Tuesday, August 12, 2008

1/3 of new homeowners owe more on their house than it is worth

This is not good. It creates a situation that will be harder and harder for homeowners to dig themselves out of debt.

http://www.bloomberg.com/apps/news?pid=20601087&sid=a3uzhDOF9FXI&refer=worldwide

I am reminded of a Simpsons quote which suddenly seems less funny. "[Ned Flanders] doesn't believe in insurance. He sees it as a form of legalized gambling." If you stick in "mortgages" for "insurance", it seems to fit all too well.

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5 comments:

  1. Sean2:41 PM

    mmm....bubbles

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  2. "Nick"3:09 PM

    One reason (among several) that Nora and I haven't bought a house just yet.

    Highlights the old advice... don't buy a house as an investment, buy it as a place to live.

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  3. quizwedge4:34 PM

    I'd alter that just a little, Nick... Don't buy your only house just as an investment, but as a place to live. We bought a house figuring that the housing market will still go down a bit, but in the end, it'd be a sound investment because we plan to live here for a bit. After you make sure that your primary living dwelling is safe, then you can start investing, if you care to, in other houses.

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  4. Anonymous7:48 AM

    Put down a good downpayment and don't mortgage as big a percentage of the price. This will help when the market prices fluctuates downward. In the long run, the investment will be a good one, but if you should have to sell sooner than planned, it will help if you haven't mortgaged all, or nearly all, of the purchase price.

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  5. Anonymous8:18 AM

    my multi-family home has been a good investment for me... even though I bought when the prices were high, my house is still worth far more than it purchased for. (much sweat and friends helping out)

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