On Sat, 22 Mar 2008 22:55:10 -0400, "Ed Huntress"
wrote:



This wouldn't have happened in the first place if the mortgage lenders
hadn't fallen all over each other to give mortgages with practically no
money down. That's bad banking. It's NOT necessarily bad borrowing.

It clearly is both bad banking and bad borrowing.

No money down mortgages (GI) have been available for decades. Property
values have definitely fluctuated both up and down during that time:
long term has been up but there have been regional short-term dips. My
house has not been a "financial performer" in terms of market
appreciation and DCFROI (discounted cash flow return on investment)
but I gotta live somewhere. Shelter is a basic need.

If a person buys a house with a mortgage they can afford, they can
still afford it even if the house value declines to negative equity
for a while -- unless they then leverage equity increase with
increasing market value to maintain absolutely all the debt they can
afford to keep up with and perhaps a bit more. This can only work in
a monotonically increasing market, and no market does that forever.

Speculating in real estate is no different than speculating in any
other market. Speculating with an asset that is one's shelter is
"smart" only if it works, really dumb if it doesn't.

Pick yer pony, take yer ride. Strut proudly when yer artful dodging
works, bleat pitifully when yer grab for the big brass ring gets ya a
face full of gravel.

This is not addressed to you personally, Ed. It's meant to be
metaphoric.