Or just make plenty and pay it in full upfront in cash Then you never have to "worry" about selling it off or secured with a mortgage...moving? rent it out!
Noob, and I do mean that, uh, no one could even finance a purchase if 80% of their salary was going to pay for it. Nobody. The limit is something a little under 40% per the new FHA guidelines if I recall correctly.
Of course it will get worse, but not right away, talk is that they will be extending the housing credit again, this should keep the housing market propped up for another year. If they weren't propping it up housing would be off probably an additional 10-15% by now. All they are doing is delaying the bottoming process in housing by intervening.
I think it is going to get worse. Last week I have a friend who "invested" in the Florida real estate boom....he is now telling me he is upside down on all his properties, rental income (that he has) doesn't come close to paying the mortgage. Banks are calling him everyday, so he has decided to BK himself and send the keys back to the banks and start afresh. Today I'm at the Ford dealer and overhear the salesman telling a customer on the phone they couldn't finance the loan as no bank was prepared to hold the loan....."sorry we tried everyone".... It's getting worse. Stimulus II will be coming in 2010 as Dems start to really panic ....expect more checks in the mail.
If you need more proof of the recession getting worse... http://www.cnn.com/video/#/video/business/2009/10/27/wynter.porn.recession.cnn
plus there is massive supply, massive shadow supply, and massive future supply due to resets and increasingly unemployed homeowners who will get crushed twofold if they let equities take another leg down.
Back in the days when mortgage loans were prudent and we didn't have these troubles.... 1. 20% down payment required (or PMI if not) 2. Payment max of 28% of income.
I think you make some very good points. Of course the specific circumstances youre in makes a big difference. (A modest house bought years ago at a reasonable price, versus an inflated MacMansion purchased in what was 'known' as a 'hot' market a couple years ago.) - - But the idea that a house is 'your biggest investment' that was sold to everyday Joe&Jane Doe is silly. - - There is a lot of inventory on their books that the banks don't want to recognize as losses. (To do so would reveal that theyre bankrupt.) When that inventory hits the market house prices will tank to where they belong. The govt will try to 'prop' up this price crash, but Mr Market always wins in the long run. Unfortunately a lot of resources can be appropriated and misdirected in the meantime. - -