Monday, December 12, 2011

Very Interesting research

“Flip This House”: Investor Speculation and the Housing Bubble

Virtually everyone who buys a house is hoping for prices to rise, and most use leverage (debt)—in this case, a mortgage—to allow them to buy more housing than they can afford to pay for in cash. While the majority of borrowers have a consumption motive—as “owner-occupants,” they intend to live in the house—some borrowers own housing purely as an investment. As mortgage lenders have long known, investors are more likely than owner-occupants to walk away from an underwater property

Posted by mark @ 10:44 AM (2877 views)
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One thought on “Very Interesting research

  • “no single answer has emerged to explain why prices rose so fast”

    Simple, it’s because of Home-Owner-Ism, bankers love it, politicians love it, the land speculators love it, the gullible voters love it. It’s all splendid until it goes wrong again – as it always does – and the little people end up bailing out the big people.

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