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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: JBTFD who wrote (16132)1/17/2004 5:51:33 PM
From: Elroy JetsonRead Replies (1) of 306849
 
Mortgages are an enabling device which do little to change the long-term price equation.

CMOs do provide an endless source of funds for mortgages, at a price.

This price plus the real estate tax and other expenses add up to the total cost of holding a mortgaged property.

When the rental income is less than the total cost of holding the property it attracts few buyers and perhaps the price declines - even though an endless supply of mortgages may be at hand.

The owner-occupied market often becomes more irrational than the rental market. Not every owner thinks very logically about what price they're paying for rent. But bubble markets do collapse back to reality with a vengeance.
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