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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: John Vosilla who wrote (28749)3/26/2005 3:48:10 PM
From: GraceZRead Replies (3) of 306849
 
How does a 5-10% drop in value of an asset in which you have little financial interest ruin you? That is, if what you say here is true, they may have zero money invested:

Many, many, many, people have taken out 90-100% of the value

Seems to me it is the banks which are set up to fall in that situation and those who have the most money invested in their house, not the least.

Now the person who doesn't walk, the one who sells and satisfies the principle of the mortgage from savings can suffer real losses as I've illustrated earlier with my examples of my neighbors.

Message 21138919

During that downturn where 50% of the houses in my neighborhod were underwater to some degree there were almost no foreclosures in the neighborhood of 150 houses or so. There weren't a lot of sales either. The great news for us was that our incomes rose so much during the period our house was priced below what we paid for it (ten years), that the mortgage payment shrank in significance as well as in real terms (we refinanced at a shorter term and lower rate). I never saved so much money in my life as I did when I was stuck in that house.

Also, if housing inflation foreshadows an accelerating trend in inflation in the general price levels one can expect wages to inflate as well.
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