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To: Roads End who wrote (84933)	3/23/2001 6:37:23 PM
From: GraceZ	Read Replies (1) \| Respond to of 436258

This is good. When a region gets too frothy is dangerous for everyone. A few years ago some friends of mine finally figured out how they could by a house in Marin County, CA. They had rented for 15 years, and for 15 years they called me up trying to figure out how they could buy in an area that seemed to get more and more expensive with every passing minute. They were people of very moderate means. For years I told them that they were better off in their tax bracket to rent. But once someone has the bug.....they want to buy, plus they were seeing the house idea get further and further away with every passing year, no matter how much money they saved. Finally their landlord offered to sell them the house they rented and to hold the loan. The loan was an interest only, 5 year balloon at 8% which was a little higher than the current commercial rate. But, with their incomes they'd never qualify for a standard mortgage so they wanted to take it. They called me to ask my advice. I railed against it. I told them, it would set them on the path to financial ruin, that there was a good reason that a bank wouldn't write that loan and who is to say that a bank would refinance the balloon in five years? To make a long story short, the house appreciated 100k in about 13 months. They had more equity in their house than some people who had owned a house for 5 years paying principal on a 30 year conventional. My only fear now is that the whole region will come down and take their equity with it. Hopefully they will have re-fied this year, because I do think prices have peaked there as well as in a lot of other expensive areas.