Has the bubble burst?

News and Review ^ | Sep 21 06 | Sasha Abramsky

[onyx]

How surprising to learn you're against mandating builders to provide for schools and parks. Perhaps you prefer to allow builders to erect tall units of condominiums regardless of the locale?

CA's real estate soared for several reasons, not just supply and demand. People wanted larger houses and more 'extras.'

No interest loans are shams as are some of the more imaginative finanancing but it still reverts back to BUYER BEWARE.

[RockinRight]

Since they weren’t paying anything toward the principal of their mortgage between 2004 and 2006, they didn’t have any more equity when they refinanced in 2006 than when they moved in. For those 24 months, all John and Karen had done was pay close to $2,000 a month servicing their debt. This was a far higher monthly payment than if they had been renting during this time.

Pros and cons of interest-only loans aside, this is a common phenomenon in overpriced markets. The rent for the same house is less than the mortgage payment on the same property. Without getting too technical and figuring different down payment scenarios, here in Ohio a renter can generally purchase a similar home in a similar neighborhood, and have a mortgage payment very close to what they paid in rent.

[onyx]

StephenJohn being snarky again?

[Petronski]

No.

But I do have a degree in economics and an undying aversion to deceptive and/or ignorant "universal sales pitches."

[RockinRight]

In the end, they borrowed $260,000--$16,000 more than the initial cost of the house--at a higher rate of interest than they were paying when they first bought the house in 2004.

Fees aside...the interest rate was NOT higher. It was 6.375 on a first mortgage and 9-something on the second...now the whole thing is "a little over 6..."

Not saying the prepayment penalty didn't suck...but I hate when journalists stretch the truth.

[Panzerfaust]

The only bubble bursting here is the idiocy bubble. Those being affected are those who are always affected- the idiots who fail to read a mortgage document and who are trying to live above their means. The couple in the story are two of the stupidest people I've read about in some time.

[nopardons]

As always..................................

[Darnright]

>They could buy a $60k home in fly-over country. California dreamin'<

That's for sure. A 200,000+ home is not a starter, for young people without a downpayment. I know a lot of folks who've moved from California, and New York for that matter, in order to own a home.

I just looked and found a 3 bedroom, 2 bath house for 59,950.00 in the city near where I live. It's not the greatest neighborhood, but it's a lot safer than some place in East LA.

[MikefromOhio]

did you see the latest kookery from Jerome Corsi today?

[onyx]

Churchy wants attention, even negative attention.

[MikefromOhio]

LOL

[Howlin]

What is it?

[nickcarraway]

I am not saying they weren't. A lot of the borrowers are stupid. And they are going to pay the price- I wouldn't suggest the government do anything to absolve them of the consequences of their stupidity.

[Petronski]

Where was the prepayment penalty mentioned? Did it apply longer than the period of fixed interest?

[Brimack34]

Not yet but I will let you know.

[nopardons]

Good for you and the missus!

Sadly, newspapers ONLY write about mordant idiots and you aren't one. Ergo, you will NEVER be written up!

[RockinRight]

since the government counts the money not paid back to the second lender as income paid to the borrower.

Regardless of one's opinion of homeowners who do this, am I the only one that thinks it's BS that the government does this?

Abolish the IRS! Go to a consumption tax.

Wait...sorry...wrong thread...

[Moonman62]

In addition to the Note, the "Truth-in-Lending," and the "Federal Disclosure on Adjustable Rate Loans," apparently the government should also require another form called "Now Listen Here You Senseless Git!"

The mistake these people made was believing the word of a real estate agent.

[nopardons]

hehehehehehehehehehehehehe

[elmer fudd]

Is there a difference between a "crash" and a gradual downturn? The media loves to call things "crashes," but it doesn't mean it's justified. I live in an area with extremely high-priced real estate. The market is not as robust as it was a year ago, but I would hardly describe it as disastrous.

Real estate is quite a bit different than stocks. When stocks go down they can really plummet, whereas real estate usually doesn't lose that much of it's value even in a downturn. The problem is that a large number of people have very little equity in their homes. So if a $400,000 home goes down to $300,000 those people have just lost $100,000 they don't have. Stocks on the other hand are ussually bought and paid for, so even if you lose big in the stock market it doesn't land you in debt.