannot go on forever, prices cannot rise forever and would recognise the fragility of their own situation-a job today doesn't mean you will have one in five, ten or twenty years.

The banks were just capitalising on people being short sighted.

[ZakBrownrigg123]

@theporksicle

capitalizing? Lending people money who cant pay back will only lead to their own default. Too bad people believe in bailouts because they banks deserve to be bankrupt. Bailouts only lead to more bailouts and not market corrections.

[theporksicle]

@ZakBrownrigg123

I'm saying the bank isn't responsible for people's stupidity, if you borrow money nobody can say for sure you will pay it back. People who fail to repay should be held fully accountable.

[ZakBrownrigg123]

@theporksicle

Agreed.

[timzulf]

@theporksicle Sure, but the banks have to realize the stupidity of people, because if not enough people are paying their debt, all the bank has left is debt, and must default. Furthermore, people like Alan Greenspan, Larry Summers, and Robert Rubin, who if you know were regarded as some of the best economist of all time, at the time that is, encouraged people to take these loans and tap into equity, which led to this culture of borrowing.

[mredstriumph]

@timzulf

Ok, lets see if I have this straight.. banks realize "people" are stupid (not u, naturally), which allows them to make bad loans (aka - give $) to "victims" that can't / won't pay back.

This in turn, lets banks make MORE bad loans to the same "victim" - which ALSO don't get paid back.

And this was the banks intention all along - to get rich by giving their money away in a 'culture of borrowing'

Am I getting close, or do I need to attend a DNC de-education camp like you did?

[Coolguyrob2006]

@theporksicle The banks were actively taking advantage of the peoples ignorance, they just blasted the customers with jargon knowing they wouldn't understand so they could get them to get an easy loan with the customers thinking they had made a good deal.

[mredstriumph]

@Coolguyrob2006

By your logic.. if * I * give YOU $100, and YOU don't pay it back... Than *** I *** am a predator who has taken advantage of YOU.

The fact that I went bankrupt and fell into the control of the government, and YOU got to live in a home you never could afford, and never paid for never even enters your mind. How amazing it must be to be a Democrat.

Nothing ever has a cause, & obvious contradictions go unnoticed because you never think about the lies you're told then spread.

[mediblue9]

I luv how the video starts off with responsibility then ends with plain nonsense, on the buyers behave

[AlexanderPoho]

Great. Thank you.

[frenchy137]

Awesome!

[sov19871987]

thank you, very nice

[toti35]

now i understand why in the location were i moved you can see people with very low income owning huge houses.....and rusted cars parked on the driveway!

[dsws2]

It doesn't make sense unless landlords were asleep at the switch. If $15k equity could get you $500/mo net income, owning a house and renting it out was a good deal. If your prospective renters can get a liar loan on almost the same terms you can, there's no reason for you to own it. Demand for rental property should decrease one-for-one with the increase in demand from those who formerly rented.

[avatar9247]

And you have to carry the depreciation. When you now add the risk of a bad tenant, you see that the house owners not haven't made a so good deal.

[avatar9247]

The interest Rate for long term loans was in the 70s 9%-10% + the margin for the Bank 2,5 % + a risiko agio + for example 2 % = 14 %

Then you have to combine the 14 % with the compleate house prise, cause after the invest you dont get interest for the 15.000 dollars.

So you have a monthly interest payment of 60.000 * 0,14 / 12 = 700 $

But with this payment you dont redeem your credit, so no equity will be build.

[ch00bz0rzz]

Wait so why did financing get easier in the first place again?

[pjblabla]

see the next video :)

[U2BHistory]

This is Vid 2. I'm going to give my comments on an EXCELLENT piece of work. I think your history is somewhat off. I'll forcast Vid 3 as well. The availability of Mortgage Insurance is the Catalyst for Change. Insurance that the top 20% is covered by an Actuary Table. Failure of government to make MI tax deductable, 80/10/10 and then later 80/20 for the Tax Benefit and greedy business that wanted the high return on bullet proof Real Estate Benefits.Look at my Vid U2BHistory want ur comments

[Serge808]

the very first monthly interest payment would have been $324.33

[Serge808]

over a 25-year mortgage amortization the payment would have been $377.64

[Serge808]

good example but you're oversimplifying the payment anmounts.the interest portion of the mortgage payment would decrease over the life of the mortgage as the principal decreases.you should say 9%/12 per month, no $ amounts since the inteerest portion is not fixed ie.$340 per month.=wrong.

[hibobhobob9]

Regarding interest rate history, I took an engineering economics course in 1982. It required that students purchase an interest rate booklet. The LOWEST rate in the book - for a senior level college course - was 9%. In other words, interest rates had been much higher than 9% for so long that nobody bothered printing information less than 9%. So during the 70's, baby boomers saw interest rates of 15%+ as the norm. Drop this to 3% adjustable rate, and they can afford to pay 5x as much for a house.

[anonimuslistener]

FYI: houses were priced at 10 times more in 2000, 2003 etc. You miss the point!

[vickiormindyb]

I can't help but be grateful I'm alive. No matter what happens, I'm always glad of that.

My best friend always used to say, "As long as there's life, there's hope and as long as there's hope, you can make things better."

That's really poignant to me now, because he no longer has hope. I think he was too good for this world.

[Patrickthedutch]

you gotta be kidding me, this situation is really bad, loans for a million dollar ? by Joe Average ?

Are you kidding me, you are kidding me right?

I am shocked.

This had to go down. No way to avoid it.

Go down ? If i hear you talk like this, the so called rescue plan, wont do a single thing.

We dont even see the beginning of the crisis, stand alone the end....

[ubornthick]

And so housing became a ponzi treadmill cash machine carrot , ending when The 120% ninja loans which caused the final increase in the house price bubble were defaulted on after the teaser rates ended thus knocking the ponzi treadmill off its axis ,now its rigourmortgages for those that have been stiffed with variable loans going up when fed rates[2%] go down

[smedheat]

Back in the day, only losers rented.