Real Estate Speculation

Quote from flat5:

This is just an opinion, but I think you're over analyzing. The interest only loans whether fixed or adjustable are both scary because people are using them because it is their only option to get in. People are leveraging themselves to the absolute hilt, and even betting the farm on increased earnings later to remain solvent.

People may be bringing wealth to the table in FL or wherever you are, but that's not the case here in general. People are taking $100k salaries and buying $900k homes on these interest only mortgages. That is a typical scenario, not an outlier.

I think there may be more "average joes" than you realize who are in danger of getting caught here.
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I think often the people using interest only are not mature, rational investors like jem is talking about, but people who can only get in this way. But, again, if most interest only's are ten years, it's relatively safe imo...
 
13:56 Real Estate Index -IYR- stabilizes after testing support -Technical-

Highlighted the test of resistance for the IYR (121.85, -1.2%) on Friday and the divergent posture with the subsequent reversal probing support in the 121.60/121.54 area (May breakout point/gap) this afternoon (session low 121.63) before attempting to stabilize. (click for chart)
 
I know I am overanalyzing.
I do not claim to be right
I just got very tired of listening to dopes on t.v. calling a bubble for 4 years.

I do not care about here on ET we all have opinions.

But the guys in the mass media -- their are jerks.

I sort of accept Schiller's position because he is not dogmatic about it.

There are reasons prices may be high right now and there are also many reasons why prices will continue to rise.

No one knows.

How long have intrest rates surprised the experts. By my count it is at least 6 years of intrest rate top calling?Actually it could be closer to 8-10. I remember back in 97 the low on the yeild was in according to experts. Which is part of the reason why I was using 30 year mortgages. Imagine how much I would have saved with variable rates back then. (although I did refi frequently)
 
Quote from jem:

I know I am overanalyzing.
I do not claim to be right
I just got very tired of listening to dopes on t.v. calling a bubble for 4 years.

I do not care about here on ET we all have opinions.

But the guys in the mass media -- their are jerks.

I sort of accept Schiller's position because he is not dogmatic about it.

There are reasons prices may be high right now and there are also many reasons why prices will continue to rise.

No one knows.

How long have intrest rates surprised the experts. By my count it is at least 6 years of intrest rate top calling?Actually it could be closer to 8-10. I remember back in 97 the low on the yeild was in according to experts. Which is part of the reason why I was using 30 year mortgages. Imagine how much I would have saved with variable rates back then. (although I did refi frequently)
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Had a relative just write:

"Interest rates just dropped lower yesterday (at least the 10 year Treasury Bill did and everything is tied to it). Try to bargain or shop around for 5.5% on a 30 year fixed mortgage. Rates are headed lower as the year progresses, or that's the consensus thinking anyway. The dollar has been gaining strength and all of this is good news for the economy and stocks. "

This just goes to show what you're saying. Maybe everyone will be surprised by a short term fall in rates??
 
Quote from flat5:

Try here.

http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2005/05/20/MNG5CCS82U1.DTL

Apparently it has moved to 70% in recent months, according to the article.
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Makes sense. Who can afford a 30 year fixed mortgage in CA? But a lot of people can still in AZ and the middle part of country. But that's kind of interesting: w/o interest only most people in CA could obviously not even afford a home. Never thought about it and the consequences.

Eventually it'll turn the Average Joe on the coasts into a real estate serf: continual interest payments the rest of his natural life. Of course, they'll get appreciation, but it's a gravy train for the financial institutions - seems like they'll benefit more than anyone else...
 
Quote from ShoeshineBoy:

Makes sense. Who can afford a 30 year fixed mortgage in CA? But a lot of people can still in AZ and the middle part of country. But that's kind of interesting: w/o interest only most people in CA could obviously not even afford a home. Never thought about it and the consequences.
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ShoeshineBoy:

All the new home communities I have visited last weekend in SoCal were completely sold out, with priority lists as long as 900 people. They were all "non-contingent, fully qualified" buyers. The builders were jacking up prices at $10-$20k per phase.

If you have owned anything in CA, FL, NV, or NY for the past few years, you would have built up a good amount of home equity, if not huge already. You may not even need a mortgage in your next purchase.

You're talking like someone who has never even bought a house.
 
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