It is sad to see some will lose their homes when their mortgages reset at market rates they can't afford, but what made them think they could live in a house with a monthly mortgage far cheaper than the house cost to rent?
I have little sympathy for those seeking returns in excess of safe CDs and US Treasuries who are being crushed when their sub prime paper they bought with all sorts of fancy names is worth less than they paid. Sure it was nice to get 8 or 11% yields for awhile, but only a fool would think you get that sort of yield without high risk. (See Best CD Rates.)
In the major cities benefiting from global trade where there are good jobs and homes are too expensive to buy for speculation, real estate is going up! I do not think anyone is talking about this on TV.
Los Altos, California Real Estate Prices 2000-2007Click image to see it full sized.
Los Altos, CA, just down the street from Google with its young millionaires looking for homes to raise families in a city with great schools, is doing great despite sky high prices.
Towns across the SF Bay or in South San Jose where renters were converted to homeowners to buy inflated houses due to the low cost of money are not doing well. This should serve as a reminder to anyone “speculating” on a home that buying a house in a poor location just because it is going up is risky.