Squat In Your Own Unit

In the face of the lowest mortgage rates in our nation's history comes the announcement that we've dropped 27% in existing home sales.

Admittedly, I'm just a little bit pissed that I've spent the past fourteen years paying on a mortgage whose time value of money ranged between 7.75% and 5.625%, while mortgage rates today are less than 4% (for a 15-year note). I would have been better off not paying down that principal and instead spent my money on hookers and blow. Today a blowjob on Stockton Blvd. is probably more expensive than one in 2004 while mortgage rates are lower. Probably. I'm just sayin'.

We're not selling as many units while borrowing rates are the cheapest any American has seen in our history?

On the radio today a mortgage lending advertisement was blunt: all mortgages end up backed by Freddie or Fannie so go with the cheapest mortgage service provider...us. Freddie and Fannie are themselves marketing ways for you to buy with no money down without once divulging how Mrs. taxpayer holds all the risk. Assume for a second that home prices fall another 15% and a few hundred thousand of us decide to default...who's taking it on the chin?

Didn't you, back in 2005, wake up every day thinking how you were worth $47 more than the day before simply because you owed owned a home? Didn't that feel wonderful? Don't you remember not really giving a shit that the broker you employed to help sell your previous housal unit drove her white Mercedes from unit to unit, knowing that you were getting your own slice of that housal unit pie? Don't you remember your financial stocks rising 32% per annum ad infinitum due to all their creative financial instruments?"

I've said it before on my monologues: housal units are our economy -- we've got nothing left other that the building, financing, and the accessorizing of suburban sprawl. Sprawl is a necessary component of our economic existence. Without growing it, our economy collapses, which is why, in my little opinion, we are doing every damn fool thing we can to artificially inflate prices. Did you, dear reader who purchased your unit pre-2007, get an $18,000 tax credit for doing so? Did you, dear reader, get your mortgage backed by Freddie or Fannie as a certainty by your MSP? Did you, dear reader who purchased your unit pre-2002, have access to four percent interest?

Tell me: How is it that sales volume can drop 27% year over year while housal unit prices remain virtually unchanged? Wouldn't you expect that in any decent economy prices would drop to accommodate the lack of demand?

I gotta say that there must be several million families willing to purchase an inflated housal unit today because they know that rates are dirt cheap, but they don't know/care that they've paid a premium because they know that rates are dirt cheap. If a $14,000 car at 7% is offered at $19,000 at 4.5%, Americans will jump on that in a minute, thinking somehow that they've beaten the banker.

4.5%? Wa-hey!

Because we've artifically created early housal unit sales due to stimulati, my guess is that we will see prices falling going forward now that we've created a depressed forward demand. What, pray tell, makes you believe that prices will rise when there are 3,977,844 unoccupied units with no other govermental stimulatory programs out there?

Really though, when an existing unit changes hands there isn't a whole lot of economic growth occurring. Sure, there's a commission generated for the florist-turned-realtor but overall there isn't nearly the economic stimulati that a new unit generates. No...used home sales are a good indicator of where prices are headed as housal units are the principal store of wealth for most Americans.

A co-worker divulged that he'll continue paying on his $302,000 mortgage while his unit is worth $160,000 because his calculated savings by foreclosing and renting would only be $250 a month...but his unit is his home. I've been trying to tell him how much he'd be able to save by sqatting in his own unit for the next 12-18 months while his mortgage holders wrestle with figuring out who owns what and figuring out which investor holds which exotic security the mortgage was bundled into and that it'll take a long, long time to finally evict him. Living mortgage-free for twelve to eighteen months? If he saved all that he'd have a hell of an egg ready for his next housal unit, seven years hence, without being underwater. But he won't do it.

Fair enough. It's like making a car payment on a car with four flat tires. Same with anyone else, in my little opinion, who buys a housal unit today when prices tomorrow are most certainly going to drop.