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I mean, seriously if the people who were 'upside down' simply walked away from their car they would be stuck WITHOUT A CAR, a bad idea.
The analogy is just bad.. From what I can see people walk away for two primarily reasons 1.) They are underwater by a healthy amount of money, 2.) Rents of comparable properties are less than their PITI.
Both of these are lacking in the case of automobiles.
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Originally Posted by chet everett
I do not think that will happen with homes, and MOST homes will EVENTUALLY recover a large portion of their value and may not be "underwater"
Homes depreciate, just on a different time scale. How many 1700's homes do you see around still? Regardless, its not just the paper loss. I don't think you'd find as many people walking away if their rents were comparable to their PITI.
Quote:
Originally Posted by chet everett
but even if that NEVER happened by 'walking away' the home owner is STILL out of place to live and ON THE HOOK for the amount of their mortgage
If the loan is non-recourse they are not on the hook for anything. Even if it was not you could file for bankruptcy.,
Anyhow, homes are very unlikely to recover in real terms for many decades. Nominally, they may "recover"....but its just smoke and mirrors. Your balance sheet will be whole again, but you would have bleed money each month satisfying the loan.
The states with the highest percentage of underwater loans are Nevada, Arizona and Florida. It's going to take a while before this housing problem goes away.
Being underwater is primarily a problem for people who are wanting to refinance from adjustable mortgages and now don't qualify for refinance.
Also for people who bought at high market points and now must sell (divorce, job relocation). If someone bought high expecting to make a profit in quick resale/refinance, too bad for them.
Being underwater is primarily a problem for people who are wanting to refinance from adjustable mortgages and now don't qualify for refinance.
Also for people who bought at high market points and now must sell (divorce, job relocation). If someone bought high expecting to make a profit in quick resale/refinance, too bad for them.
Just a note.... not sure how the above was intended, but, someone who has to sell due to a job relo most likely didn't buy to make a profit.
I will tell you that we have a house on the market because of a relo and didn't have any intention on moving from that house... the job relo came as a surprise and we are now most certainly going to loose a lot of money due to many,many factors,none of which we contributed to.
Homes depreciate, just on a different time scale. How many 1700's homes do you see around still? Regardless, its not just the paper loss. I don't think you'd find as many people walking away if their rents were comparable to their PITI.
The land is where the value is in CA. Go down to San Juan Capistrano and you will see some 1700's homes/buildings.
In 1990 to 1997 many homes were under water. Some walked away and some stayed. For those that stayed their homes are still worth more than they were in 1990.
It's hard to say if they will ever be valued where they were in 2007, but they should recover once the economy does. For some reason people still want to live in CA.
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