Southern California homeowners at greatest risk
New home sales unexpectedly jumped to a 12 year record high in October, "according to a government report Tuesday that bucked other recent readings suggesting a cooling of the nation's white-hot housing market." (CNNMoney)
Those other "recent readings" prompted the story, Many are unprepared for a downturn which notes that California home owners could be in real trouble if the real estate bubble bursts. "Because of their state's extremely high housing costs, Californians are the least likely to hold more conventional — and safer — fixed-rate loans."
While rates were down, slightly, this week, the general consensus seems to be that higher rates are inevitable. If appreciation slows, or reverses, and interest rates rise, what will happen to California home owners that are already stretched, have all their equity tapped, and are financed on adjustable rates?
Nothing good, that is for sure. While many homeowners could get hurt, there could be some real buying opportunities for those that waited the market out. Of course, real estate bubble bursting proponents have been wrong for several years now, and if rates drop for some reason, they could be wrong a lot longer.
Those other "recent readings" prompted the story, Many are unprepared for a downturn which notes that California home owners could be in real trouble if the real estate bubble bursts. "Because of their state's extremely high housing costs, Californians are the least likely to hold more conventional — and safer — fixed-rate loans."
While rates were down, slightly, this week, the general consensus seems to be that higher rates are inevitable. If appreciation slows, or reverses, and interest rates rise, what will happen to California home owners that are already stretched, have all their equity tapped, and are financed on adjustable rates?
Nothing good, that is for sure. While many homeowners could get hurt, there could be some real buying opportunities for those that waited the market out. Of course, real estate bubble bursting proponents have been wrong for several years now, and if rates drop for some reason, they could be wrong a lot longer.
