Put up or shut up? Why so angry? No need to be hostile Sober.
Yes, I believe easy money is available in Detroit.
Do you believe there is no easy money available in Detroit?
I'd just like to understand your own position before I start posting data for you.
No anger here, just bemusement.
Once again, where is your evidence that "easy money" is available for the purchase of Detroit real estate? On what basis do you believe that banks readily lend on "easy terms" to purchase Detroit housing?
My own position on the matter is surely irrelevant when it comes to backing your own stated view on the matter...?!?
Once again, where is your evidence that "easy money" is available for the purchase of Detroit real estate? On what basis do you believe that banks readily lend on "easy terms" to purchase Detroit housing?
My own position on the matter is surely irrelevant when it comes to backing your own stated view on the matter...?!?
Rates available from under 3%. That's easy credit as far as I'm concerned. And specific to Detroit.
Your turn.
And how many mortgages are granted at these rates, against Detroit City real estate purchases...? What down payments are required?
"Available" interest rate quotes from national website sources like Trulia are immaterial, unless backed by actual loan origination data for the area in question.
Instead, three real-world criteria must be met, before the "easy money" premise can be demonstrated: 1) Are banks *actually, extensively* lending at these rates, 2) to typical local mortgage applicants, 3) for properties in the Detroit City area??
If you think there are problems comparing Aus to Detriot just compare Sydney to Broken Hill. They have the same banks, interst rates, availability of credit but 1 has a median price 1/6th of the other. If credit availability was the main factor in house prices their prices would be closer.
Obviously availability of credit isn't that important. Think of Broken Hill as the control - same availability of credit different prices by 6x obviously other factors (such as supply and demand) must impact price much more than availability of credit.
“You Keep Using That Word, I Do Not Think It Means What You Think It Means” - Inigo Montoya
If you think there are problems comparing Aus to Detriot just compare Sydney to Broken Hill. They have the same banks, interst rates, availability of credit but 1 has a median price 1/6th of the other. If credit availability was the main factor in house prices their prices would be closer.
Obviously availability of credit isn't that important. Think of Broken Hill as the control - same availability of credit different prices by 6x obviously other factors (such as supply and demand) must impact price much more than availability of credit.
Say the banks said they would loan people up to $2m at 0.1% fixed for 10 years.
a) Do you think people would borrow it? b) Do you think they would use it to buy or upgrade their house? c) Do you think they would choose to live or invest in Sydney or Broken Hill? d) Do you think house prices would rise? d) Would you expect house prices to rise more in Sydney or Broken Hill?
Your questions are irrelevant. I said easy credit is available in Detroit and provided a link to prove it.
Your turn.
Do you believe easy credit is available in Detroit?
And I say you have not proven your case, by a long shot.
"Easy credit", in relation to a given asset class, is not merely a matter of a posted "available" interest rate. It is instead a demonstrated ability for mass-market applicants to easily access such credit, on those interest-rate terms, for the wide-spread purchase of that asset class--in this case, Detroit City housing.
So far, you have demonstrated nothing of the sort.
Say the banks said they would loan people up to $2m at 0.1% fixed for 10 years.
a) Do you think people would borrow it? b) Do you think they would use it to buy or upgrade their house? c) Do you think they would choose to live or invest in Sydney or Broken Hill? d) Do you think house prices would rise? d) Would you expect house prices to rise more in Sydney or Broken Hill?
a) some people would borrow on those terms. Some people already borrow $2m to buy a house. Most won't as they wouldn't be able to meet the principle repayments. b) people that borrow that amount would likely use it for housing c) more in Sydney some in Broken Hill (eg someone might use $2m to build a bespoke large house in Broken Hill if they could meet the repayments) d) it would place upward pressure on prices where supply is constrained, so yes for Sydney, less certain for Broken Hill e) more in Sydney
In summary, those lending terms may add fuel to Sydney house price fire but it's likely to be a small impact as most people couldn't make the repayments on the principle. This is likely to marginally increase the spread between Sydney and Broken Hill. This difference in price between the 2 locations is nothing to do with credit availability but all about desirability, increasing population, wage growth for professionals, increase gap between rich and poor, restricted land release, nimbyism, rising costs of construction and govt charges for new builds (new builds are needed in Sydney for the 1,000 per week new entrants).
Edit - repayments on your loan terms will be $6750.00 per month for the first 10 years for a 25 year loan then you are at risk of significantly more for the last 15 years. If you wanted to pay this off over 10 years to stay within the fixed interest period repayments would be $16,750 per month. Either way, your not going to get that many takers.
And I say you have not proven your case, by a long shot.
"Easy credit", in relation to a given asset class, is not merely a matter of a posted "available" interest rate. It is instead a demonstrated ability for mass-market applicants to easily access such credit, on those interest-rate terms, for the wide-spread purchase of that asset class--in this case, Detroit City housing.
So far, you have demonstrated nothing of the sort.
Try again.
:pop:
You are clutching at straws.
Shadow has proved cheap credit is readily available. He does not need to prove people have the ability to borrow this credit at all in Detroit as anyone in the USA can buy a property in Detroit it is not limited to local people.
What you have not done is prove that easy credit forces prices higher as the main driving force. Most posters have said easy credit is a factor in demand but far from the only factor or most important.
A good reply and I generally agree with what you say.
The amounts and period in my example are by way of example only so no need to get too technical but anyway I agree your conclusions.
So what do we agree on and what can we conclude?
1) Some people would borrow it and use it to buy houses. 2) Easy credit and low interest rates DO result in generally higher prices. 3) The ratio of house prices will remain generally the same between regions. (you say marginally higher but fine)
This is exactly my position and we agree.
Please note however that originally you thought that
Quote:
If credit availability was the main factor in house prices their prices would be closer.
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