November 20, 2005

Open thread - let's hear some stories about people buying at the top

Seems the stories about people buying this summer with zero down interest only negative ammortization loans, combined with an explosion in listings, combined with two straight months of median home price decline, isn't quite enough for some of the real estate agents and investors out there to understand that it's over, it's coming down and the ponzi scheme has ended...

Again, I'm not disputing that MASSIVE money was made during the ride up. Anyone can argue that point. The point now is that we're going down.

So... let's hear some stories about people panic buying this summer at the top. Here's one:

I have a friend in San Diego who purchased a new build 1200 sq. ft. loft downtown in June for $700,000. Usual story - interest only, 5% down, financed on credit card, etc...

He reports now that

1) He doesn't seem to have any neighbors - all the units were bought by flippers and are now for sale, with no buyers

2) He's worried if it's already droppped 10%, he's $70k in the hole

3) He figured he could've rented one for about 30% of his monthly total cost

4) He thought it was a sure thing - that real estate only goes up - and can't believe how quick things changed

13 comments:

000000000000000000000000000000000000 said...

As a child I watched my father buy forclosures from the bank in real estate cycles that use to run every 5 years. I remember the crash of the early 70's. I remember the 17.49% interest rate of January 1980 that wiped out real estate. I bought in 1985 just before prices went up and tripled my money in three years. I moved to Marin County (wealthiest county in California at the time. We stayed for one year and sold at a loss of about 15%. We then moved to Californias Antilope valley, stayed one year and lost %50 of our homes value.
Crunch all the numbers you want and quote whatever cooked up statisitcs you can find. You will never convince me that real estate does not deflate. You can't sell me an investment that has a monthly tax and requres a 6% paper jockey to liquidate. I have been a trader my whole life and know this. "PEOPLE ALL BUY AND SELL AT THE SAME TIME"

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