Quote from Arnie:
Anytime someone asked "what's a wharehousing fee?" We would answer "Another point"
LOL you either meant "warehousing" or "whorehousing" I'm not sure which, though both would be appropriate.
15-20% interest rate in early 80's
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LOL you either meant "warehousing" or "whorehousing" I'm not sure which, though both would be appropriate.
home prices nearly tripled from 1970 to 1980. Makes sense to me as a house is more of a "hard" asset and these tend to increase during high inflation.
link:
http://www.census.gov/hhes/www/housing/census/historic/values.html
Quote from Tech Analysis:
How the hell was anyone able to qualify for a house and a car loan when the vig was 20 points.
Nice houses were $80k and cars were $12k.
John
Quote from Arnie:
I sold RE from late '77 to '83. Prime got as high as 21%. I remember one loan to a couple where their rate was 14% and there were SEVEN points. They would usually break it down like this:
Seller pays 2-3 pts
Loan Origination: 1-3 pts
"Discount Points": 1-3
"Wharehousing Fee" 1-2 pts
Anytime someone asked "what's a wharehousing fee?" We would answer "Another point"
I worked for US Home from 81-85 in New Orleans. We routinely paid 15pts on loans to close them.
We had a no interest 5 year mortage that cost us 22 points.
We also had negative am products which caused them to be outlawed for fha, fannie mae stuff.
John
And if you calculate how much the USD has depreciated between then and now, houses today probably cost about the same if measured in 1980 purchasing power.
My 1978 Dodge Magnum with all options brand new was $4300. The discount was $2000 or $3000 as I recall. I bought it on the last day of March 1979 brand new from a lot completely full of 1978's. Paid cash.
People don't know that owing money is bad. It was something that people learned in the depression when all the people that had borrowed in the 1920's were reduced to drifters and shanty dwellers.
The difference is that today very few people were ever taught that lesson.
People don't know that owing money is bad. It was something that people learned in the depression when all the people that had borrowed in the 1920's were reduced to drifters and shanty dwellers.
The difference is that today very few people were ever taught that lesson.
My father refused to borrow money after seeing his father lose everything during the great depression.
Despite that, he became quite successful in business.
I'm in my 30s, and am very debt averse.
Wow. I wish I had some '84 bonds. I didn't know anything at all about bonds or stocks back then. Nice.
Bought my first house in 1982 in Arlington, Va, 3 min to DC via newly opened Rt 66 to Georgetown's Key Bridge. It was $135K and had a builder subsidized financing of 11.5% from the normal bank rate of then 13%. I watched interest rates rise to around 19% for homes over the next year and thought of myself as lucky.
Now... in today's dollars, had I kept that house with the amount of land I had and the location (2 blocks from the Metro and a 3br/3ba 2 story)... heh, it would have beat inflation by a very long mile
.
I got into the market for the first time in 1986... bought into a mutual fund, lost money in the 1987 crash and sold that following week vowing I wasn't going to get into the stock market ever again. Then, in 1989, I was back in, and learning since then, very painfully in 2000. I don't think we learn anything til we lose a lot, at least for me it's been that way. But my trading has changed tremendously since then.
It is VERY funny how people complain about the interest rates today. On the other hand, I don't see how we can really afford to raise them, because that would delay the housing recovery by an even longer time.
Bought my first house in 1982 in Arlington, Va, 3 min to DC via newly opened Rt 66 to Georgetown's Key Bridge. It was $135K and had a builder subsidized financing of 11.5% from the normal bank rate of then 13%. I watched interest rates rise to around 19% for homes over the next year and thought of myself as lucky.
Now... in today's dollars, had I kept that house with the amount of land I had and the location (2 blocks from the Metro and a 3br/3ba 2 story)... heh, it would have beat inflation by a very long mile
. I got into the market for the first time in 1986... bought into a mutual fund, lost money in the 1987 crash and sold that following week vowing I wasn't going to get into the stock market ever again. Then, in 1989, I was back in, and learning since then, very painfully in 2000. I don't think we learn anything til we lose a lot, at least for me it's been that way. But my trading has changed tremendously since then.
It is VERY funny how people complain about the interest rates today. On the other hand, I don't see how we can really afford to raise them, because that would delay the housing recovery by an even longer time.
Owing money is bad if you have the discipline and patience of a 6 year old, like some adults do. If you're wise and disciplined enough to invest your savings that accumlated from debt, then debt a great thing.
Interest rates are so low now, I don't see why people would want to buy anything with cash.