i know 3 people that purchased a house in the last 6 months. One sold both her house and her husband’s house (just got married) and bought a new bigger house. i do not think they will have problems with the payments as probably downpayment was huge. do not know details but does not look like the type will take money from their houses. They are willing to ride any downturn as they do not plan to move ever. i guess in their case it is ok, however, they might be paying a hell lot more in property taxes.
another is a coworker, a transfer from the midwest. I advise not to buy but she claimed that if she does not buy she will lose the company paying for closing cost (first i thought now you could get the seller to pay closing, second why is she so desperate to get a $20K benefit when her house could drop $100K or more in value) Anyway, she has high position in a company and supposed to be very smart but did not care at all “real estate always goes up!!”
last is also a couple that purchased after living abroad. it was funny they said he bought a new house because they could not stand to give a lot of money to someone that bought a house for half the price 3 years ago, but had no problem to pay it to a builder (because then they would not know the profit). They keep pushing me to buy,”its all about demand and supply” “san diego only has so much land”. i laugh, i tried to explain but they do not listen. i found it funny when one of them told me that i could look for foreclosures at Costco! maybe in a few years i will buy my groceries and be able to buy 2 or 3 foreclosures.. for now i will rent and save.
I think we overestimate the number of people that is really on top of what is happening with RE. The cases i mentioned are managers with MBAs, very bright people. They bought because that is what you supposed. they have no idea of foreclosure rates, ARM reseting or people using their houses as ATM or frauds that are inflating the values. Is like i am speaking greek to them (i include other co-workers who own and insist that i should buy too)
I wonder how many people are really on top of what is happening, 100? 1000?
