Hey, I’m neither a perma anything like you said TG, I just like research.

I have to say your example is a bit flawed though. I don’t see how you can expect that house to sell for 15% off the list price, when you admit it’s one of the best deals you can find. Thats like me saying that housing has bottomed, assuming you get 15% off of current list prices, why not say housing will bottom when prices drop 15% more? I doubt that will sell for $220k right now, it will go for full price. And tell me how you are gonna pay ONLY $400 for taxes and insurance….hmm thats wishful thinking. I see about $500 more realistic. So putting 52k down, and financing 208k you get PI of 1225+500 taxes ins, and you get $1725.

Sure, it may rent for that(now), and there may be a tax advantage but thats 52k plus closing costs that some schmuck is gonna have to come up with. Does the average Temeculain have that and decent credit? Hardly. Also, you admit that there was an over correction, before in 1996 but discount that it can happen again? I don’t get it, why not? Also, Rustico mentioned un-employment as part of the problem during the 90’s, but its already a problem in so-cal now, and it’s likely to get worse. You can’t say that the 90’s were different because of a recession, or bad labor market, or an over correction, because all of that is just as likely now, if not more so.

And to Rustico, nothing would make me happier than to see interest rates sky rocket back up. Please bring em on, and in a world of negative savings and negative/zero equity, house values will really plummet. I could actually get a decent return on my cash, and since I am lucky to have some, the loan amount and thus the payment will be smaller and much less important, I might be able to pay cash, who knows?