“I think that when all is said on done, we’ll find out that the upper-middle class gambled on housing and subprime/exotic loans even more so than the lower income folks. I would go so far as to say that the RE gambling ran across economic classes, in proportion to earnings”
I agree with this. I know several people who each own more than a handful of investment properties (all financed with interest-only loans). Even now, they are still in denial about the direction of home prices.
Typically, these investment properties have negative cash flow (even with the IO loans). So, it’s the upper-middle class folks who can afford the negative cash flow. They tend to be confident that, with their incomes, they can “ride it out”.
Before the mortgage payments go up, these folks can manage the negative cash flow w/o any problem. It’s when the payments start to “balloon” …
