You are soooo right.
This isn’t the 90’s… It’s 2007, and the housing mess this time is going to be 20 times worse than in the 90’s.
The loss of homes in the 90’s was virtually all to people that had used down payments, and still lost.
There were probably 25 times the number of people that bought homes with no money down in the last 7 years.
Some of them got lucky, they got in early. It wasn’t brilliance. Pity the ones that bought after 2004.
Forget the “subprime” borrower. There are plenty of prime borrowers with similar loans that will be adjusting also.
They cannot afford their new payments either.
With a loan balance of $600K and a home value of $400K or $500k, even some prime borrowers will walk away, adding to inventory.
The only difference between a prime loan and subprime loan is the prepayment penalty. Plenty of people with high scores are in loans with prepays. Plenty of prime borrowers are in option arm loans, which are the worst loan ever invented for the borrower (and best loan ever for the lender)
Anybody who bought a home with an adjustable loan and without a down payment was just gambling. No different than going to a casino. You take your chances. Sometimes you win, and sometimes you lose.
Looking for someone to blame for your gambling loss is just wrong.
La Jolla is not a starter home community. The market there may hold up better than others, but it’s still going to weaken.
