So here we go again, people are getting themselves all worked up over how hard it is to get a mortgage and how hard it is to buy a home. Yes, even those who should know better are looking for ways to lower standards so more people can qualify for mortgages. Are you kidding me? Has anyone forgotten what happens when you lower standards? Did we not just get through an entire era where everyone thought it was a great idea to lend people money that had no chance of repaying it on some misguided effort to grow percentage of ownership in this country only to find out that this was a bad idea and almost bankrupted the world?
We do NOT need to lower standards; we need to TEACH fundamental financial management in our schools at a very early age. We need to teach SAVING. We need to teach people about CREDIT, DEBT, and DISCIPLINE! We need to stop sending kids to colleges and universities who are borrowing huge sums of money in pursuit of a degree that won’t get them a job that pays enough to repay their obligations. We need to provide more opportunities to train our children in a skilled labor and technical trades that can provide great incomes for far less money than college cost and reduce the demand on these institutions so the cost of that education will go DOWN due to less demand. We need to understand that there are people in this world that will NEVER be in a position to OWN a home because it isn’t the best situation for them. We also need to understand a few basic concepts.
- If you want to buy a home and can prove you are in a position to repay the money you want to borrow, there is no shortage of mortgage money.
- With such a shortage of available homes for sale in many markets across the country, why the sudden need to find MORE BUYERS to fight over that limited supply?
- In most of the country, renting is more expensive than ownership; shouldn’t we be looking into generating more rental opportunities?
- As more and more people conduct their business outside a tradition office setting, and even some work many miles away and rarely if ever make a trip to a traditional office location, why aren’t we moving out of the cities that are too congested and find or grow new or smaller areas of the country where it is far cheaper to acquire land and build?
As a country we need to take a breath and stop over reacting to everything. Everyone needs realize that so much of the self-absorbed behavior and the almost constant victimization just need to stop. If you are offended, then get over yourself. Grow up and realize that being offended by everything is YOUR PROBLEM, not anyone else’s problem. You’re NOT entitled to own a home in this country. You are not entitled to an equal outcome. You are not entitled to be offended. You have freedoms and liberty and the choice to do with that the best you can to suit your own personal needs. That’s it. No guarantee, just opportunity. And while I am at it, let’s get rid of all the participation trophies. We need to go back and teach winning and losing. It feels good to win and it really stinks to lose. If you don’t like losing than practice and get better or quit and go find something you can win at.
So as the government begins another push to “level the playing field” by lowering standards and making it “easier” for people to borrow money. Maybe we need to take a step back and ask ourselves if this is really a good idea since we have already seen what will happen? Stop lowering the standards and spend your time making better people!
Questions or comments: Mike@IMTcoaching.com or visit us online at http://imtcoaching.com
TWO REASONS WHY THE RECENT UPTICK IN HOUSE PRICES IS NOT A BUBBLE
The last time house prices went up considerably, they plummeted 30% from their peak in 2006. Are we gearing up for a similar decline in light of the recent uptick in house prices? Apparently not, according to a study recently conducted by the Federal Reserve Bank of San Francisco (click here to view the full study). Here’s why:
1 – House prices are much more affordable compared to rents than they were during 2005-2006. In those days, it was actually more affordable to rent vs. buy in most markets. The red line in the chart illustrates how the price-to-rent ratio today is about 25% lower than it’s peak in 2006. This is partly because rents have gone up in recent years, which provides some “fundamental justification for the upward price movement” in house prices.
2 – Homebuyers today owe less on their mortgages as compared to their income than homebuyers during 2005-2006. In those days, the mortgage-debt-to-income ratio was much higher than normal, and that’s what fueled the bubble. The blue line in the chart reached an all-time high in 2007, and has been steadily declining ever since. Today, the growth in house prices is not being fueled by over-leverage. It’s being fueled by new household formation and lack of housing supply.