JVan

Real Estate Bottom - or Prelude to a Drop?

Andrew has some very fine observations. But I believe the opening of his piece says it all--there is a generational difference. And it has to do with fear. With fear driving so much of the financial world the older, more experienced generation has been through some horrors we younger ones cannot imagine. Their experience should be considered carefully.

Andrew says, "will they ever see the 20% or 40% drops making headlines? I doubt it." Had I listened to my financial guru (who began saying in January the financials had bottomed) instead of my father (another depression era worrier) I'd be broke.

If the fathers are right, upside-down mortgages will not ultimately slow down price erosion in real estate. With the government insuring that the banks cannot be hurt, they will foreclose on overdue debt. Too bad for those who are upside-down, but reality will win out. Prices can go lower! Congress can only go so far legislating that lenders give "holidays" or "relief" or God knows what to strapped mortgagees. In the end, a slow down with global implications will wallop the upside-down mortgages too.

I'm with Andrew's father. Hold your water!