Reply #44: The slump actually happened from the mid 80's to the early 90's [View All]

[WatchWhatISay]

I used to be a real estate agent during that time.

I just about quit working on taking listings. It was too depressing to go tell someone that their house was worth $50,000 less than they owed on it. Especially when they might have lost a job or found another job that paid a lot less. It is sad watching honorable people face the humiliation that they will likely loose their home to foreclosure.

One word of advice - if mortgage rates start to rise, say over 10%, be wary of those who say they'll never be as low again as they are now. Thats what they told people in the mid 80's, and those who believed it took out some really dangerous loans. That is where most of the foreclosures came from. Some of the loans not only adjusted, say monthly (up, up, up) but early payments were artificially low to attract the buyer to sign on, in hopes that their salaries would rise later. In fact payments were so low, they might not have covered interest payments, so not only was no principal paid, it would actually be increasing along with the interest rate. If the buyers had been forced to actually pay the cost of the loan as they used it, of course, they probably wouldnt have taken out the loan in the first place.

On the other hand, at the low point of the slump, you could buy a forclosed condo or small home cheaper than you could buy a (entry level) BMW.

And we just loved those buyers coming in from California who could buy twice the home here that they had in California, with just the equity that they got out of the sale of their home there.