Comments on: Why the Economic Stimulus Package Won’t Work http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html Redfin Bay Area Sweet Digs Tue, 07 Feb 2012 16:59:16 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Janis Mara http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2605 Janis Mara Wed, 30 Jan 2008 13:03:30 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2605 Yes, catsjellicle, you are absolutely correct. The $150 billion economic stimulus program approved Tuesday by the House of Representatives would, among other things, raise the conforming loan limit to as much as $729,750 -- but only until the end of 2008. Glad you brought that up, as it's an important consideration. BTW, for accurate, detailed and up-to-date info answering questions like this, Inman News, www.inman.com, is a great resource, among others. It's a real estate news site. Why is the increase temporary? Might legislators decide to make it permanent? I'd be interested to hear what some of the well-informed and opinionated readers here think. Yes, catsjellicle, you are absolutely correct. The $150 billion economic stimulus program approved Tuesday by the House of Representatives would, among other things, raise the conforming loan limit to as much as $729,750 — but only until the end of 2008.

Glad you brought that up, as it’s an important consideration. BTW, for accurate, detailed and up-to-date info answering questions like this, Inman News, http://www.inman.com, is a great resource, among others. It’s a real estate news site.

Why is the increase temporary? Might legislators decide to make it permanent? I’d be interested to hear what some of the well-informed and opinionated readers here think.

]]> By: catsjellicle http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2602 catsjellicle Wed, 30 Jan 2008 06:19:51 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2602 i read somewhere that this is only valid until dec 31, 08. if true...what does it all mean and whats the point, again? i read somewhere that this is only valid until dec 31, 08. if true…what does it all mean and whats the point, again?

]]> By: Doug http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2598 Doug Wed, 30 Jan 2008 02:06:35 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2598 And one more thing about what you "shudder to think". Why don't you look at the bright side? Let's say you lost the house and had to rent for a while. Wouldn't that be a great lesson to teach your kids and grandkids? Contrast that to getting bailed out by the government; then you might just repeat your behavior because you'd expect the government to just bail you out whenever you got in trouble. And you wouldn't have such a great lesson to teach the future generation. And that Janis, is what moral hazard is all about. And one more thing about what you “shudder to think”. Why don’t you look at the bright side? Let’s say you lost the house and had to rent for a while. Wouldn’t that be a great lesson to teach your kids and grandkids? Contrast that to getting bailed out by the government; then you might just repeat your behavior because you’d expect the government to just bail you out whenever you got in trouble. And you wouldn’t have such a great lesson to teach the future generation. And that Janis, is what moral hazard is all about.

]]> By: Doug http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2597 Doug Wed, 30 Jan 2008 01:45:41 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2597 Janis, with all due respect, you are an adult. And as an adult, you need to be responsible for the things you do in your life. If you make a mistake, you should own up to them, and deal with the consequences, rather than blaming others and expecting the government to bail you out. As for your scenario, let's say you were upside down, and had to walk away from your house. And then you'd rent for a while. So what? That's not the worst thing that can happen. Janis, with all due respect, you are an adult. And as an adult, you need to be responsible for the things you do in your life. If you make a mistake, you should own up to them, and deal with the consequences, rather than blaming others and expecting the government to bail you out. As for your scenario, let’s say you were upside down, and had to walk away from your house. And then you’d rent for a while. So what? That’s not the worst thing that can happen.

]]> By: Janis Mara http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2595 Janis Mara Tue, 29 Jan 2008 23:02:51 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2595 But Doug! I think back on when I bought my house. I had never owned a house before, and though I did do the math to make sure I could make the payments, I had only the most hazy idea of how the whole lending process worked. My loan broker pulled a nifty deal where I got a second mortgage and hence avoided PMI. I didn't have the slightest idea that such a thing as PMI even existed. I was lucky - he was an honest guy looking out for me. Doug, I'll tell you, as I tried to negotiate the maze of completely unfamiliar elements - appraisal! Home inspection! Loan qualification! Title insurance! - if he had steered me to an interest-only or ARM, God help me, I shudder to think where I would be today. You know? But Doug! I think back on when I bought my house. I had never owned a house before, and though I did do the math to make sure I could make the payments, I had only the most hazy idea of how the whole lending process worked. My loan broker pulled a nifty deal where I got a second mortgage and hence avoided PMI. I didn’t have the slightest idea that such a thing as PMI even existed.

I was lucky – he was an honest guy looking out for me. Doug, I’ll tell you, as I tried to negotiate the maze of completely unfamiliar elements – appraisal! Home inspection! Loan qualification! Title insurance! – if he had steered me to an interest-only or ARM, God help me, I shudder to think where I would be today. You know?

