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

To: GraceZ who wrote (11791)	7/26/2003 2:05:06 PM
From: Amy J	Read Replies (1) \| Respond to of 306849

Hi Grace, Different perspectives give opposite opinions. Cashflow perspective vs networth perspective. People who are starting out seem to look more at the monthly mortgage payment (cashflow: what can they afford per month?), rather than the underlying house cost (networth: did they get screwed?). Said another way, it's possible it could be currently easier for some of the first time buyers to get hurt in the RE market (via bloated housing prices due to unusually low interest rates) since they may be focused more on cashflow than networth analysis. (This of course assumes the gov't doesn't decide to pay off its seemingly uncontrollable debt thru hyperinflation.) Previously, the first-time buyers had it good - I loved your example about the $60k couple who now have a $600k house due to their $300k doubling. Awesome. Unfortunately, moving forward things will most likely work in the opposite direction for newbies (i.e. first-time buyers). The newbies that could be seriously hurt moving forward. And I suppose that could eventually negatively impact the higher end market too a bit. I think the newbies may be taken to the cleaners if they buy today. (Like you said, the higher end homes are mainly purchased thru investment capital - whether that investment be from the gains of a prior residence or from stock.) How many newbies have investment capital? Regards, Amy J

To: GraceZ who wrote (11791)	7/26/2003 7:02:22 PM
From: J. P.	Read Replies (1) \| Respond to of 306849

Just because the money is easy doesn't mean it's the smartest thing in the world to do. I'm not one of those who subscribe to the "low monthly payment and higher price at lower interest rate is better" theory. I'd rather pay a higher interest rate if that's what it takes to get a lower price and pay it off quick. But maybe that's not working the system properly. I guess anything is smart, even dumb things are smart, as long as the market is working in your favor. Just like it was smart to buy internet stocks in 1998 and dumb to buy them in 2000. And yes, yes, I know, houses are not like stocks. You can't live in your stocks. And the transaction cost prohibit houses from being traded like stocks, yada, yada, yada. The thing is, all those who would encourage one to buy a house at the top of a massive seller's market are not going to be there to pay the bills and clean up the mess if things turn south. Just like when the stock market comes tumbling down, either you were protected or you were S.O.L. Just don't see the sense in buying a top.