Posted on 04/03/2006 7:38:13 AM PDT by ex-Texan
Correct, in the banking biz those are known as 'low doc loans'. Code for a family sponsored deal.
"Fully 22 percent of the borrowers who borrowed at initial rates of 2.5 percent or less during the past two years have negative equity in their homes, and 40 percent have less than 10 percent equity. The study also finds that a third of people who took out adjustable rate mortgages last year have negative equity and 52 percent have less than 10 percent equity. How is this possible? One reason is that 43 percent of first-time home buyers paid no down payment last year."Add another $ 20,000 or $ 30,000 to the negative equity equation based on falling prices. As time passes the black hole just keeps getting deeper.
Here you go -- have at it.
http://nymag.com/news/intelligencer/16531/index.html
Housing is cyclical and regional. No one is saying it will (or can) continue at its current rate of appreciation. There will be corrections and they will be regional in nature. This country hasn't seen a year over year decline in the aggregate value of real estate since before WWII.
...while I build my positions in precious metals.
I suppose one reason precious metals are increasing in value is the belief that inflation is higher than being reported or that a big increase is expected. Although inflation may be bad for stocks and bonds, it is terrific for tangible assets like real estate.
Please continue to believe, and pour your money into real estate, stocks and bonds.
Yes, we will. Because, as you can see from this chart, over the long term, gold has barely kept up with inflation while stocks, bonds (and real estate) have easily outperformed the yellow metal. The gold bugs have had a good two year run, but stocks and bonds will continue to be the better investment.
and encourage everybody to invest in this rapidly growing, fantastic, superbly managed economy of ours.
Someday, our amazing economic growth will slow and the doomsayers will tell us that they told us so while ignoring the fact that our homes and stock portfolios more than doubled in value during that run.
The beauty with the bubble, is that people in Blue cities will most likely get hit the hardest.
Boston, Chicago, San Fran,Seattle and Portland. Oh well.
I suppose after losing 30% of their home value, they'll be tighter when it comes to funding liberal candidates.
Credit Bubble is the one to worry about.
If helicopter Ben is true to his documented philosophy - you will be right in the near term, real estate and equities will continue to appreciate - as will precious metals. However, once people figure out where all that liquidity is coming from, PM's will skyrocket and the other two will tank.
But, as was said, talk is cheap - we're all putting our money where our mouths are. May the wisest investor win...
Just one example - look at Pulte Corp (PHM). Stock is at $38 and they will probably make something like $6 + per share this year. Media reports about housing (and just about everything else) are very misleading.
A house is worth what someone is willing to pay for it.
>>>I suppose after losing 30% of their home value, they'll be tighter when it comes to funding liberal candidates.<<<
;^)
A house is worth what someone is willing to pay for it.
That's the problem. The price that someone is willing to pay and is able to pay is subject to fluctuations.
What is his documented philosophy?
How would you fight deflation? That's what his comment was referencing.
However, once people figure out where all that liquidity is coming from, PM's will skyrocket and the other two will tank.
Well, I'm not one to believe that inflation is as bad as the doomers say it is. I often wonder why the doomers here at FR seem to know that inflation is much higher than what's being reported, while all those smart people who make their living buying and selling bonds, and have access to much more information than you and me, are completely unaware. Again, if inflation skyrockets home values will follow. Inflation will cause home prices to increase.
May the wisest investor win...
Time, and this chart, have already proven who that will be.
I just obtained what is likely considered a "risky mortgage" by many on this thread. The first 10 years are interest only, then it becomes a fully amortizing 20 year loan. The rate is locked for the entire 30 years. Now, for someone like me this is a great product. It gives me the flexibility to pay down the mortgage if I'd like, but if I have a tough month or two, I can just pay the minimum interest payment.
Interest only is not always a bad thing. I wish I would have done an interest only 5 year ARM on my last home. I would have saved a TON of money and lost out on a minimal amount of equity.
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