Another Great Depression?

[OakLeaf]

But my Joy of Cooking (1974 edition) has illustrated instructions on how to skin a squirrel, so I could probably learn if I had to. But I'd rather clean a fish.

See, that's why I had to hang onto my old Joy when I bought the new one (with a lot more vegetarian and ethnic recipes). They deleted the game recipes... and the bartender's guide.

I betcha skinning a squirrel isn't too different from skinning a catfish though. Except for the legs

[Pax]

I'm buying a house, as some of you know. This is my third house purchase. It's quite a simple house, and quite a low price, well within my means. My credit is great, and I'm a good catch for a lender! The mortgage payments will be several hundred dollars less than my current rent...

We're a few weeks ahead of you (we already closed) but our situations are really similar. We could have bought a much bigger house that was further from work but we decided that a smaller/less expensive house that is bikeable/walkable to work, groceries, shopping was a truly sensible choice. It's nice to know that if the economy crashes and burns we'll be able to afford our little house and can leave our cars parked as long as necessary.

[smilingcat]

The new trend in house purchases is toward smaller and more reasonable sized home and away from McMansions. I think this is a wonderful trend. My house is 1600sq feet. It's a beach bugalow built in 1939. 2 bedroom/1bath...with detached garage. if you've got two small cars it will fit but not todays midsized cars.

Well heck growing up in Utah, with many of my friends coming from a rather large family (6 or more kids), they seemed to have managed just fine with 3bedroom one bath or one-and-half bath sized house. typical square footage was around 1600 sq. feet. And if you grew up in a house with over 2,000 sq feet that was a luxury. BTW, I did ask my friends about the bathroom situation in the morning... My friends said forget about makeup in the bathroom! or doing your hair! 10min/kid and its still one solid hour of bathroom usage in the morning.

smilingcat

[Trek420]

I'm several years behind both of you. I chose a small place near public transportation options, it was waaaaaay the heck below market value of similar units at the time. Messy, cluttered, crowded, unpainted ... the sellers had done nothing to stage the joint. Their agent was a moron not to tell them what to do (at least de'clutter, fix, clean and paint).

So here I am.

:::sigh::: I missed the housing bubble. I coulda done this remodel and sold the joint for over twice what I paid. Silly me. I did back to back to back to back CA AIDS rides, recovered my health and fitness, met Knott and had some great rides. No regrets.

Meanwhile to my peers/coworkers who chose bigger places in Vacaville, Sacto, Modesto ... with matching huge commutes .... I <3 my tiny 1.5 miles to BART condo.

I think people will always want to live in CA, the housing market will recover slightly somehow at some time. All I need is one person or family who's learned the lesson of living closer to work/transit.

[salsabike]

http://www.washingtonpost.com/wp-dyn...d=opinionsbox1

[TahoeDirtGirl]

I will have to check out that book (I think it's a book Animal, Mineral, Vegetable?) about water. For a while there, people were paying more per gallon than they were for gas. I think we have probably passed that. I think of that too, that water is often wasted as much as anything. We have water restrictions here in Mass where I am and I think I'm the only one that follows it. I thought that the other people had wells but no, they just don't care.

A few years ago, we hit a housing kaboom in Tahoe. If you had dirt, they would try and build on it. I won't go into the whole TRPA thing, but basically, there weren't many buildable lots so they ...made everything buildable. Building building everywhere. I couldn't understand who was buying these HUGE houses...we finally cornered a real estate agent at the local watering hole and she explained the 'no interest second' that people were taking out on their primary residence and then, either they were just figuring they would sell it in a few years because of the market (people were bidding over the asking price!) or they would just refi it or something before it came 'due' (ie they had to pay more on it or the interest went up). We didn't really get it. You would never really 'own' your house? on just paying interest only? What was going on...and like I said "this can't keep going".

And I guess that's what happened there. My house doubled in value of course, but no one is up for buying anything. There are people just loading up their furniture and shutting the lights out. It's crazy. My friend is telling me her neighbor is raffling off his house that he just HAD TO BUILD and ruin the lot with no intention of living in it. He just wanted to make $$$. So now there is a big ugly house with no one that wants it.

I remember back in the 90s when I bought my first house, they dug up everything on you, wanted all kinds of info, and it was much tougher. When I bought my current house in 2000, I think I just produced a w2 and tax statements for two years. It was over before I knew it.

To me, just that overconsumption was what made me realize this couldn't keep going on. It was like ....debt obesity? Or just waste?? And the more we build and build these huge malls on farmland, makes it less and less likely we will be farming anything on it? Has anyone else noticed that? Someone was reading me a list of stores that will be closing 'underperforming' stores. All I know is that there is a couple of stores that are under construction near me in Mass that aren't even going to open. What a waste...

[GLC1968]

I remember back in the 90s when I bought my first house, they dug up everything on you, wanted all kinds of info, and it was much tougher. When I bought my current house in 2000, I think I just produced a w2 and tax statements for two years. It was over before I knew it.

We experienced the same thing. I remember my friends moaning about having bounced a check in college and how it was coming back to haunt her when she bought her house in 92!

We bought our first home in 2003 and we basically just signed a piece of paper...it was SO easy even though the price was kind of a stretch for us. Same thing in 2004 when we bought in NC.

We just closed on a house here in OR last month. VERY different experience. We are actually now buying a house that is very much well, well below our means and yet we had to dot every single 'i' and cross every single 't' on the paperwork. They even questioned the dates on a transfer of our downpayment. It left one bank on the 22nd and got credited at the second bank on the 21st (due to a midnight transfer and a difference of time zones) and THIS held up our approval! They wanted a 'reason' for it and proof!! All in all, in some ways the extra scrutiny felt totally unnecessary and yet it made us feel like the industry was finally getting back to the way it SHOULD have been all along.

