Three-legged Chihuahuas and the Sleeping Lions
Here is an article worth reading (scroll down towards the end); nothing new to us "survivors" but maybe the three-legged Chihuahuas out there in the RE wild will finally get a clue. Ok, so maybe not. But I also like the fact that the author quotes a Marin County fool:
"Doug Levy, a university administrator in San Francisco, sucked $25,000 out of his Marin County condo to pay a few bills and to take a modest skiing vacation in British Columbia. "It's like I'm sleeping in my piggy bank," Levy gushes. "In this market, real estate is a liquid asset. There is no longer an incentive to paying off your mortgage. The only way I'll ever pay mine off is if I win the lottery.""
"The flip-side of this borrowed prosperity as Levy admits, is that the leveraged homeowner becomes a kind of long-term renter, never really accumulating much equity in the house he purports to own. "I'm never going to be able to retire," Levy says, "because I'll never have enough money in the bank"...And neither will the millions of other American homeowners who have mortgaged away their home equity. In the old days, a mortgage was something that started off big and slowly shrank. Now it does just the opposite."
"Because so few Americans posses so little home equity, they possess no capacity to withstand adversity. That's why a reversal of fortunes could prove so devastating...and why the next recession could be surprisingly ferocious."