How can there be any doubt that there is a housing bubble when almost one half of first time home buyers are putting no money down five years into the biggest run up of nation housing prices, in real terms, ever seen in the United States.
USA Today
As housing prices soared last year, an eye-popping 43% of first-time home buyers purchased their homes with no-money-down loans, according to a study released Tuesday by the National Association of Realtors.
Even in the hey day of the late 20s you had to put 10% down to buy stocks on margin and only a small number of people were involved in the game. The risk that this kind of leverage puts the economy in for the over heated asset market that housing has become is immense.
Already, home prices in many areas are declining, and the "For Sale" signs are hanging in front yards longer. There's now at least a 50% risk that prices will decline within two years in 11 major metro areas, including San Diego; Boston; Long Island, N.Y.; Los Angeles; and San Francisco, according to PMI Mortgage Insurance's latest U.S. Market Risk Index.
So, prices are already declining on people who bought half million dollar homes and paid no money down? The housing ATM is going out of service and that is just the tip of the iceberg. We are on the precipice of a very serious financial crisis.