[Pax]

We just closed on a house here in OR last month. VERY different experience...

Same here, we transferred $900 from a tiny credit union account to our checking account to help with our closing costs and they wanted print outs and a letter from the credit union saying this happened. They said "we need to know that it wasn't a gift". I'm glad we didn't just bring some money from home and deposit it.

[TahoeDirtGirl]

I had that same issue when I was buying a house in the 90s. They were trying to figure out if I borrowed money from someone to cover the closing costs. I remember asking when we were purchasing our house in 2000 if they needed a statement of my accounts and they just took the first one and never bothered looking at it again.

There was a very very interesting program on, either MSNBC or PBS (I only get 5 channels, it had to be one of those!) about what happened with the mortgage industry. They showed a speech by Bush where he wanted to see more low income people own their own homes, and so, the mortgage industry began doing 'reverse redlining' where 30 years earlier they had drawn these red lines around undesirable neighborhoods where they didn't want to fund. Now they were going in those lines and funding housing within those lines, but with not the best ideas, such as interest only loans. I wasn't aware of that, my anecdotal experience was with the upper middle class that were just spending out of control and just way over extended on loans and mortgages. I have yet to see any type of information where they compare the salaries of those going up for foreclosures. Is it what they were talking about on this program or is it the upper middle class and their McMansions? I would like to see some kind of demographic on it, I guess I haven't looked hard enough.

It was sad to see people that were really stuck, they had already put money into their houses and soon realized that their payments were going through the roof. I know that everyone should be paying attention and understand the terms and conditions of their loans, but on the other hand, what were these banks thinking? Couldn't they figure out that people weren't going to pay double their payment? That's the part I don't get. Or was it just the fact that the people that were doing left the mortgage business as soon as they made a scad of cash?

[firenze11]

I keep reading this thread with a certain amount of horror. As a grad student with essentially nothing, the recession is scary enough. Seeing the word depression kinda blows my mind. As a history student, I've always hoped knowledge of the past actually does keep the same mistakes from being repeated (at the very least, the huge, devastating ones). I've done a little reading for the past couple of days (thanks for that article today Salsabike!) and I don't think we're headed for a depression. We do have a lot of work to do and I think many many people just got comfortable with all the things they could get over the past years.

When I graduate next year I'm terrified I won't be able to find a job, or I'll be laid off once I get one like one of my friends just experienced. I've already started looking. I'm reading more and more about how to keep my personal finances in check and stay out of debt. I watch some of my friends use their credit cards like there is free money on them. I know they don't make enough money to support the lifestyles they lead and wonder how much debt they have already gotten into. I'm trying to learn from others' examples, but it's hard when so many people still seem crazy irresponsible.

I think weathering a recession, even if it is a long and difficult recession, is part of the economic cycle. I'm ok with that. It's happened before and it will happen again. Hopefully, the issues this one is dredging up will actually lead to some change.

Besides, I don't really want to have to sleep in a tent on a commune and learn how to skin squirrels. . .but if I have to I better go find a copy of the Joy of Cooking from the 70s.

There was a very very interesting program on, either MSNBC or PBS (I only get 5 channels, it had to be one of those!) about what happened with the mortgage industry. They showed a speech by Bush where he wanted to see more low income people own their own homes, and so, the mortgage industry began doing 'reverse redlining' where 30 years earlier they had drawn these red lines around undesirable neighborhoods where they didn't want to fund. Now they were going in those lines and funding housing within those lines, but with not the best ideas, such as interest only loans.

I saw a clip about something similar on The Daily Show. Jon had Richard Bitner on the show. He wrote a book called Confessions of a Subprime Lender and was talking about how the whole situation might have worked out if the government had regulated the subprime mortgages/lenders. And that when you let businesses regulate situations like that it just becomes one big casino.

[maillotpois]

Wow. My in laws gave us a pretty big amount of money for a deposit on our house when we bought in 2004. First it wasn't in our account, then it was. No questions were ever asked. I never really thought much of it, but it sounds like that would raise some eyebrows now.

[tulip]

Wow. My in laws gave us a pretty big amount of money for a deposit on our house when we bought in 2005. First it wasn't in our account, then it was. No questions were ever asked. I never really thought much of it, but it sounds like that would raise some eyebrows now.

Usually you have to show bank account info for three months prior to your purchase. That's how it's always been for me in my three house purchases. Otherwise it's considered a gift and is treated differently.

[GLC1968]

Usually you have to show bank account info for three months prior to your purchase. That's how it's always been for me in my three house purchases. Otherwise it's considered a gift and is treated differently.

Unless you could show where it came from (in our case, the sale of our previous home).

When we purchased our first home, we used money received as wedding gifts towards the downpayment. We had to sign paperwork stating that it was from gifts and the largest of the givers had to write a letter as well. This was in 2003 - but we also had no home purchase history and I had very little career related job work (I was just out of my masters program and only employed for a few weeks). Plus, that home was a stretch for us, financially. In retrospect, I still can't believe how easy it was...even with all the things that now would be considered marks against us. And that was only 5 years ago!

[Mr. Bloom]

When we bought our first house in 1986, they wanted copies of our college diplomas...

We didn't even attend our graduation, but they wanted copies of our diplomas

[maillotpois]

Maybe it was just easier for us because our lender is our bank (Wells Fargo). Cut out a step, perhaps.