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Comment by huytersd | Hacker News Reader

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huytersd

For people looking to buy. What about us poor saps that own homes.

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You continue to own a home. It keeps protecting you from the rain.

Which is great until you need to move after a price collapse. Then you are very likely screwed.

Not if prices collapse everywhere you might want to move to. Then it’s not a problem.

They're talking about having to sell the current house, obviously.

And it’s not a problem to sell at a lower price if you can also buy at a similarly low price. I’m in the same situation myself.

It's a problem if you can't sell at all, which happens to many people in a collapse like this.

That is the actual problem, yes. But it’s a problem if prices fail to drop when they should, not if they’ve already dropped and so sales happen again.

Depends. Can you transfer the loan? If not, you may not be able to get the loan, because you may need to borrow more money than the bank is willing to lend with the current prices.

I wasn’t aware there even are non-transferable loans. Transfer and second charge is the common way to sell and buy while you still have a mortgage, around here.

Out of curiosity, where is "here" in this case. I've never heard of someone transferring a mortgage here (in the US). I'd _love_ to transfer my low-interest loan considering the current rates.

In the UK all providers allow it, except for a few specialist ones. I know of people in some continental Europe countries that have done it, too.

Not if you have a mortgage. You may end up owing hundreds of thousands all of a sudden with no equity backing it.

Where do mortgages work like that?

The loan is backed by the property, regardless of fluctuations in its price. The bank takes the risk that the property may be worth less (or more) than when they gave out the loan.

But you purchased a property at value X and likely have a mortgage to cover the majority of that purchase. The lender takes a risk, sure, but if you want to sell the property, you still owe the lender whatever the principal balance on the mortgage happens to be, regardless of the sell price of the property. If you sell the property for 50% of what you paid, you still owe the full amount. If you default, the lender takes a loss, but you also take a loss in your credit and won't be able to get a new loan. (And they will continue to try to collect.)

Sure, I continue to pay the mortgage based on my purchase price. But I’m in the same situation if I simply stay in the property I bought, as its price drops.

My point was that a drop in all property prices doesn’t stop you from selling and buying in order to move. Just like an increase in all property prices.

That’s the risk of buying.

Realistically, if home prices trend down in a significant way, that’s going to be a nationwide issue.

The house you’re selling will be sold at a discount. The house you are buying will be night at a discount.

The issue is that you are unlikely to own your property outright. In that scenario it doesn't matter if the property you want to purchase is also depressed in price, you are very likely stuck with an upside-down mortgage.

As someone who has had to foreclose due to a steep price decline after the GFC and inability to sell the house, them’s the breaks of capitalism.

sounds like a bank owns your home

the purpose of language is to convey a shared concept, saying “own” when you’re actually under stress from over leveraged debt speculation does not convey that concept

No I own it outright.

Congrats! Then it is impossible for you to be underwater on it.

then why do price fluctuations bother you?

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