Let’s Party Like It’s 1999

I honestly didn’t see this coming.  Seriously.

The number of foreclosure notices filed against Massachusetts homeowners last year reached their highest level since the housing bust of the early 1990s, as homeowners fell behind on their mortgages and lenders began the process of taking back the properties.

Paradoxically, the sudden halt to sharply rising home prices put a squeeze on many borrowers, analysts said. Homeowners who stretched their finances to the limit to buy a home found it more difficult to make their payments on variable-rate mortgages as interest rates rose, but they were less able to refinance their loans at more attractive rates — or sell and pay off their debts — because the value of their homes fell or remained flat.

Wow.  Shocking.  When I started to see 2-bedroom houses in crappy neighborhoods here in Hawaii going for 600,000-700,000$US, I figured that wasn’t some manner of tulip chasing going on, but the natural price coming out.  Likewise, the fact that you can’t get a condo in the South End for less than $750,000 is only right.  Same goes for $500,000 town houses in Braintree. What are we to do?

~ by kinshay on 2006-01-31.

No Responses Yet to “Let’s Party Like It’s 1999”

  1. Yah, but now you can pay for your house while paying NO PRINCIPAL! With no principal, your payments are in HALF! That’s genius!

    BTW – I have a case of snake oil if anyone needs a bottle.

    Whats the difference between a no principal loan and paying rent?

  2. You can deduct your “rent” on your taxes?

  3. Fair point, I forgot taxes.

    We got our end of year statement for the mortgage, and I was horrified that in all we paid, X went to principal, and X times 2 was paid to interest. Plus taxes on top of that. Must be a lot more fun at the end of a mortgage.

  4. Do people get to the end of mortgages anymore? Personally, I have a hard time imagining being in the same house after 30 years.

  5. To be completely honest, I don’t know if I’ll buy a house until I retire and can be assured of settling in one place for a long time (SE Mass, sucka!). Of course, my peers and I get to retire rather earlier than most.

  6. Eventually the value of money goes down, and you windf up getting paid more. So that $1,500 a month that kills you now will be the $500 a month someone who bought a house 15 years ago pays.

    But you never reach the end, because when it is low enough, and you have equity, you either buy bigger or add on. It contnues that way til your old, relaise the house is too big and go smaller. Or your husband dies and you pay off the remainder with life insurance.

  7. We like mortgages so much we have two. The second one is a balloon-type so in 15 years there is a big payment due. The rationale for this, according to our mortgage guy, was that the average first-time home buyer only stays in the house for five years.

    We made sure to go for fixed-rate for both mortgages just so we wouldn’t have to worry about rate changes like people are dealing with now, but I admit we caught the market right before rates started going up again. And luckily our mortgage guy was very straightforward about all the loan types and how much we could afford to pay.

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