True for equities but not necessarily for real estate. In equities markets go up when bears call a top because bears provide fuel via short covering as well as bears capitulating and becoming buyers. In stocks sentiment is everything. Real estate is like a margin call -- forced liquidation if you can't make the payments; sentiment is secondary. We know there is a lot of high LTV ARM paper out there. We also know rates are rising, and incomes are not rising fast enough to meet the ARM adjustments down the road. And so it is a foregone conclusion that the bubble will deflate when some of these properties are liquidated in default. The question is how long until it happens, and whether it is a soft landing or a hard one. Sentiment might drive an R.E. contraction if the market softens and overextended investors rush to the exits to sell their rentals. This could happen ahead of the ARM day of reckoning.
You're from Canada right? I know it's done different up there but down here you can lock in a 30-year mortgage at 5.25% for the entire life of the mortgage. Ballon payments like in Canada are rare in the states. This is why, considering the huge benefit of Fixed-Rate Mortgages, I have no pity for the Americans who have variable rate mortgages or I/O mortgages in order to live in a home they can't afford. They have no idea how good a deal they're passing up. It's a pity that the Banks in Canada hold a Oligopoly. They're really taking you guys for a ride.
I hear some real estate agents are really getting rich in SoCal, sounds like easy money, business taking off etc. lots of people entering the profession (that last bit reported on CNBC as well). It sure sounds like the end of it. And about many homeowners getting rich that is just media and industry hype . Everyone was getting rich in stocks back in 2000. You can easily sell your stocks how many did so and kept their winnings? Houses cannot be sold as easily and anyway where are you going to move after you cashed out? in the middle of the desert? Because everything has gone up , you are just getting rich on paper. Only professionals and speculators have made the big money. This is just another scam orchestrated by Greenspan and Co. Once again the rich are getting richer the little guy gets the illusion he is for a while and most can't even afford a house.
San Diego has been a standout in the use of unconventional lending. It ranks No. 1 in the use of so-called piggyback loans, which let borrowers with low down payments finance a home purchase without paying for mortgage insurance. And the majority of buyers in San Diego still use loans with an "interest only" option Local mortgage lenders must be a great short.
I think the latest I heard is that close to 70% own their own home. Seems to contradict your statement eh? OldTrader
I just sold a property in So. Ca. : As long as you live in it 2/5 years you get the gain tax free.... just keep moving and selling until things stop and you would be doing very very well over the last several years ..... And the Agents are doing better. Now, do I think things are long in the tooth in So. Ca. ? Yes. Do I know when things will change - if at all ? No. Did I make a mistake in transacting one of my Ca. Properties ? Maybe. I still booked the gain however ....
I heard the local san diego real estate guru on his talk show today saying that the ownership rate was right at 75% nationwide. John