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Strategies & Market Trends : The Residential Real Estate Crash Index -- Ignore unavailable to you. Want to Upgrade?

To: Tradelite who wrote (534)	8/29/2001 4:59:48 PM
From: patron_anejo_por_favor	Read Replies (4) \| Respond to of 306849

<<, I have emphasized the difference between long-term and short-term ownership. If long-term, the wrinkles will iron out one way or another and the risk of ownership either declines or disappears over time.>> OK, I think I can agree with most of this. The problem is that few buy a home with the expectation that they'll flip it for a gain, for the most part (some of the more speculative areas of the country where a lot of flipping has gone on like the Bay area excluded). Most people buy a home expecting to live in it forever, pay the note every month, slowly work that big debt down. In the era of 20% down payment minimums, that was prudent and wise personal financial planning. However, the trend towards "low down financing" and "cash out refinancings" has changed everything. Average percentage of home equity ownership DROPPED last year, during a period when people were employed at record levels. Obviously, many homeowners don't consider their home to be the inviolate, sancrosanct holding that you and I do. We would never consider the family home to be simply a giant sink to hold all our debts, and to use and abuse as a facilitator of personal consumption. But that's the concept being foisted on the American people by the mortgage finance industry, the Fed, the GSE's and their accomplices. And it's being bought, at the very time it can do the greatest harm to the greatest number of people. Ultimately, I believe it will have a profound effect on home values (thus the title of the thread). Of course, housing is a regional industry and market, and your results may vary, etc. But if the end result is a big jump in foreclosures, housing supply at the margin will no longer be constrained. Prices at the margins will drop, and those who've leveraged up to buy "all the home they can afford" will be severely pressured. Glad to have you posting on the thread, we need to hear all sides on this important topic.