Six months to housing hell

What happens if/when it doesn't and you're proven a hysterical fool? The "housing bubble" has been "supposed to burst" for two years now, guy. It ain't bursting. In fact the market fluctuates by region; some areas are hot, some are cold, and reporters rush out to a currently "cold" region to breathlessly announce the Impending Doom of Housing. They totally ignore the places where housing is red-hot. More, when houses start moving in previously "cold" regions again they ignore these and turn their cameras and microphones to new cold spots. Here's the truth: With an unemployment rate of 4.7%, reasonably low interest rates, and an ever-expanding population Housing is not going to "burst". People need some place to live and home ownership is one of the best long-term investments out there for the middle class. When interest rates go back up to 10%+ housing will cool off and we'll have a recession, yes. But it's high interest rates that cause recession, not Housing per se. The Fed uses interest as a tool/blunt object to prevent runaway inflation. We're not having runaway inflation so interest rates aren't headed for Lunar orbit, ergo Housing will continue to expand w/o "bursting" as loons in the press and on USENET seem to hope it will.

Unless, of course, you pay off the loan early. Equity-borrowers are generally burning their retirement, yes, and it's stupid. Pulling it out early is living beyond your means; you're trading your retirement nest egg for a nice car or whatever that wears out before you get old and need the money.

The way to do it, if you don't have kids or anyone you want to leave anything to, is to wait until you're 60 and then take out a 30-year reverse mortgage. You pull the equity out of your house, a little each year so you don't get socked for taxes, and when you die the house goes to the equity lender. Which you don't care about at that point; you're dead.

In message , Number 9 writes

No your not. You are fine, just so long as you keep making the payments.

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If I may chip in on this interesting thread .... Certainly a very large proportion of Americans do live on credit - I suspect most of it comprises credit cards and car loans. I don't know how many of those with mortgages borrow on their property. A straw in the wind: one finance-related professional remarked to me recently that I was "very unusual in not having any debts". Actually I've been keeping a very nervous eye on the housing market here, as I have just moved into a new built condominium house (paid if full on closing) and the house I've moved out of is now up for sale. I also bought another property just over a year ago which is leased and brings in 1000 dollars gross per month. So even if the demand for housing does drop and I'm stuck with the empty house, I can still lease that one too and wait till things pick up. However, I'm told it is the overpriced real estate in places like California and maybe the north-east States and Florida that are distorting the figures and that here, in north Texas, the demand still exceeds the supply. (Sorry for any typos: damned difficult typing with fingers crossed ....) BTW I heard on the radio not long ago that Britons had more debt than Americans, and from reading this n/group over the last few days I'm beginning to believe that this may well be true! PS Lest my Sig line misleads you, I am from Britain.

Also self-certification mortgages where you tell them what you earn (eg 40k pa for addressing envelopes etc), and 'payment holidays' - if you're a bit stretched, skip a month or twos payments (by prior arrangement) - don;t panic, we'll roll the interest up for you... Then there are mortgage offers over 100% providing you also buy insurance to cover the bit over 90% of the lender's valuation.

Yes, the UK institutions have been just as 'agressive' (greedy) - situation is perhaps worse in the US due to interest rates in general going up steeply.