Why not start a House Exchange Commission and enforce the same Margin requirements on home speculators.
Not on the primary residence, only on extra homes purchased.
ie. You have to put down initial 50% down to buy a speculative flip home.
Regulation H, when a trader buys a speculative home on margin, key levels must be maintained throughout the life of the trade. First off, a bank cannot extend any credit to accounts with less than $20,000 in cash (or equivalent home equity). Second, the initial margin of 50% is required for a trade to be entered on the housing market. Finally, the maintenance margin says that an equity level of at least 25% must be maintained. The investor will be hit with a margin call if the value of house falls below the maintenance margin.
Should the market value of the houses in your margin account decline below minimum maintenance, you will be required to deposit more cash or titles to your other homes including primary residence with equivalent equity required or sell some of the homes in your portfolio in order to bring your account back to the initial margin requirement. If you are unable to do so, Bank XXX may be required to sell all, your homes to meet the initial requirement. Margin trading of homes for the purpose of flipping entails greater risk and is not suitable for all investors.
Long Positions Initial Margin Requirement Minimum Maintenance Requirement
Condos 100%
New McMansions The greater of 50% 50%
Homes in well established neighborhoods in good areas The greater of 50% 30%
Not on the primary residence, only on extra homes purchased.
ie. You have to put down initial 50% down to buy a speculative flip home.
Regulation H, when a trader buys a speculative home on margin, key levels must be maintained throughout the life of the trade. First off, a bank cannot extend any credit to accounts with less than $20,000 in cash (or equivalent home equity). Second, the initial margin of 50% is required for a trade to be entered on the housing market. Finally, the maintenance margin says that an equity level of at least 25% must be maintained. The investor will be hit with a margin call if the value of house falls below the maintenance margin.
Should the market value of the houses in your margin account decline below minimum maintenance, you will be required to deposit more cash or titles to your other homes including primary residence with equivalent equity required or sell some of the homes in your portfolio in order to bring your account back to the initial margin requirement. If you are unable to do so, Bank XXX may be required to sell all, your homes to meet the initial requirement. Margin trading of homes for the purpose of flipping entails greater risk and is not suitable for all investors.
Long Positions Initial Margin Requirement Minimum Maintenance Requirement
Condos 100%
New McMansions The greater of 50% 50%
Homes in well established neighborhoods in good areas The greater of 50% 30%
