I never said that I lost money in 1990-97. I bought a 1500 sf townhouse for $252,000 near UC Irvine. The peak price for the neighborhood was $270,000 in 1989 so I thought that I bought in a at good price for a premium unit.
The properties were built in 1984-85 and many of the origninal owners still owned them at base prices of about $150,000. Back then, there were no EZ qualifying loans. I had to put up 3 years of tax returns to get a $180,000 loan. My payments were $1800 per month @ 9.75%. No one was refinancing at inflated prices and there were no foreclosures.
Over the next 5 years, the prices for my unit drfited down to about $205,000. Everyone kept dropping their prices by $5000 per transaction. They didn’t worry about it because they still had $50-$100,000 equity.
I lived through it because it was a great place and it was affordable.
The market picked up in 1996-97 and I was probably back to even by then. I sold in 2002 for $399,000.
This time around, the EZ money has allowed people to borrow more than 100% of the price of the home. When the banks are taking back the propeties, they are writing off the first 20% of the inflated value and an additional 20% to make it attractive to sell. They have no regard for my equity so I have no regard for their debt.
