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I personally know some people who defaulted deliberately on a house in Salinas. They also live here illegally.
Ha! I know a couple of US citizens who deliberately defaulted on a condo in San Diego immediately after buying a house in a new development.
While many people still think that the last housing crisis in the United States was largely due to banks offering too many subprime mortgages, it's now clear that wasn't actually the case. Instead, recent research pins the blame on house flippers and speculators, who pumped markets up, then defaulted in large numbers when they were unable to turn a profit on their investment properties.
buy a house you can comfortably afford. That may mean getting less than you want
reset your Prop 13 taxes, etc.
This, but I can't complain. I have a $380k mortgage on a home valued at around $675k. My property tax is assessed at $2,400 per year ($220k assessment). If I wanted to "step up" to a nicer home, that's putting me somewhere around $800-900k. Is it worth more than tripling my property taxes to get a house that's just a little nicer than the one I'm currently in? Hell no. That said, this is a huge part of keeping mobility low and prices high.
I don't think buying a "starter house" is a good idea because buying and selling are so full of friction and costs. Suppose you buy a "starter home" and 5 years later decided you really want, need, and can afford something better. So you sell one house and buy the other... and pay huge commission to the real estate cartel, financing fees for a new mortgage, reset your Prop 13 taxes, etc. There's also the cost and effort of moving. Financing a house purchase while not having finished paying the first house off can be tricky too. All the effort and costs you put into customizing your first home are thrown away; and if you didn't upgrade and customize your first home then you might as well have rented it.
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