Real Estate Bubble Bursting
 

There's been threads about this in the past. Either house prices are just going to keep on rising or we are due for a "correction" soon. England's had a bit of a sell off. When is the US' turn?

umm.. the market is fixing itself if anything

ur right tho

house that are worth millions will have less ppl buying which means lowered prices

the lower tomiddle ones are still high

and besides... RE isnt a bubble. bubbles pop and ur left with 0, RE ur left with something

Blame it on Clinton. :1orglaugh

Fuck that...blame it on Bush like everything else.

That's true, you're left with something....but if you BORROWED MORE than the House is worth...you are left with NEGATIVE cash flow.

well.. what the house is worth only matters when ur selling it. if ur gonna live in it, u wouldnt really care.

flipping property is possible within the timeframe of 2-3 months (excluding paperwork and apparasials) prices shouldnt flux that badly at that point. RE isnt that liquid.

I think a lot of American homeowners are being set up.

I'm sure all of us (at least those of us in California) know someone who recently sold their home because they had huge gains/equity in the home -- only to turn around and get into a much bigger mortgage than they had before.

They do this without getting raises at their jobs, and they do it knowing that the economy is on the ropes.

But the low interest rates are enticing them to strap themselves to an even larger mortgage than they had before.


So what happens if the RE market value drops considerably? The squeeze will be on, people will lose their jobs & not be able to afford their shiney new mortgages.... leading to foreclosures and bankers getting it all.

Bankers are smart - they always win :thumbsup

That makes me think of another question.....

Say you have a 400,000 mortgage on what was (when you bought it) a $500,000 house. So you put down the 20% ($100K) and now you are left with your $400k mortgage.

Now I doubt this would happen... but if something happend to the RE market and it got cut in half.. and your home was now worth only $250k and your mortgage was still $400k...

Could the bank then "call you" on that difference? Like how in the stock market they do margin calls? Tell you that you have 90 days to pay the $150k difference or they will have to terminate your mortgage?

That could be a big problem for homeowners.

:glugglug

The bank doesn't care as long as you make your payments they are happy.

I dont see a big correction atleast in Southern California.

Take the average household.

Man earns $30k and Woman $30k.. For 60k total a year...

That means they can easily afford 2k a month house payment as one of them will earn that much by themself.

2k a month house payment buys you a 375k home, not the best but a doable one here.

I think we are getting close to maxing out the dual incomes now though as the avg home price is over 330k I believe.

In So Cal, its a question of simple supply and demand. There just is not enough housing for the growing population base.