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by Tim Phelan
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kets. Heck, if we can
pay $20,000, $50,000 and even up to and over $100,000 on
automobiles, then spending $300,000, $1,000,000 and more on
homes seems very reasonable. Property will always be there
as long as the mortgage is paid and the taxes are paid, too.
That brings us to a good argument for believing the real
estate market will slow down and possibly have a downturn.
The reason there is a good argument for the belief that the
real estate industry will have a major downturn is because
some people, perhaps a good amount of people, won’t be able
to keep up with their mortgage payments if they start losing
their jobs and the economy slows down. The rise in gas
prices could have a major effect on the economy and if these
homeowners start defaulting on their mortgages then this
could turn the industry around.
Many home owners and speculative real estate investors are
using what some would call risky home mortgages, the
interest-only and no-income verification loans. These allow
more people to buy more homes and are part of the reason the
real estate industry has enjoyed such a boom the last
several years. Creative financing started decades ago and
has kept increasing more and more different ways for the
home buyer and speculator to get what they want. This is a
good thing overall in my opinion. However I can see the
dangers of this trend also. I don’t feel a burst is
inevitable but it is certainly very possible. Perhaps more
likely, unless a major event su |
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