[quote=Kilohana]I think the point is that even IF your ARM does adjust lower, when you find yourself owing $1m on a home worth $500k, you start to question whether or not you should even be there. Saving a few hundred dollars a month doesn’t help the math along when you’re up against those numbers. The house would have to really be something special, I think. I can’t imagine seeing a model match at 50% off and thinking anything other than “BAIL!”
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I believe the price your neighbors house sold for is mostly irrelevant to the vast majority of people out there.
All they care about is the monthly cost. How much do I owe this month? That, and in most cases their house is “different” of course.
If your mortgage is at or cheaper then comparable rent – why would they bail? Until they actually have to pay more, or simply cannot afford the current rate.
Of course there are reasons it would still make sense to bail now. All I’m suggesting is, I don’t see a huge tidal wive of people walking just because their ARMs are adjusting this year. Or next. Long, drawn out process with inflation eventually kicking in is what I’m envisioning right now.
