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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Tradelite who wrote (37514)8/10/2005 10:02:04 PM
From: mishedloRead Replies (3) of 306849
 
Mish, you're not going to like this answer, but it will definitely reflect why I said what I did, why I believe what I believe, and how I know what I know.

A "lot of people" include the many people I sold homes to over the years, who often put down huge downpayments that came from many different sources. You probably wouldn't believe me even if I cited each case in detail and told you where the money came from, but simple observation of what has happened with U.S. real estate over the years should confirm what I say.

You still did not answer the question (so yes you are correct that I do not "like" the answer) although "like is not the exact word.

I fail to see how PYRAMIDING a 200,000 house into a 400,000 house to provide "payment" for a 1.4Million house is anything other than a giant ponzi scheme. When that 1.4 million house shrinks back to 700,000 the person will owe $1M on a house worth 700,000. That is about to happen. Now if one owned 5 houses and sold 4 of them totally cashing out then great. That is certainly not the majority.

People are "house rich" FOR NOW. It will all soon come to a crashing end as dream after dream goes up in smoke.

Even if "MANY" had enough to pay cash for houses out of savings or other investments or inheritance or whatever, that is an enormously small % of transactions one would think. Even if it is higher than I think, pyramiding that investment into bigger and bigger more expensive houses is going to wipe out all of the gains on the VAST MAJORITY of people "trading up".

Mish
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