Financialization Of The Housing Market

wallyj84

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I just watched the above video and it got me thinking about the financialization of the housing market and the problems it causes.

In addition to the shady practices in the video, I think it is increasing the cost of housing and making home ownership much more difficult for average people. With coming likely collapse of the housing market, I think things will get even worse.

What do you think of this problem? Is it a problem? What can be done to fix it?
 

keenobserver

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I just watched the above video and it got me thinking about the financialization of the housing market and the problems it causes.

In addition to the shady practices in the video, I think it is increasing the cost of housing and making home ownership much more difficult for average people. With coming likely collapse of the housing market, I think things will get even worse.

What do you think of this problem? Is it a problem? What can be done to fix it?

There is a lot to unpack here. Great video clip - really laid out a specific problem clearly.

The housing market in my rural area, with no industry to speak of if the hottest it has ever been. Housing is selling at the fastest rate I have ever seen. The friends I have in the local industry all say this has been their best year ever and it is not as I write this slowing down. There are a lot of reasons for it - none have anything to do with the issue raised in the video.

The video highlighted are really dark segment of the R.E. business that has always existed and is likely to get bigger and more harmful. The couple making 36K a year who signed up to 'buy' their house never had a chance. They did not understand what they were getting into, there was no local standard that would have required a home inspection, they were living on a wish and a prayer. Doomed from the start.

The free market folks will say 'let the buyer beware' - which is a golden rule in the real estate business. Imposing simple disclose laws about the condition of the house and making sure people, especially first time buyers understood what was happening and what they were signing could clean this mess up pretty fast, but are unlikely to ever happen. Our friends in the GOP will fight them tooth and nail. This crew opposed a regulation that required financial consultants to 'be honest' to their customers because 'it isn't necessary.'

The couple was doomed by their own illiteracy of finances and blinded by wishful thinking. The company was looking to fleece them and resell the property many times before it collapsed under its own weight and was condemned. If the local county had a requirement to insist on a 'certificate of occupancy' requirement they would have at least known they had no pipes. This is why we have consumer protection regulation - many people are easily unprepared for real world finances. The problems are multiple here - predators selling, uninformed people wanting their dream.

This isn't so much a housing problem as a consumer protection issue for all transactions. Believe me the same couple probably have a car or truck at 29% apr from a 'buy here, pay here place.' Being poor they are at the mercy of financial predators their entire life. This is why Obama started the consumer financial protection process with Elizabeth Warren as its head. This is why the GOP has gutted and killed it.

Among the who's who of real estate predators - Fox News host Sean Hannity who pours a lot of his 29 million dollar salary into apartment buildings and distressed housing units. I wonder what his ROI was last year?
 
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keenobserver

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That is standard. But in the case of the video this was rent to own, so the process is probably different.

Rent to own is a whole different kettle of fish. You don't own shit, but you get to make all the repairs, pay the taxes and deduct nothing. Miss a payment and you're out on the street. Buyers think, in their minds the seller is 'giving them credit' towards a down payment, but unless it is stated specifically to the penny in the contract that is not the case. There is almost no oversight because renters are not considered 'at risk,' since it is not their property. Most laws protect the seller or landlord, not the buyer / renter.
 
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wallyj84

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There is a lot to unpack here. Great video clip - really laid out a specific problem clearly.

The housing market in my rural area, with no industry to speak of if the hottest it has ever been. Housing is selling at the fastest rate I have ever seen. The friends I have in the local industry all say this has been their best year ever and it is not as I write this slowing down. There are a lot of reasons for it - none have anything to do with the issue raised in the video.

The video highlighted are really dark segment of the R.E. business that has always existed and is likely to get bigger and more harmful. The couple making 36K a year who signed up to 'buy' their house never had a chance. They did not understand what they were getting into, there was no local standard that would have required a home inspection, they were living on a wish and a prayer. Doomed from the start.

The free market folks will say 'let the buyer beware' - which is a golden rule in the real estate business. Imposing simple disclose laws about the condition of the house and making sure people, especially first time buyers understood what was happening and what they were signing could clean this mess up pretty fast, but are unlikely to ever happen. Our friends in the GOP will fight them tooth and nail. This crew opposed a regulation that required financial consultants to 'be honest' to their customers because 'it isn't necessary.'

The couple was doomed by their own illiteracy of finances and blinded by wishful thinking. The company was looking to fleece them and resell the property many times before it collapsed under its own weight and was condemned. If the local county had a requirement to insist on a 'certificate of occupancy' requirement they would have at least known they had no pipes. This is why we have consumer protection regulation - many people are easily unprepared for real world finances. The problems are multiple here - predators selling, uninformed people wanting their dream.

This isn't so much a housing problem as a consumer protection issue for all transactions. Believe me the same couple probably have a car or truck at 29% apr from a 'buy here, pay here place.' Being poor they are at the mercy of financial predators their entire life. This is why Obama started the consumer financial protection process with Elizabeth Warren as its head. This is why the GOP has gutted and killed it.

Among the who's who of real estate predators - Fox News host Sean Hannity who pours a lot of his 29 million dollar salary into apartment buildings and distressed housing units. I wonder what his ROI was last year?

I can't disagree with anything you've written here.

I'm very pro-market, but as I get older I become less pro-capitalism. These huge companies with more money than God and less morals than Satan shouldn't have their fingers in all aspects of our lives.
 
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Sagittarius84

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Oppression is perfected upon minorities before it is unleashed upon the masses..
Having an understanding of the inherent shadiness of the housing market and its discriminatory tendencies( construct really) as a function of skin color, and seeing how the rest of the nation still likes to stick its head in the sand to that reality makes it hard not to pull out the world's smallest violin when the low income and working class White and White adjacent folks start complaining when said shadiness seems to be aimed at them....
But i guess in retrospect thats why MLK Jr is dead..because he saw this coming and was trying to work against it