I swear, I don’t want to be a Debbie Downer, I swear.
OK, it’s everyone for himself. Everybody save your own hide. Let’s talk about productivity strategies and individual psychological resilience.
50-Year Mortgages
Opinions, art, debate
Clarissa's Blog 
We are so F***ed
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Very.
Is there anybody who thinks it’s a good idea? Spurring on the demand when it’s the supply that’s a problem?
What am I not getting?
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I’ve been contemplating a listing in my area for a singlewide trailer with roof damage, on half an acre. We could afford to pay cash for it, right now.
It wasn’t really worth it because my husband has a deep PMC bias against trailers. But I think it might be time to push hard on that. I think we could learn to install subfloor, replace wallboard and insulation, and maybe take out a loan for enough to contract the roof.
Also, picked the wrong week to stop swearing.
-ethyl
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When, when is the right week to stop swearing because it’s an avalanche of this kind of ridiculousness.
I happen to be in the market for a new used car right now and…. It’s very different from 7 years ago when we were previously in the market for used cars. My eyes popped so wide when I saw the prices, I look like a person of a different race.
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If you can find a Honda or Toyota with about 180k miles on it, that’s the sweet spot for price. If it’s been cared for reasonably well and doesn’t smell bad, you can get another 150k miles out of it. CR-V made before 2015 is one of the best cars on the road, in terms of price/reliability. Ditto the Corolla. Around here they are running 7-8k, but if you live somewhere with road salt, stuff doesn’t last as long. After 2014 you start getting the overcomplicated center console integrated electronic stuff that’s nearly impossible to repair, the custom one-off LED head/taillight arrays that cost hundreds of dollars to replace, have to be ordered… where it used to be a $5 light bulb you could buy at Walmart and replace in the parking lot in 2 minutes.
Last week somehow didn’t seem so bad.
This week it’s like the memo went out, and the admin loosened their girdles, relaxed, decided they didn’t have to pretend to be working for the wage class anymore. What changed? A dinky semi-election where a bunch of blue districts voted very predictably? Surely that wasn’t it??
-ethyl
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Are you saying I can get 300k+ miles out of my 18-yo RAV4? That gladdens my heart because I’m at 110k now and I don’t want to ever let it go. Maybe I can ask to be buried in it (and I’m only half joking). Whenever I get a loaner during repairs and it’s a new RAV, I lament how cheap the interior looks and I hate the all-digital dashboard (give me analog gauges for fuel and speed!) and the giant tablet control for radio and AC. Ugh.
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Possibly. Keep up with the maintenance, and make double-dang sure that if you have a timing belt (instead of a timing chain), you do that maintenance early or on time, every time.
We had a 99 CR-V, bought at 180k, drove it to 330k, and the thing was still humming along. We sold it for scrap at that point because we had failed to keep up the weather stripping, moisture got into the cab, and the interior was growing black mold.
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A friend invited me to take a ride in her brand-new BMW, and it completely freaked me out because when you are driving it at night, there’s a hologram of the map that kind of raises itself and hovers in the air in front of you. I found that so distracting that I refused to drive the vehicle.
Maybe I’m a hopeless country bumpkin.
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“PMC bias against trailers”
In rural florida living in a trailer used to be normal, even for the well off. My cattle raising cousins were worth millions (back when that still meant something) and lived in housetrailers because that was easier to set up a mile from the front gate at the end of a dirt road.
When they did finally build a house it was laid out exactly like a house trailer (because that’s what they knew).
I’d jump on it.
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I’ve been looking at them all along: I didn’t grow up PMC and to me that just looks like a starter home.
I need to put in some serious effort on the evangelization front, I think. The biggest thing I want in a home purchase isn’t even the house: I just want to get out of bloody rentals so I can have a garden again. And chickens. I miss those so much.
