I was one of the fools who bought a house in 1989 so I should know. You live and learn. 🙂

At that time, there were ARMs but I had not heard of interest-only loans and all the other exotics we have today.

Loan officers were affiliated with builders but they did not sit in the sales offices running buyers through various iterations to see what maximum monthly payments they could afford. There were no 1%, 2%, or 3% buydown loans. At that time my loan was 9.5% fixed.

Most people would put down 20% or had to pay PMI. Buyers generally did not do 100% loans nor the 80/20 loans we see today.

Loan equity loans were available. But HELOCs were rare.

Today, the marketing machine is much more effective and buyers are not really aware of what they are getting into. They still think that so long as they can afford the monthly payments, they are “investing” in their future (not throwing money away in rent).

I believe that the exotic loans and payment resets will have the effects today that the mass lay-offs had in 1990.

If we have a recession in 2007 then unemployment and loan resets will be double whammys on the real estate market.