Defaults rise in California

Central Valley Business Times ^ | 8/21/2006 | Staff Writers

[VegasCowboy]

Interest only loand = renting from the bank.

Hydroshock's posts = broad generalizations and tons of hyperbole

[Hydroshock]

That is how I see it. I would never buy a house with anything other then a fixed loan.

[VegasCowboy]

That's great for you. It doesn't mean others can't manage other loan products to their benefit.

[Mase]

I'll bet the residents of Tokyo would be glad to hear that they will recover the >50% drop in the value of their real estate.

Using Tokyo as an example for what can happen here will only be relevant when our economy experiences 14 straight years of deflation. Not gonna happen.

[Mase]

I would never have known who posted this thread unless I looked at the keywords. LOL!

[Hydroshock]

Alot of those people will manage to lose their houses in the next 2 or 3 years.

[VegasCowboy]

So will a lot of people with 30 year fixeds.

My point is that some people may be foolish with their mortgage, or buy too much house. That doesn't mean that everyone who uses a non-conventional mortgage is a fool or will lose their house. I'm not sure what your point is, but it sounds like you believe everything but 30 year fixeds should be outlawed, and anyone who does not have exactly your risk tolerance is an idiot. Am I far off?

[Hydroshock]

I will state it again. I think that a real serious tightening of lending standards is in order for the lending industry.

[zek157]

hmmm, guess I didn't make as much as I thought the last 10 years in DC. lol...

I don't make 1800's $'s & the comparison is somewhat irrelevant. Show me a 10 year period of decline outside the depression years.

[RayStacy]

Not following you. Not sure how much you made in DC in ten years is pertinent. You seem to be saying that the houses could have been worth more in 1870, AND at the same time, there was not a period between now and then of 10 year decline. The houses were worth more in 1870 than now. More in 1950 than now. More in 1960 than now. Were they worth more in 1996 than they are now? I don't know. But inner city housing in a great many cities all over the country is a BAD BUY. You have heard of white flight have you not? Here are the 10 year declines.
1870 - 1880
1880 - 1890
1890 - 1900
1900 - 1910
1910 - 1920
1920 - 1930
1930 - 1940
1940 - 1950
1950 - 1960

[zek157]

turn the clue light on. Even if I buy into your argument that housing in DC, or any other area was more expensive in 1870 inflation adjusted it was not strait line deflation. There would have been multiple periods of increase. 1995-2005 to be one. I didn't buy the properties I sold in 1870, but instead 1988, 1990 and 1993. 1870 doesn't come into the equation in any way, shape or form. When I sold the properties it was at considerable profit. Have you ever herd of gentrification? I didn't think so. It can be your friend.

[zek157]

by the way, I'm not buying anymore. Couple years when the fear is really in the air I will probably do it again.

[ladyjane]

Timing is everything in real estate.

I had a tenant who was going to move out and buy an ocean front townhouse north of Boston. She and a friend figured they could afford it. The price was $500,000.

She didn't do it and two years later they went for less then $200,000.

Now they're worth about a million.

[RayStacy]

I will turn the clue light on as soon as you learn to read simple English. I NEVER EVER EVER EVER EVER said or implied that there was no up and down movement in the inner city dc housing market. I never ever talked about your homebuying experiences. I merely said, and continue to say that there is a good deal of inner city dc housing that IS A BAD BUY. You yourself said that that was true in Baltimore. You seem to be saying that "Balt. experienced inner city decline cause of drugs and murder and, well, the exact, precise same reason LOTS of inner cities declined, but as we all know, that kind of thing never went down in DC, that nation's murder capital for many consec. years back in the 90s" Stop trying to change the subject from inner city decline in SE DC to your personal homebuying experiences. I also made a fricking fortune in DC area real estate starting in 1990 or so. That, also, is irrelevant to the discussion.

[sr4402]

You do realize you can pay down principal on an interest-only loan, don't you? And you realize many people use them as a tool to manage cash flows, especially those whose incomes are not consistent from month-to-month?

Yes, I do. Same slippery slope. You are ignoring what happened to all those whose interest only loan payments have gone up by almost 25% and will go up even further. Are you ignoring the consequences in human terms or just for profit?

[zek157]

Timing and leverage is everything. I never bought anything I couldn't afford to hold onto regardless what happened in the market. It also had to be at least slightly positive w/cash flow. Not following these general rules is what will kill this generation of "investors" and make some good pickings in a couple years.

[zek157]

Sorry my mistake.

DC's poorest neighborhoods peaked in price in the 1870!!! That's 130 years of decline

[RayStacy]

Precisely.

[zek157]

Funny thing is some of the crappiest most drug infested parts of mid 90's DC generated the best increases the last couple years as neighborhoods cleaned up. Owning a few was like hitting the lottery. There are a lot less of these areas in the city.

Good on you for making $'s in DC. I guess we are talking past each other. My cup is half full & I'll leave it at that.

[Toddsterpatriot]

Poor ex-Texan. He stays up all night worrying that someone, somewhere might have made money in real estate. Kicking himself because he didn't get to participate in the real estate market.