91–100 of 196 posts
Feels bad for the people paying mortgages for homes they’ll never get to see. They can’t just stop paying either. Doesn’t work that way.
Feels bad for the people paying mortgages for homes they’ll never get to see. They can’t just stop paying either. Doesn’t work that way.
In the city I'm aspiring to buy a house (a.k.a. somewhere near Tokyo), you only need to put the down payment if the construction hasn't finished yet. There will be no mortgage until after the house is ready. I kind of think this may be a slightly better model in terms of homebuyer protection... (May not sound good for the developer though)
Earlier quoted context omitted.
PSA: this is not how stock price works.
I thought it was; help me understand where I'm wrong.
If the price rises by 120%, the market see a 120% chance of favorable outcome?
Why would they resume trading NOW, right after Longfor was mixed with mud? https://timesofindia.indiatimes.com/business/international-b... It's not going to make people feel positive about their mortgages
Feels bad for the people paying mortgages for homes they’ll never get to see. They can’t just stop paying either. Doesn’t work that way.
If they stop paying the mortgage, the bank can foreclose on their non-built house. Frankly speaking, the government is probably going to bail all of these people out; if they don’t the whole real estate sector could fall over. The practice of selling houses yet built is not limited to Evergrande.
Earlier quoted context omitted.
Evergrande sells apartments before they are built to fund construction, and the purchasers pay mortgages during the build. If the company has insufficient funds to complete ongoing construction, which gets delayed, purchasers stop paying their mortgages and the company goes into a death spiral. Meanwhile purchasers get shafted, buildings stand uncompleted, and construction workers and materials suppliers see demand c…
This creates a situation where developer and homeowner interests aren’t aligned. Once the developer receives the money, they are not incentivized to deliver the house on time or do quality construction. The other model, where investors fund development before the house is sold, aligns both parties. The developer/investor wants to produce a good product so that it will sell at a high price and the buyer has the chance…
That should be a solution. But not usually that simple, sadly
The developer/investor wants to produce a product that LOOKS good so that it will sell at a high price. Read the other comments about quality
And, those investors often sell the property before it is finished or before it’s even started. So you have the same problem, with a longer chain of middlemen
Earlier quoted context omitted.
What's the worst that can happen? It's all just numbers on papers or memory. When Evergrande folds, others will pick up the opportunity. Why should the government and the non-investors pay for government agencies that enforce regulations? If investors cannot handle due diligence, let them pay private agencies to secure their investments.
Worst that can happen? If banks have used peoples' savings to purchase Evergrande debt or anything related then the banks may not get repaid which would result in the banks losing peoples' money leading to people spending less money resulting in a recession or depression.
Can someone explain to me why is this problem? The houses that they've built are still standing, people can still live in them, what's the problem?
Evergrande sells apartments before they are built to fund construction, and the purchasers pay mortgages during the build. If the company has insufficient funds to complete ongoing construction, which gets delayed, purchasers stop paying their mortgages and the company goes into a death spiral. Meanwhile purchasers get shafted, buildings stand uncompleted, and construction workers and materials suppliers see demand c…
Personal anecdote. I had a mortgage for 2 full years before being able to move in to my apartment because I bought it before a single stone was laid. The way this works here is that the money is held into an escrow account for most of time, with the construction company only receiving payments in installments (e.g. 'roof finished'). Lastly, the final 5% of the purchase amount is held back until 3 months after the unit is finished, which can be extended if large defects are found. Bankruptcy risk was covered with an insurance, which was a condition to the mortgage.
Why isn’t it down 100%? According to the article, they’re in bankruptcy with way more liabilities than assets. Presumably the shareholders are getting wiped out.
Why isn’t it down 100%? According to the article, they’re in bankruptcy with way more liabilities than assets. Presumably the shareholders are getting wiped out.