Housing - Krugman is worried too...
i posted on the scarey increase in housing prices just the other day... now, paul krugman (yes, ANOTHER of my heroes), is raising his voice in alarm... i don't want to be one of those sky-is-falling, cruisin'-for-a-bruisin' kinda guys, but i am really nervous... even if prices stabilize at their current levels, my son and his wife are in hock for the rest of their natural lives with their current mortgage and home equity loan... god help 'em if the bottom falls out of the real estate market and we fall back into a recession...
[A]lthough the housing boom has lasted longer than anyone could have imagined, the economy would still be in big trouble if it came to an end. That is, if the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. If housing prices actually started falling, we'd be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession.
[...]
According to Business Week, 31 percent of new mortgages are interest only, a sign that people are stretching to their financial limits.
THAT'S the kind of number that gives me goose bumps... INTEREST-ONLY MORTGAGES...? as one fast approaching geezerhood, the mere idea of an interest-only mortgage, to me, is appalling... Submit To Propeller
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[A]lthough the housing boom has lasted longer than anyone could have imagined, the economy would still be in big trouble if it came to an end. That is, if the hectic pace of home construction were to cool, and consumers were to stop borrowing against their houses, the economy would slow down sharply. If housing prices actually started falling, we'd be looking at a very nasty scene, in which both construction and consumer spending would plunge, pushing the economy right back into recession.
[...]
According to Business Week, 31 percent of new mortgages are interest only, a sign that people are stretching to their financial limits.
THAT'S the kind of number that gives me goose bumps... INTEREST-ONLY MORTGAGES...? as one fast approaching geezerhood, the mere idea of an interest-only mortgage, to me, is appalling... Submit To Propeller
Tweet
posted by profmarcus at
5/27/2005