-ethyl
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“to me that just looks like a starter home”
Totally. I remember once my brother working from another part of the country once brought a northern girl along for a visit and she was stunned to see…. nice trailer parks in town or nice looking trailers on single family plots. She’d never had any idea that anyone but the scum of the earth lived in trailers…. (to be fair there was that element too locally but she didn’t notice… you had to know where to look and we had no need to look there during her visit).
Is it just the trailer or land too?
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It’s the land *and* the trailer, or I wouldn’t even look. Nearly half an acre, outside of town but not too far, surrounding houses are nice. There are trees. The trailer itself is in sad, sad shape. Needs a new roof, and probably a portion of the front wall is rotted out from the unfixed roof leak, along with sections of subfloor. It’d be a lot of work, but dangitall we’d *own* it. We’ve lived in some pretty decrepit housing before. I don’t care about the aesthetics at all, as long as we could save up for improvements instead of paying interest (and still being on the hook for all the maintenance).
-ethyl
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It does sound very seductive especially if you can have your own vegetable patch and chickens. Plus, all of the indignities of a rental would be gone.
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Also THE SUPPLY ISN’T THE PROBLEM.
We literally have the highest ratio of houses to people in the history of our country right now.
The problems are many and varied, but the top of the list is:
-inflation
-fraud
-more fraud
-other kinds of fraud
-investment firms getting into single family housing, because inflation
-we never fixed the high-risk loan problem from 2008
-too much subsidy money sloshing around the market
-fraud (see subsidy money: nobody audits that shit)
-etc.
And you know the ONE THING nobody ever proposes to help?
Going after fraud.
Because literally everybody is doing fraud in real estate now. The politicians, the regulators, all the politicians friends and relatives, the investment firms paying the politicians, everybody. There is no way to address the fraud game because everybody who is in a position to do something about it is doing real estate fraud. They are claiming residency on a rental, they are lying about their income to get more loans, they are lying about their income to get tax breaks and qualify for homebuyer assistance programs, they are paying off inspectors so they can sign off on the insurance and get a house already. It is the all-fraud all-the-time world championship games, and the first person to seriously try to tackle it is going to get incinerated on that live wire.
Gonna go start researching overseas jobs again. I hear you can buy old farmhouses in Japan these days for like $20k.
-ethyl
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We recently bought a house. Pre-Covid we could have gotten a relatively new house, 4,000+ sq feet on at least a 0.5 acre lot in a good part of town with easy commute. Now, all we could get for the same price was a townhome… To be fair, we could have gotten a house too on a 0.14 acre lot, if I wanted to commute to work for 1 hour each way. It’s completely ridiculous.
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Combine that with knowing: there is no housing shortage.
So… who the heck is living in all those houses we could’ve afforded in 2019? We did not experience a burst of mass prosperity that allowed massive numbers of people to move into nicer houses.
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That’s exactly my question. Who are the people who moved into the $800,000 three-bedroom apartments over a pizzeria in my town? To sink almost a million dollars into an apartment in Buttcrack, Illinois you really need a reason and an inordinate amount of money to spare. What is going on?
The pizzeria apartments were built in 2022. COVID money? I don’t know.
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So. Much. Fraud.
And the solution is to extend mortgages so the fraud can continue for as long as possible.
What I think happened:
Tons of covid money sloshing around, nobody checking up on it. Tons of people took the money, bought investment real estate. They rent it out, or at least say they’re renting it out, but not for enough money to actually cover the mortgage and maintenance, which means the buildings are likely degrading with time. Doesn’t matter if you’re doing fraud: you can use your faked rental income to take out MORE loans that are now based on the “increasing equity” in the properties you already have, as well as the “income potential” from renting them out, whether that’s to tenants or as STVRs.
If you’re lying about the rental income, the loan potential is limitless. Apparently nobody ever audits these things.
So then, you live off borrowed money, use more borrowed money to buy more properties, use those properties to borrow more money, rinse, repeat, ad infinitum, until the vague day somewhere in the future where you just file for bankruptcy, wipe the slate clean, and start over again with some other con game.
Con games have always been around, but the scale on this one is astronomical.
