I have a feeling that drug dealers would have the cash to buy a house (at least a substantial down).

I’ve talked to mortgage brokers and my feeling is that, the professor wrote in his piece, many homeowners are speculation the their own homes. Say two single sisters live together because the normally can’t afford 2 houses. They decide to “invest” in a house so they go out and buy a new house hoping to flip it. However, the market is stagnating and they can’t get out. They can refi once more at a teaser rate, until 2-3 year s from now, when they’re so much under water that they have to sell.

I’ve heard of mortgage brokers telling clients exactly want they need to make in order to qualify. Just about all buyers were getting the maximun house that they could qualify for. I’m not surprised at the study’s findings.

Also consider all the families who ended up with 2 primary residence homes who would normally qualify just one mortgage. They’re going to be up-the-creek when the investment property doesn’t sell. I believe that this second category is much greater than we realize.