The Oregonian has an interesting article about foreclosures in Portland and how they are not only affecting low or moderate income homeowners (article link: Foreclosures move into tony Zip codes)
This confirms my suspicions that most of the foreclosures in Portland will be due to:
1. Speculators getting caught by the bubble bursting and having to sell for a loss
2. Buyers living beyond their means and buying more house than they can afford with risky mortgages
3. Owners tapping into the equity of their house to take out money, and not being able to keep up with the additional payments
I'm seeing more examples of #3 and #1, but I haven't seen too many examples of #2 just yet, but I think they will increase as 2-3 year ARM's reset.
Sunday, February 3, 2008
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I have seen examples of #2. Household income approximately $8,000 per month. $550,000 home and a mortgage about equal to the current appraised value. New BMW. About $1,000,000 in assets (all owned by banks and financial institutions of course) with $1,500 in the bank. I wish I was kidding, but I am not. My prediction is a foreclosure proceedings begin within 12 months.
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