patrick.net

Cautious1 says

@American: Exactly! So how can that be a retirement strategy when you’ll get ripped off? Wouldn’t it be better to rent out your house (if you can find a renter) or take in roommates (if you can stand them)? Hope I’m not getting off-topic, but this does relate to the subject in that the banks are going to try to clear this inventory of expired reverse mortgages in years to come. Seniors receiving a tiny equity check aren’t going to do much for the economy, and after they die, their homes are going to be offered to a smaller, increasingly urban generation, which doesn’t sound very bullish to me.

The main element of a reverse mortgage that concerns us is that the senior gets to stay in the house until she or he dies. In effect, the can is kicked down the road with those houses. The folks making these reverse mortgages are betting that in 10 or 15 years, the housing market will have recovered to its historical appreciation rate.

American in Japan nothing will change. History will repeat itself.

All those bullish on housing I'll be seeing on television in 3 to 5 years from now, with their sob stories about how they can't feed their children. It's cyclical in CA. Every few years some people get into too much debt over their head and end up crying for a bail out. And for most part it is obvious that they paid too much for their dwelling, or bought in an area where it periodically floods/burns/mudslides... sometimes of course it's worse such as medical bills or other terrible life events.

And it is all because some level of amnesia kicks in after some time and people get too cocky believing downturns in life cannot happen to them, so they don't account for such, and bullishly believe that whatever they buy goes up in price permanently such as cars, old electronics, laundry detergent, or housing. And they over-leverage their liabilities right into permanent debt. Those type of people are the reason all the banks in LA are the tallest buildings and realtors are spending half a year on cruises in their pricey yachts drinking wine and enjoying life. Someone has to pay for all that extravagance, that someone is very easy to spot... usually a high mortgage and some sort of a HELOC down the line.

I want to quote Jurassic Park here…

Are real estate agents still enjoying those luxury cruises?