]]> By: Doug http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2594 Doug Tue, 29 Jan 2008 22:21:07 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2594 "I do feel that the government, the lenders and everyone involved has a responsiblity to do everything possible to help people save their homes. To me, this is the most important thing." Ever hear of moral hazard? The governement should not be in the business of bailing out irresponsible buyers/lenders so they can save their homes. Let them rent and learn from their mistakes. It's not going to kill them. “I do feel that the government, the lenders and everyone involved has a responsiblity to do everything possible to help people save their homes. To me, this is the most important thing.”

Ever hear of moral hazard? The governement should not be in the business of bailing out irresponsible buyers/lenders so they can save their homes. Let them rent and learn from their mistakes. It’s not going to kill them.

]]> By: Janis Mara http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2590 Janis Mara Tue, 29 Jan 2008 21:17:42 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2590 Yes, yes, David, you've really hit the nail on the head, and I'm glad someone said that! Realistically speaking, in my opinion, trying to stop the decline is like trying to get a tsunami to back up. Not gonna happen. I do feel that the government, the lenders and everyone involved has a responsiblity to do everything possible to help people save their homes. To me, this is the most important thing. Also, good to hear from you, curious. I'm with you in thinking that As a side note, I certainly feel that increasing the conforming limit to account for cost differentials is good policy. Meanwhile, I predict that prices in Contra Costa County and other parts of the Bay Area will continue to decline throughout 2008 and then stay low, but not drop further, for another five years or so. What do you think? Yes, yes, David, you’ve really hit the nail on the head, and I’m glad someone said that! Realistically speaking, in my opinion, trying to stop the decline is like trying to get a tsunami to back up. Not gonna happen.

I do feel that the government, the lenders and everyone involved has a responsiblity to do everything possible to help people save their homes. To me, this is the most important thing.

Also, good to hear from you, curious. I’m with you in thinking that As a side note, I certainly feel that increasing the conforming limit to account for cost differentials is good policy.

Meanwhile, I predict that prices in Contra Costa County and other parts of the Bay Area will continue to decline throughout 2008 and then stay low, but not drop further, for another five years or so. What do you think?

]]> By: David http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2580 David Tue, 29 Jan 2008 17:25:20 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2580 What I mean is that with flat to slightly lower prices for upper-end homes, those houses will be bought by the "move-up" buyer. However, if loans are getting more restrictive, the number of buyers available for cheaper, "starter" homes (mostly in the East Bay) will drop. If the number of buyers for starters drop, prices will drop. I don't think that this move in any case will pump up the market again. Never in history has a bubble been "reflated." It might slow down the decline, but prices will still decline, in a nominal basis for "subprime" neighborhoods that saw the greatest %% run-up, and at least on a real, inflation-adjusted basis in nicer 'hoods. Although, again with how huge this past run-up was, I would expect nominal declines throughout the area. David What I mean is that with flat to slightly lower prices for upper-end homes, those houses will be bought by the “move-up” buyer. However, if loans are getting more restrictive, the number of buyers available for cheaper, “starter” homes (mostly in the East Bay) will drop. If the number of buyers for starters drop, prices will drop.

I don’t think that this move in any case will pump up the market again. Never in history has a bubble been “reflated.” It might slow down the decline, but prices will still decline, in a nominal basis for “subprime” neighborhoods that saw the greatest %% run-up, and at least on a real, inflation-adjusted basis in nicer ‘hoods. Although, again with how huge this past run-up was, I would expect nominal declines throughout the area.

David

]]> By: Doug http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2577 Doug Tue, 29 Jan 2008 08:35:16 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2577 "I really don’t think there are that many people sitting around with $100-200k+ (liquid) that didn’t already jump into the housing market in the past 5 years who are now contemplating it" I am in exactly this situation, and am now LESS inclined to buy since the market now is being artificially pumped up with this limit increase. “I really don’t think there are that many people sitting around with $100-200k+ (liquid) that didn’t already jump into the housing market in the past 5 years who are now contemplating it”

I am in exactly this situation, and am now LESS inclined to buy since the market now is being artificially pumped up with this limit increase.

]]> By: dg http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html/comment-page-1#comment-2576 dg Tue, 29 Jan 2008 08:30:38 +0000 http://blog.redfin.com/sfbay/2008/01/why_the_economic_stimulus_package_wont_work.html#comment-2576 and Janis... thanks for using my previous comments as new post material. I am flattered. :) and Janis… thanks for using my previous comments as new post material. I am flattered. :)

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