Buying a house? Watch out for paradigms

[substitute]

torgo_x forwarded the most clear and forceful explanation of how really bad mortgage ideas work, and why the current situation can't end well. Math is hard, and optimism is easy. I'd guess a lot of the people who do this think of themselves as risk-takers who are going to win. I wish them all luck tripling their incomes in the next five years

Comments

[springheel_jack]

I drove past a house - really a small, clapped-out, 2 bedroom cottage on a teensy lot - near my house, and it said NEW PRICE! ONLY $425,000

I thought, god, this isn't california. eh?

[threepunchstuff]

Some people I know, young people, made a ton of money with those fuzzy mortgages. I don't understand the process but basically they buy up a bunch of houses in Arizona with no money down, wait a few months and sell them. But that's one thing, the people who are gambling their families on this bubble are another matter.

[icariancypher]

Having (sadly) worked in the martgage, real estate, architecture and now engineering worlds, I've been wondering about this as well. It's going to get quite ugly in the next 3-5 years, as more and more people are forced into foreclosure. Your point about the whole classes of people who will suddenly find work scarce is also right on target - most people only think of the home owners as the people strapped to the bullseye (which they climbed onto willingly?).

I'm curious to see if the wealthy elite of OC won't take it as an opportunity to pick up a whole lot of property on the cheap when everything bursts. Just imagine... a whole new era of landlord driven real estate in Orange County. Yeah.

[icariancypher]

Heh - with the way the Yuan's been rocketing in value over the last few days, it could be pretty likely. It's like the 80's all over again, with China instead of Japan.

I love the Pacific Rim.

[substitute]

The "Japanese taking over" phenomenon of the 1990s was mostly race fear. They never bought a significant chunk of the country. Brits and Dutch were way ahead of them the whole time. I assume a similar yellow peril freakout will take place when the Chinese buy things of sentimental value here.