partypup wrote “Do you really want to be in the position of having to stay in a house for 10 years in order to recoup your equity? That’s what happened to me in 1992.” My neighbor said she doesn’t care if her house price falls in half, because when she sells, she would buy a bigger house and that house would be 1/2 off also. That made sense to me. What do you think?
chris, did you see edna_mode’s posts, about a new paradigm shift than can move the ratio of income to house prices permanently higher, just as global warming is causing a new median temperature, some other unknown factor could cause a new median home price. I told her not to compare biological systems to asset bubbles, and that Grantham challenged 2400 professional investors to find just one exception to an asset bubble reverting to the mean; no one could think of one, and Grantham has shown that all asset bubbles returned to mean. Do you want to add to this?
Foreclosure: you will owe the IRS taxes at your tax rate, NOT your capital gains tax rate, on the forgiven amount. Lender gives you a 1099. If you refinanced or took out a HELOC, you cannot avoid this. Only if you kept your original mortgage you are safe. Google recourse loan and non-recourse loan for California.
