[Sapphireho]

Originally Posted by Irace86.2.0

Those people were over-extending themselves trying to flip homes and to use houses as investments, which is the very mentality problem I am discussing, but taken to more of an extreme, yet it isn’t far off from the norm of today with people jacking their rents, maximizing home prices, people in bidding wars willing to spend astronomical prices because they believe they have the safety net of an aggressively appreciating home, etc. These people had huge interest ARM loans and not low-interest, fixed-rate mortgages. Furthermore, the recession and housing bust had home values plummet, so much so, that the whole economy suffered and people lost their jobs. It doesn’t matter if everyone put down 20%, if they couldn’t afford the house because they had no income, or weren’t willing to pay for a high interest mortgage, or for paying for a mortgage that was double the value of the home, then they defaulted, often intensionally.

Putting 20% down isn’t a guarantee that a person can escape from under the property without being under water, nor is it the case that someone who puts 3.5% down is inherently doing so with high risk. Maybe they have assets in the form of a 401k or vehicles or whatever that they can liquidate, but they would rather not liquidate those to buy with 20% down, yet if they wait for the 20% in another five years of savings, they can’t catch up to the growth.

Your home has grown at 3%, which is about the rate of inflation. Maybe the area isn’t the norm for the country or for the Atlanta area. I was explaining more about a mentality that exists, and it exists everywhere not just the west coast, and a concept that is taught and believed that a home with indefinitely appreciate and that it builds wealth, while also suggesting that such mentality is part of the driving force for unsustainable growth in home values.

You sound like the guys that predicted the 2008 crash. Values went down a bunch. Then, a couple years later, prices went back up. Crazy back up. Your "unsustainable" comment has proven untrue so far in history. It crashes, then comes back stronger. God isn't making any more land, but many more people .

I don't know the point of this thread.