The British wake up to the Facr that high hourse prices don't make you RICH!

[Mega]

http://www.guardian.co.uk/money/2008...y-prices-crash
Mike

[Starving Steve]

Re: The British wake up to the Facr that high hourse prices don't make you RICH!

Your market in the UK seems reasonably sane compared to the one in California.

We have neg-am mortgages in Cal. The more you keep-up with the payment schedule on the mortgage, the more the mortgage blossoms-out into new incumberance. Hence the name: neg-am.

The go-go yuppies in the SF Bay Area invented the neg-am mortgage because real estate could never go down, so the negative amortization was to be of no concern..... At least, that was the theory.:rolleyes:

Who could imagine deflation? Lower wages? Unemployment in the Bay Area? A shortage of mortgage money? Falling real estate values? All of this was in the future.

It was the day of the house-flipper. Neg-am mortgages allowed people to buy over-priced homes, and how could that be such a bad thing? Everybody won in an inflation, or so the story went.

And then we would hear stories about homes in Patterson or Los Banos that sold for $400K. How could a bungalow in San Francisco not be worth in the millions? ---certainly $900K, no matter what it cost in WWII.

Then, the dot.com bubble blew-out, and Alan Greenspan began "the cartoon Fed". Interest rates were lowered to 1% and held there for years... Deflation would simply not be allowed to happen.

The party in real estate in the SF Bay Area had only just begun. After all, the maestro was in charge.