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Posted by: spartanfornow
That is highly suspect. From personal experience, my parents bought a townhouse in Las Vegas just during the very peak of the bubble. Everyone was drinking the coolaid of how it was going to be a great time to buy. They ended up selling before the bubble burst, like 8-10 months after the purchase. The
townhouse lost 68% of its equity over the next 2 years.
Las Vegas was hit hard during the housing collapse. Townhouses were hit hard during the collapse. But that area is also one of the areas rebounding quickest off of the housing lows.
The median sales price there has 20% year over year increases - $130k median. Are you going to see it shoot back up to where it was? Of course not. Should it anytime soon? Of course not. But it is also one of the areas where buying especially made sense when average rents hover around $1,000 a month. Why pay $1,000 a month for a rental when you can pay $1,000 a month, build equity, and have more control over your own property? All things equal, people prefer to buy than rent - which is why buying properties where renting was more expensive than buying was the easiest real estate play you could make in the past few years.
Posted by: spartanfornow
1/4 of all mortgages are for homes that are now worth less than what people are paying for in their mortgage. There is no way to get rid of these properties, except letting the home go into foreclosure/short sale. If you rent and want to get out, you can sublet and get away with very little hassle. If you own a house that has greatly depreciated, you're stuck in it, potentially for the full duration of the mortgage.
Are a lot of homes underwater? Sure if you bought at the wrong time at the peak of the market. And yes, the road to principal forgiveness/short sale/loan modification is not the easiest one. That doesn't change the fact of the situation of how good a deal houses are now, versus how good a deal houses were five years ago.
Posted by: spartanfornow
The housing market continually rises and falls, which is why it is very risky to get involved with. If you rent and your apartment building burns down, you're fine if you had some renter's insurance which is like $120/year. If your house burns down, you're facing financial ruin even if you had insurance.
Yes, markets undulate. And houses really shouldn't be viewed as a wealth builder - if anything, they should be viewed as an inflation hedge. That was part of the problem.
But why do you say you face financial ruin? That is the point of housing insurance - you will be fine provided you have adequate coverage and understand the policy you have.
[Edited on 12.20.2012 7:52 AM PST]