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For Sale

The 2005 California housing market is scary.

This LA Times article maybe sensational but it isn’t that misleading. The market has clearly drawn in people who can’t afford to pay for their homes. They borrow money to borrow a home – they borrow to play in a rising market just to keep pace. Sit it out responsibly and you’re a loser – prices are increasing faster than a person can save for the down payment. They are not speculating, its survival. Recognize that a whole class of people is being priced out of home ownership - forever - and they’re desperately using the current “easy-money” driven market to grab something.

Sadly, it’s become a housing market rigged against the average Joe and Jane. Interest only loans can make sense for a family starting out and trying to get settled into a new home (new familes have one-time costs for furniture and etc.). There are interest deductions on taxes and spending/savings habits to change that could justify a short period of lesser payments. Interest only loans do not make sense when rates are expected to increase – better to lock in a minimum 5 to 10 year fixed loan and eat ramen noodle dinners.