Buyers can be wealthy . . . or just savvy (pt. 2)
"Today, we're buying houses like we buy cars, based on the (lowest) monthly payment," said Mark Eitel, managing partner of Palm Beach Gardens-based Schaffer Mortgage Corp. "But the scary thing is the average guy who works his fingers to the bone making $60,000 a year, and he cashes out his 401K to buy a home in expectation that prices will keep going up."
Hunter believes buyers looking to cash in on the real estate boom should bear in mind that the nature of a bubble, housing or any other kind, is that they usually burst.
"People have it in their minds that South Florida home prices always go up, but that's actually not true," Hunter said. Adjusting for inflation, he said prices of new homes actually went down in the late 1990s.
Adeimy remembers what can happen when a housing bubble bursts. In the late 1970s, when he was 22 and interest rates hit 12 percent, it nearly catapulted him into bankruptcy.
"I had all these properties. I got in trouble and couldn't keep up the payments," he said.
He gave his houses back to the bank then, and figures if the bubble bursts this time, he can do it again.
"The worst that can happen is we sell it for less than we paid," he said.
"Today, we're buying houses like we buy cars, based on the (lowest) monthly payment," said Mark Eitel, managing partner of Palm Beach Gardens-based Schaffer Mortgage Corp. "But the scary thing is the average guy who works his fingers to the bone making $60,000 a year, and he cashes out his 401K to buy a home in expectation that prices will keep going up."
Hunter believes buyers looking to cash in on the real estate boom should bear in mind that the nature of a bubble, housing or any other kind, is that they usually burst.
"People have it in their minds that South Florida home prices always go up, but that's actually not true," Hunter said. Adjusting for inflation, he said prices of new homes actually went down in the late 1990s.
Adeimy remembers what can happen when a housing bubble bursts. In the late 1970s, when he was 22 and interest rates hit 12 percent, it nearly catapulted him into bankruptcy.
"I had all these properties. I got in trouble and couldn't keep up the payments," he said.
He gave his houses back to the bank then, and figures if the bubble bursts this time, he can do it again.
"The worst that can happen is we sell it for less than we paid," he said.