Throw that on top of the already-existing problem of boomer reverse mortgage lifestyles, and Blackrock et al getting into residential real estate landlording, and it’s a helluva mess. Oh, and FHA loans have been not requiring payments since COVID, probably accounting for over two hundred thousand houses occupied by people who are not paying their mortgage, but also not being foreclosed on. Because “forbearance”.
Just for funsies, you can also add all the rampant smalltime real estate and loan fraud: claiming primary residence on investment properties to get better loan rates, claiming you are a first time buyer to access special programs (even though you’re not a first time buyer), claiming a homestead exemption on an investment property, listing your investments as STVRs without paying hotel taxes, faking your income to qualify for low-income buyer assistance (and then renting out the house)…
I read a report this year, from the Philly FED office, which estimated that in the US, if you counted all the RE investors who are claiming primary residence fraudulently (literally all you have to do to check, is look up the property owner in public records, and then find out what their current legal address is, and see if the addresses match: a programmer could do it in like ten minutes), so JUST OCCUPANCY FRAUD and nothing else– if you counted all those guys as the investors they actually are, then you’d need to increase the number of RE investors by 50%.
Which means if you just prosecuted that shit, we’d see prices come down, massive numbers of houses go back on the market.
Does anybody lobby for that?
Nope.
It’s not because the big investors are doing occupancy fraud. It’s because they’re against anything that would let prices come down. Boomers who think they are rich because “my house is worth a million bucks now” even if nobody can afford to buy it, cannot contemplate prices coming down. Then what would they borrow against to go on a cruise? Like it or not, when I checked our 401k book, every single fund available to us was at least partially sunk in real estate. Prices come down: 401ks will shrink.
So I guess we’re just going to keep inflating that to the moon even though it impoverishes nearly everyone, because… banks, investors, boomers, all get more of a say than we do.
-ethyl
(/ranting)
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“What am I not getting?”
Intergenerational debt… young people inheriting and being locked into long term inescapable debt?
That’s the first thing I thought of…
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Newsom-AOC 2028!
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“So. Much. Fraud.”
Unfortunately the only way out at this point is systemic collapse…
Which sucks, but what you described cannot be fixed with fine-tuning policy….
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Yeah. It sucks. We are already middle aged. I’m scared that it will not get better in time for us to ever see any benefit from the collapse– we’ll just have to live with the collapse and hope our kids get a better deal.
-ethyl
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“It’s the land *and* the trailer, or I wouldn’t even look”
You need to tell your husband to get on board with this or swear to God I’m gonna hunt him down and punch him in the nose… (or adopt all the redneck ways I know* and follow him around embarassing him in front of his hoity toity PMC friends….)
*I usually don’t brag, but…. I know a lot of redneck ways
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“your husband to get on board”
disclaimer… never accept financial advice from me (terrible with money for lots of reasons, not least, being the fact that I’m not interested in money… it’s boring).
But…. I trust your judgement and your husband should too.
If other readers want to back you up, they should.
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ethyl
I wish you well, but don’t give financial advice because I don’t know enough about your situation. Your man has to agree; because if things go south he will be blamed, that is just how it works. We buy a house, older, built well, but in need of repair on a small acreage. On city water and garbage services but we were on septic for about five years — so check out the services, particularly water. Repair is costly unless both of you are handy, I had acquired construction tools and knowledge, and my wife was certainly not afraid to get dirty helping. That said, upgrades are much easier today than years ago, but fittings are still costly and far too often made of chinesium ;-D
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Appreciate the well wishes.
Don’t worry: this is one of those arenas where the bean-sorting autistic tendencies are helpful 😉 The part y’all can’t see is the pages and pages of notes and calculations in front of me, working out mortgage payments for 10yrs, 15yrs, what we shell out if we just rent for the same time period, best and worst case scenarios for repair costs, flood zone maps, utility access info, crime maps, tax info, public records, railroad and industrial site locations, prevailing wind charts, topo maps…
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