http://www.kitco.com/ind/Galakoutis/may022006.html
Quote:
I came across a mind-boggling statistic recently in a Washington Post article by Kirstin Downey that I thought I would share. It indicated that roughly two-thirds of all people who purchased homes in the Washington area in 2005 used adjustable rate interest-only or option mortgages, up from 2.2 percent in 2000.
Mortgage brokers are, not surprisingly, quite concerned about any regulation that might disturb this most surreal of relationships, not to mention their very profitable gravy train ride. They argue that borrowers are taking out these types of loans because it is the only way they can afford to buy a home. One broker quoted in the story went as far as to say that without these types of products homes could not be purchased, and any action to remove them would in fact precipitate a “disaster of epic proportions” in the housing market...
...The home for instance, throughout all of time the symbol of family and stability that most strived to own free and clear, has been reduced to nothing more than a vehicle of speculation by the so-called "flippers" as well as ordinary Americans; individuals whose actions one might argue are far removed from the great generation of Americans that built this country into a superpower. The Federal Reserve, enablers of this false prosperity by conditioning the populace to embrace credit and run up debts like drunken sailors, is revered by consumers that don't know any better, and cheered on by Wall Street pundits who continue to profit the further up the creek Americans paddle.
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You hear many people argue that 'people always need a place to live' and that 'a home is more than a financial asset'.. However the last few years have seen that change as Americans have used thier home like an ATM machine financing a consumer lifestyle they cant afford by going further into debt.. Also historically a home has cost a certain multiple of earnings (lets face it people have to be able to buy homes and pay for them so it makes sense that house prices fit in like with price and wage inflation) where right now again house prices are off the scale if factored in against earnings.. Markets move in waves and from the highest peaks they usually go to the lowest troughs.
If I had real balls I would be shorting the home builders..
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Last edited by LivinLOS : 13-05-2006 at 14:11.
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