Well, this is what happened in the last housing recession.
I bought my beautiful little townhouse in Alexandria, VA in 1989. It went down in value for the next seven years before the prices began turning around in 1997 or so.
I remember saying to my mother, after several years of home ownership, “so, what’s all this talk about building equity?”
This, too, shall pass.
I for one would not buy a house unless I could afford 120% of the total monthly cost, putting 10% down on a 30 fixed note. And I buy a house to make it a home, so if it goes up, good, if not oh well I have to pay to live somewhere.
Actually, I feel just fine. The economy seems to be doing just fine.
I disagree...in a sense that home ownership will continue to bring equity profits as in the past.
Speaking as a Realtor for 30 years, the prices had gone too high to sustain.
Unless they start offering 200 year amortization schedules, buyers won't qualify for mortgages...and nobody is able to save for a downpayment to meet FNMA guidelines.
And we haven't even begun to discuss the fact that today's 6.5% 30 year fixed rate is historically low and not guaranteed to be there indefinitely.
Rex, I bought my house in 1991, not far away from Alexandria. Even if it loses three quarters of its value, if I sold it I’d still make a killing relative to what I could have made in the stock market or any other investment instrument over those years.
The debt hangover that we have today is unprecedented at least five times worse than 1989.
This time it will take at least 15 years to unwind the excesses.
Unless the Fed hyperinflates us out of our debts.
BUMP