[Tiberius]

In 1962 my parents bought a modest house in Burbank for $20,000. They had a std 30 yr mortgage with monthly payments of $103, which they told me later was more expensive than renting in Hollywood. By 1985, I was out of college and renting almost anywhere in L.A. cost 10 to 15 times what my parents were still paying in mortgage payments.

[AgentR]

As long as you can continue to perform your side of the obligations written in the loan documents, nothing particularly interesting happens.

A few mistakes in thinking about this are common.

1st off... The bank DOES NOT WANT TO OWN YOUR HOUSE. Owning small chunks of real estate like that are an unrelenting nightmare for a bank. What they do want, is to own a piece of paper that causes you to send them the stated amounts on the stated dates. Repo'ing a house is a near guaranteed loss of tens or hundreds of thousands of dollars for them, depending on the house.

2nd'ly; people assume to much about what they will or will not be able to do in the future. You honestly can not know, in a collapse, whether you will earn enough to make your house payment trivial, or whether you will be making barely enough to purchase a loaf a fresh bread once a day.

3rd'ly, people assume to much about what the value of the currency will be in some future collapse situation. As we peons are not in control of the currency, we have no say in this matter; and those that are in control will do that which suits them best at the point in time that action is required. It is unknowable whether those in control will choose devaluation with extreme inflation, or constant valuation with rapid loss in overall liquidity, in the event of a systemic crash. As it is just printed paper in the end, they can choose either path with impunity.

In the end, if you have a home with a loan attached, then there are situations that could arise that could cause you to be evicted. However, that is true enough, even without the loan, taxes, legal liabilities, and / or zombie hordes could easily do exactly the same, all in a much more ruthless manner than a bank would.

[mos6507]

$this->bbcode_second_pass_quote('Maddog78', 'S')o no comments on the housing boom in Canada?
Just a harangue against people who don't see doom everywhere?

[mos6507]

$this->bbcode_second_pass_quote('PrestonSturges', '
')Home ownership seems to be an economic sweet spot that may never return.

[Maddog78]

$this->bbcode_second_pass_quote('mos6507', '')$this->bbcode_second_pass_quote('Maddog78', 'S')o no comments on the housing boom in Canada?
Just a harangue against people who don't see doom everywhere?

[mos6507]

Maybe it is a head fake after all.

[crude_intentions]

. $this->bbcode_second_pass_quote('Tiberius', 'I')n 1962 my parents bought a modest house in Burbank for $20,000. They had a std 30 yr mortgage with monthly payments of $103, which they told me later was more expensive than renting in Hollywood. By 1985, I was out of college and renting almost anywhere in L.A. cost 10 to 15 times what my parents were still paying in mortgage payments.

[Dr. Ofellati]

$this->bbcode_second_pass_quote('mos6507', 'M')aybe it is a head fake after all.

[Novus]

$this->bbcode_second_pass_quote('pedalling_faster', '
')I think there's something to be said for borrowing in 2010 dollars and re-paying in 2025 dollars. if there are any dollars left.

ON THE CONDITION THAT you have sufficient income/savings to cover the loan. for a $130K 30 year loan the payments would be about $700 a month.

[pedalling_faster]

$this->bbcode_second_pass_quote('PrestonSturges', 'D')ebt could be a good thing, and if the value of money goes to zero, use it to pay off that loan fast before the fed revalues everything by tacking on several zeros to the principal of your mortgage.

[Mesuge]

$this->bbcode_second_pass_quote('mcgowanjm', ' ')
You're a smart guy, ranger. Think about it:

needing a place and increasing pop means (almost nothing)
to having a shelter. Or if it did, then the Record Vacancies
would all be taken by force to live in. Problem solved.

We're in a Secular Deflationary Winter (yes Kondratieff).
That's why the $24 Trillion in US debt loan guarantees aren't
working. The tub to be filled is $1.4 Quadrillion.

Houses will fall to 3x the wage level. And further because
bubbles always move past the mean. We have at least a 45%
downfall to go. 1930 isn't the measure. 1873 is.

[TreeFarmer]

$this->bbcode_second_pass_quote('crude_intentions', '.')
The exact reason i'm even toying with the idea of buying a house. Inflation destroys debt, and if America goes into a high-inflation or even hyper-inflation cycle that 150k-200k mortgage would be gone. The problem is that hyperinflation could cause banks to do the unthinkable. start calling in loans. Anytime a loan is made the bank has the ability at any time to demand full payment or the collateral, and because the house would be worth more than value of the loan

[crude_intentions]

$this->bbcode_second_pass_quote('TreeFarmer', '')$this->bbcode_second_pass_quote('crude_intentions', '.')
The exact reason i'm even toying with the idea of buying a house. Inflation destroys debt, and if America goes into a high-inflation or even hyper-inflation cycle that 150k-200k mortgage would be gone. The problem is that hyperinflation could cause banks to do the unthinkable. start calling in loans. Anytime a loan is made the bank has the ability at any time to demand full payment or the collateral, and because the house would be worth more than value of the loan

[Falconoffury]

Here is a good article on Mish's blog that illustrates some of the fundamental weakness in the Canadian housing market.

http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html

The housing bubble hasn't popped in Canada yet because banks are still practicing loose lending on houses.

Also, unemployment is not that bad in Canada yet. It seems that exporting countries such as China and Canada are not as bad off as the USA... yet.

[jdmartin]

$this->bbcode_second_pass_quote('crude_intentions', '')$this->bbcode_second_pass_quote('TreeFarmer', '')$this->bbcode_second_pass_quote('crude_intentions', '.')
The exact reason i'm even toying with the idea of buying a house. Inflation destroys debt, and if America goes into a high-inflation or even hyper-inflation cycle that 150k-200k mortgage would be gone. The problem is that hyperinflation could cause banks to do the unthinkable. start calling in loans. Anytime a loan is made the bank has the ability at any time to demand full payment or the collateral, and because the house would be worth more than value of the loan

[evilgenius]

$this->bbcode_second_pass_quote('AirlinePilot', 'W')e still have a good way to go to get to the bottom of the housing price downturn. IMHO another 20% or so. May take a few years but thats where it has to go for traditional norms.

UE is going to continue to increase without some major change in the current paradigm that is the US economy.

Currently there is a RECORD shadow inventory (properties banks decide not to send out NOD's or foreclose on due to the losses they incur by doing so) This "shadow" inventory is growing rapidly. IMHO this means that banks would rather you stay in the home and maintain their asset even for no money, while this crisis exists. When things begin to get better, if they ever do, that is the time they will start calling in notes and foreclose on things. Otherwise its likely you can remain in the home and either not pay or work out some new paymnet schedule which gets the bank something and allow them NOT to list the property as a loss/foreclosure.

The Loans will still exist, but my guess is there will be a government mandated moratorium on foreclosing and NOD. Otherwise you just add fuel to any collapse crisis with even more social unrest. Sounds ridiculous but welcome to the land of tinfoil reality. What was tinfoil stuff two years ago is now the norm.

[Maddog78]

$this->bbcode_second_pass_quote('Falconoffury', 'H')ere is a good article on Mish's blog that illustrates some of the fundamental weakness in the Canadian housing market.

http://globaleconomicanalysis.blogspot.com/2009/11/canadian-says-short-canada.html

The housing bubble hasn't popped in Canada yet because banks are still practicing loose lending on houses.

Also, unemployment is not that bad in Canada yet. It seems that exporting countries such as China and Canada are not as bad off as the USA... yet.