Excerpt of an on-line conversation:
Comment by WingLee
2006-08-31 14:48:20
I live in OC and am a computer engineer, back to 1999-2000, most of engineers in our company are trading stock (you have to play and to make some extra $), and usually the more money you have the more $ you play. (Too bad, my wife lost 100K on this fantasy game).
However, the RE bubble is totally different story, most of engineers, I know of, with a lot of cash and good income stay away from RE. And the people with a little cash or no cash are playing now. For example, once I heard a few engineers who all just bought their houses in recent years are discussing the worst case scenarios. Therefore, I think they are quite aware of this is a gamble, but based on the risk and take, they think this is a good game to play, I think, the RE phenomenon is really in favor of people without savings.
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Comment by txchick57
2006-08-31 15:57:17
Wing, you are about the first person I've seen who gets that. I felt the same way.
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Comment by WaitingInOC
2006-08-31 16:12:56
Yep, it's definitely good for those without assets as it allows them to basically get all of the upside reward (potential appreciation) with basically no downside risk of out-of pocket loss (I guess negative credit rating is about the only downside for them) because of non-recourse loans for owner-occupied property. And, what other speculative investment allows you to play with almost none of your own money at risk? And, since lenders relaxed lending standards, even those with poor credit could join in, thus encouraging those with poor credit to take the gamble since the only risk was having already poor credit get a little worse.
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