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

To: fatty who wrote (4800)	8/28/2002 9:44:10 PM
From: GraceZ	Read Replies (3) \| Respond to of 306849

I don't understand why a 30-70% drop would mean hell. Easy, people don't own their houses, they are in the process of owning them using a mortgage. With a 40-50% drop you start getting people walking away from their mortgages and their houses because they have no equity left to lose. If the banks get a lot of houses then it puts more houses on the market at progressively lower prices. The good news is that this type of scenario usually doesn't play out unless large numbers of people are forced to sell their houses below the mortgage value as in post oil boom Texas.

To: fatty who wrote (4800)	8/28/2002 9:44:28 PM
From: John Chen	Read Replies (1) \| Respond to of 306849

fatty.re:"hell..". I don't get it. Wouldn't that add $200,000 liquidity to the system, instead of the Fed having to keep pumping money into the system. Fed is trying very hard to keep the 'no-inflation pledge/lie'. The problem with Japan is just that: the liquidity is still locked in the real-estate.

To: fatty who wrote (4800)	8/30/2002 1:24:16 PM
From: David Jones	Read Replies (1) \| Respond to of 306849

...Why a 30-70% drop would mean hell... Well all that lost equity. If interests drop to 4% these people couldn't take advantage of it with out making the difference up in cash. They couldn't afford to sale, there loans would be still be running. Say they got a job transfer they'd have to default. It be a social and banking catastrophe. It wouldn't take that large a percentage to start the snow ball rolling. All that equity loss and watch the interest on very thing sky rocket. Stocks dropped a ton and we're still all in all eating. If such a thing happened with property equity there'd be plenty of hungry people.