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Comment by justaguyhere | Hacker News Reader

Why exactly should we care about wealthy borrowers at this point, when millions of people are losing their jobs/health insurance...? So what if they get told no - it is not like they are living in a 500 sq ft apartment anyway

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When the people with a huge mortgages (ie. regular people in expensive areas) start losing their shirts, they are going to further crater the market.

You should have empathy for everyone. You should have empathy for the pain poor people experience and the pain the rich people experience. Someone's income doesn't make them more or less human.

Nobody is arguing that rich people don't bleed or don't feel pain. The point here is that for rich people a rent strike is a nuisance, but for renters the alternative to a rent strike is homelessness, or not being able to afford their medicine, or something equally catastrophic. That's why you don't see rent strikes everywhere, you see them where renters have their backs against the wall.

Not sure what this has got to do with empathy. If rich people don't get favorable mortgage, it is at max an annoyance to them. They are not going to be homeless or going to ask for food stamps. If a normal family with one home and one mortgage is not able to refinance or not able to pay their mortgage for a few months, their bank will go after them and they will end up on the street.

Sure we can talk about it and feel sorry for their inconvenience, but our time is better spent looking into much bigger problems of much bigger percentage of our population.

Keep in mind that in high cost of living areas, such as the Bay area, all housing is essentially jumbo mortgages.

If jumbo loans are not available or hard to obtain, this means that people who do lose their jobs face an illiquid market and don't have the option to sell their house to avoid default, and thus end up on the street.

I wonder what % of those with jumbo loans are completely out of a job? And further in such circumstances that they cannot afford to pay even a reduced or deferred mortgage payment? Or move into a lower cost apartment in another market? Going straight to the street tomorrow sounds like a stretch with options along the way especially for someone who was in a jumbo in the first place. Loans take a long time to default/evict and lenders are probably not in a rush to put the liability on their books right now either.

Good points.

I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place.

I don't know what percentage of the market that is though.

"I'm assuming the job market for non engineers in the Bay area right now is pretty tight, so for them, and assuming they have a mortgage, they might be caught between a rock and a hard place."

I'm not from/in the bay and not paying attention to it, so will go with your assumptions here.

Zooming out a bit on the general topic of high COL markets though, it's interesting talking with people around my high COL community who feel like they deserve to live and stay here regardless of the changing economy. Thinking out loud:

Maybe high COL markets are untenable in this economy for a certain percentage of the population?

...if there were no welfare schemes going around wouldn't these high COL areas rebalance faster to some equilibrium in line with broader affordability?

Are the handouts just further propagating an attitude of entitlement while also artificially inflating high COL markets otherwise overdue for a reset?

Well, high cost of living markets are basically propped up by the surrounding economy. It's true that the high cost of living areas would rebalance, but that can leave the current homeowners underwater.

As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout?

"high cost of living markets are basically propped up by the surrounding economy."

Yes - to the extent that surrounding economy can support the general COL. So if/when the surrounding economy can no longer support a relatively high COL (in this example of mortage/rent = housing), why not just let the COL adjust proportionately to the surrounding economy?

So in the event the surrounding economy is strong & growing, the COL is also high and rising (as we've experiences over the past ~10 years). But when the surrounding economy is bad and declining, the COL should lower to match, no?

"As for the handouts part of your comment, what do you consider a handout? The stimulus checks? Is QE considered a handout? "

Yes, among others, these programs and others like it are only artificially propping up high COL areas (housing, for example) that otherwise would experience a correction (down) tied to their respective surrounding economies.

Then housing prices would fall to prices in which people can secure a loan and then stabilize around that.

Who is anyone to say what anyone else "should" do?

Even if you don't feel bad for them, it's still an interesting and maybe surprising story.

You'd be surprised, at least in London (and I'm sure even worse in SF/NYC) you can have an enormous mortgage for a small apartment.

The interesting part of the story is that the people with $700k mortgages - I'd hesitate to call this class 'the wealthy', more like the 'above-average middle class' - are getting hit with a double-whammy: their wages are paying for the mortgage subsidies for the poor which are driving their own mortgage needs off the market.

Next stop: universal health care. Then the real gnashing of teeth starts.

In the state of Georgia, I'd definitely call someone with a $700k mortgage wealthy. I'm in an affluent suburb north of Atlanta and I'd probably be showing some bias if I didn't consider myself to be wealthy in a $400k house. If I read it correctly, the example given in the article was for a refinance for a lower rate, and while that would be nice, it's not as likely to be a necessity. I've considered a refi, but as a small business owner I'm not sure I'd qualify in the current climate (even though my software company is still making money).

I'd say much of this board disproportionately lives in places where $700k is the going rate for a normal mortgage, though.

My definition of 'rich' would mostly include people who don't need $700k mortgages.

Agreed on the HN demographic. I have lived in the NYC metro area and felt the pain of expensive housing, and I would only do it again if I met your definition of rich.

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