I wonder if the people using ARMs are mainly young people, under the age of 35, or those who never bought before. It seems like those over age 45 would remember what happened. The over-55 age group just shakes their head at what is going on with the ARMs.
My friend’s dad has a vacation home in Flagstaff, AZ, which is a Phoenix heat escape. He said home prices have gone up dramatically in recent years, but now every other house or condo is listed For Sale. A glut of listings. He shakes his head at the ARMs. He is probably in his early 70’s.
People do forget, and live as though recent history will continue forever.
It’s almost as though that article were written yesterday, let alone 1981. What I find amazing is how some homes back in the 70s were going for the same prices they are today! This brings me to a question: how did people secure financing for those homes? Were ARMs and I/O loans available back in the 70s?
Best quotes of these articles. The first is about bubble psychology, the 2nd shows how dire it was. Could this happen in San Diego? Boarded up condos?
Once it was admitted that it might just be possible that real estate would not go up forever, the essential spirit of prepetuity that every bubble needs was gone. Buyers became fewer and more choosy. Houses that once sold in a week stood unsold for a year. As demand fell, prices stopped rising, then began to fall.
And, of course, all bubbles, in every commodity, whether it is land or stock or gold on tulips, always end some time. No matter how sure people are that their particular rocket will always go up and never come down, it always happens. A word to the wise
My pal Jerry P. just bought a condominium in Century City, in Beverly Hills, for 60 percent of what it sold for in 1980. Down the street from me here in the Hollywood hills, four houses have been on the market since 1981. The asking prices now are about one-third less than they were three years ago. Up and down Sunset Boulevard in West Hollywood, apartment houses that were converted to condos lie empty, boarded up, not one unit sold, in bankruptcy, with banks holding title.
Just a few examples from some listing appointments I have been on regarding the profiles of people who have gotten into risky financing. Two were young couples, first time buyers and 1 was an older couple. The older couple did it to pull cash out and rehab a duplex. Needless to say they are in deep you know what now.
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