Is there a counter point to the question – why are all these wealthy people taking out stupid loans? I agree, even wealthy people will take out mortgages, but they won’t take a zero-down ARM. They will at least put down 20% to avoid PMI and get a fixed rate in times of low interest.
I think the mix of loans we saw in the last two years make it very clear that the buyers are not low-income, cash-wealthy people. They are streeeeeetching to get in to a market they see growing out of control.
Rent is not a comparison to owning a home, but rental rates give some indication of “intrinsic value” and whether or not the intrinsic value of the area is changing.
Also, you can’t compare renting a small home with buying a large home. You have to compare the cost of renting a house and the cost of buying the same or identical house.
Has the value of owning a house really gone up that much more than renting a house? Come on! Really? I don’t see any logical explanation why the EXACT same house, which rented for 1500 4 years ago and 1900 now should cost twice as much to buy now as it did then.
I agree some people are passionate about this decline. I’m not one of them. I just trust the numbers and the analysis of good economists.
