I don’t have a life either :), and thanks for all the comments.
I checked the Labor market data, which lists employees by the type of employer (so janitors at realtor offices are listed under real estate). Out of 1.3 million jobs,
law firms employ 11,800
scientific research and development 71,000
Most of our employment is in
retail 219,000
construction. 95,700 + ? (10% of 1 mil in CA)
gambling/restaurants 154,700
real estate,lending,insurance 83,800
So there may be a handful of people who get promotions to cover their ARMs. It doesn’t matter if you are a lawyer earning $200K, only that your salary goes UP 30-50%. This is a subset of the professional category.
Let’s give you the benefit of the doubt, and say that 5% of ARM holders will get 50% pay raises and afford the higher payments. What will the other 95% do?
Remember, I am looking at the big picture: you only need 30,000 motivated sellers at any time to start seriously reducing property values. The motivated sellers bring down the price for the other 1 million homes. It doesn’t matter if a few ARM holders can afford their higher payments or leave town or refinance. We’ve got a mass of people who used these as affordability products, and the trend will be set by them.
Not even Fannie Mae or the FDIC knows how big this problem is. Neither do I. I’m just having fun guessing (since I don’t have a life…)
