Home prices 10% to 30% to high! and Oil.

[cottonpicken]

A guy walks into a bank to buy a house for 450k,the sellers profits 150k.

The seller walks into the bank and deposits 150k.

Then what?

The bank has 150k to lend out?

No the bank lends out many multiples of 150k.

Works until it doesn't.

The fraction of the deposit that is left is called the tier one reserve.Fractional reserve banking,fractional reserve notes.

This is what the bassel treaties where all about.

[farmaholic]

Like cartoons, where a snowball is rolling downhill and is gaining size and speed...... it usually comes to an abrupt stop hitting something, destroying everything it hits and itself.

[farmaholic]

Sad part is this chain of events isn't or wasn't meant to be funny.

[Klause]

We bought a nice 20 ac acreage with corals barn shop and a 1300 Sq. Ft house for mid 100s. Distress sale. Replacement value is 180G for the house... I'm not sure then how some of these acreages go for 475000... can't people figure this out?


One of my buddies bought a house this summer... rig was layer off yesterday. Heard from another good buddy last week got married bought a house two cars and is now laid off with a baby on the way.

[sumdumguy]

Farmaholic, you can't regulate price, but you sure as heck can tighten up lending by increasing down payments, reducing insurance through CMHC, increasing interest rates and reducing the length to pay back. That's how!

[farmaholic]

No argument there Sumdumguy, you're right. Credit was too easily had. There could be some interesting times ahead.

Congrats on the acreage Klause, if it has natural gas with all the other utilities including a fairly new well, you're laughing. And somewhere for Klausette to keep her horses for free, ahhh life must be good.

[sumdumguy]

A young rig worker that I know just bought an acreage for $750,000 with only a house on it. He is just moving in this weekend. Need I say more?

[BreadWinner]

Don't worry about the lender in that house worth $750,000, the bank would have to get at least 20% down and most likely a little signture from his daddy. Interesting times ahead for those oil workers. I'm think a scary reality check is in order. I remember the last real slow down in the 90s and most oil workers were real desperate for any type of work just to feed their families.

[wmoebis]

Do you think there is enough money left in EI to pull this off? Or has it all been squandered away, should have built a pretty good nest egg in the last few years.