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

To: mishedlo who wrote (37509)	8/10/2005 6:42:50 PM
From: Tradelite	Read Replies (3) \| Respond to of 306849

Mish, you're not going to like this answer, but it will definitely reflect why I said what I did, why I believe what I believe, and how I know what I know. A "lot of people" include the many people I sold homes to over the years, who often put down huge downpayments that came from many different sources. You probably wouldn't believe me even if I cited each case in detail and told you where the money came from, but simple observation of what has happened with U.S. real estate over the years should confirm what I say. I'll attempt a few examples for you...... I sold a home to a young scientist-type and his new scientist wife (both from England) who paid straight cash for their home--a real nice townhome at $275K. The cash came straight from the husband's father and mother, and was in the bank when we did the transaction. Father was VP of one of the world's largest global candy companies; I know you've heard of it and probably have eaten some of their products at some point in your life. Several years earlier, I had sold a home to Father and Mother themselves in the U.S., (it was only "one" of several homes they owned around the world), when Father came to work for a while at U.S. headquarters, before retiring back home to Europe. I could go on and on about the 30-percent down payments made by very young but high-two-income couples (with maybe some downpayment money gifted from parents but who had saved plenty of their own money), immigrants who knew how to save their cash and steadily moved up in the housing market until they had large amounts of equity and money in the bank...and this was BEFORE Clinton's tax cut, which Jim McMannis would blame for their success, although I disagree. <g> Just about anytime I was selling a house to or for an older person, all their loans had been paid off, money wasn't an issue, they were looking forward to moving to their new home here or in Florida or elsewhere for retirement, and there was probably enough money in the bank to pay or borrow cash for THREE houses if they wanted to. Even when I sold homes during the sharp real estate downturn of about 15 years ago, the sellers who were underwater--in terms of what they had originally paid vs. what they got from the sale--had money in the bank to pay off the deficiency right there at the settlement table, no sweat. They needed to get rid of the house and move on to new jobs in another town. They didn't have to starve themselves or go bankrupt. We all meet different types of people in our daily lives or through our work. I don't know who you meet on a daily basis or have met in the past. But, I personally will NEVER doubt the amount of money that can be and has been deployed in the U.S. housing market. I've seen enough of it to know it's there. Sorry I have no exact figures for you, but you can look around and see the evidence of this money for yourself. When the value of the U.S. dollar fell a while back, the media quoted foreigners saying "The U.S. is on sale!" and saying they were headed to the U.S. either to pick up some real estate in New York or Miami or just do a lot of shopping with their euros. Have you ever been to Hawaii and seen all the young, well-heeled Japanese couples in Honolulu, who are there just to have a good time? I saw plenty of them when I was there in the 1980s. They still hop flights from Tokyo just to do some quick U.S. shopping. (My nephew is a pilot who flies them back and forth.) What you "might" be overlooking or might not know about lending is that when today's well-publicized newbie investors and speculators go out into the marketplace, they pay higher dollars for investor loans than most people pay for owner-occupied loans. Your desire to learn how many owner-occupiers can afford their present loans-- and your assumption that many cannot-- would seem like a fruitless enterprise to me. Why don't you pick up the phone and talk to some of the lenders in your town?---they would be the source of your best information. I've said it before--we might have to stage a funeral for the newbie investors and speculators who have made some bad decisions-- but the real money behind U.S. real estate just simply amounts to .....a....lot....of.... available cash (i.e. REAL MONEY).