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

To: Lizzie Tudor who wrote (86564)	8/22/2007 1:22:28 PM
From: bentway	Read Replies (1) \| Respond to of 306849

"This stock market which is not a great general market this year, is different than in the past. It is creating wealth again with IPOs and growth companies. Thats a powerful counterbalance against the housing depression that we haven't had in years." Lizzie, you really need to get out of SV every now and again! The world looks way different out here. The '90's aren't coming back..

To: Lizzie Tudor who wrote (86564)	8/22/2007 3:10:07 PM
From: dipanjanc	Read Replies (1) \| Respond to of 306849

The down payments are well over 20% which means there are other options for financing. Not necessarily. I know quite a few Asian immigrant -- primarily Indian and Chinese in their late 20s/early-mid 30s -- couples who have stretched themselves to buy in 1-1.5M range in prime SV -- cupertino, mountain view, silver creek country club in south SJ, mission hill area in fremont etc -- in last couple of years or so. The math works like this. Most of them made 100-200K by selling their entry-level home they bought between 1999-2003. That and some savings took care of 200K+ downpayment. Most of them are double-income tech couples making around 200K-300K in senior engineering or mid-level management jobs. That income along with a relatively austere lifestyle can support 800K-1M mortgage, sometimes with the help of a little creative financing. I agree with you that prices have been sticky because this demographic is not going to give up easily, not unless they lose jobs and do not get rehired soon enough. Also a lot of them are benefiting from a) global growth through real estate/stocks/businesses/inheritance gains in their home countries and/or b) real or perceived gains from tech stocks. Also I think you are right in stressing the significance of high-end coastal real estate because of the loan sizes. It's not just the number of foreclosures and new loans that are important. Size matters. A default and a 10-20% loss on one 1M mortgage are a lot more significant than that on a 200K mortgage, both to the borrower and the lender.