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Very scary...mortgage growth and housing starts are vastly outpacing wage increases. The government's bond buyback program is creating another housing bubble. Will we ever learn?
What's scary about it?
The majority of people have equity in their homes and some of them are trading up or down or changing locations.
Interest rates are kept artificially low, there is excess credit available for loans, government-backed housing loans, and policies that allow people with government-backed loans to have Helocs, and 2nd mortgages, setting up the potential for another future bubble and collapse.
What's different is that Wall Street is not going to buy the dirty sub primes and slice, dice and repackage them as private label investment grade securities.
No, we were not in middle of it in 2003, although things were starting to heat up a little. I bought my house in 2003, and by 2007 it had nearly doubled in value, and then things crashed.
Home value appreciation in some areas where demand exceeds supply?
You work in real estate, and I don't know if House Hunters is any indication, but I notice that most buyer's buy at the top of their budget, and often exceed their budget.
If this is commonplace, how will they afford to pay their mortgage if they lose income? And there are a variety of ways this can happen outside of losing their jobs or taking a wage cut.
For instance, the price of gas or corn could increase, which will cause inflation on almost every other item and will eat into their already maxed out budget.
So what do they do next? Get a second loan, so they can be in even more debt? And considering they purchased at the top of their budget, who's to say that the same infantile urge that possessed them to buy at the top of their budget won't again come into play, so they can fill up their house with furniture and electronics that they purchase on credit?
It's a cycle that is spinning out of control. At some point, someone is going to switch off the lights, because the party is over. This time though, the cops will be waiting outside with handcuffs.
Recently the government has been doing everything they can to encourage folks not to save from low interest on CD's in particular like you mentioned before, cash for clunkers, enticing folks to get into debt by buying these zero down homes and cars and everything else. They want us all in debt. Too bad we don't have our own fed reserve to make our own money and all would be well. lol
Those who do not need/ want the security of a government guarantee have done very well in the stock market.
LOL... If you think jumping over dollars spent in interest to the bank to save pennies in taxes is smart then have at it buddy. Just shows how dumb Americans are with money!
The dumbest thing you can do is put it in the stock market and watch all your money disappear at a whim.
The stock market, over time, outperforms real estate. But we cannot live in an investment portfolio.
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