Another myth, propagated by economists, is that so few people have ARMs, and so many people own their homes outright, that the $2 trillion of ARMs adjusting will be a blip on the radar. What they fail to realize is that the homes on the market set the value for the entire market.
Powayseller,
You are absolutely right.Here in The South Bay, there are thousands of homes that have been built since 2001.There is a very small number of these that are owned free and clear(if any).In fact, a good many of them have larger mtg’s now then when they were originally purchased.
Our house(built in 2003) will be paid off in 5 years.Ten of our 12 neighbors have mtg’s(ARMS) and HELOCS that total more than 500,000.My guess is that NONE of these 10 will EVER own their home free and clear.
As for some of the more mature areas of the South Bay,there are definitely homes that are owned free and clear or have small(120,000 or less )mtgs.However,there are also many that SHOULD be owned free and clear by now,but the homeowners got the FEVER( multiple cash out refi’s),and now they have a big fat mtg.
I can think of nothing worse than “owning” your house for 20 years or more,and now having a 400,000 + mtg.(on a house that originally cost the homeowner 70,000) as you approach age 55.Forget about retirement………
