Reply #30: It's already happening here in the D.C. area [View All]

[specimenfred1984]

as I'm sure you are aware of. I recently checked a realtor's website for homes and townhomes for sale in Gainesville, VA and got 1000s of hits.

Anyone who buys now is going to be just 1 of the 1000s who get stuck with a huge amount of debt, even if their mortgage rate is temporarily low. A house near me is selling for $1,300,000. They are offering financing at 3.875% 1st year, 4.875% 2nd year and 5.875% years 3-10. That's a huge mortgage payment that goes up 3 years in a row and here's the big if: what if that house is only worth $1,100,000 in a year to 3 years?

That buyer will be sitting on a $200,000 loss and a huge monthly payment, not to mention the addtional costs of maintaining the place. There are a lot of homes around here like that, it's not unusual. I don't feel sorry for the rich sucker that gets stuck with that debt but there aren't that many rich people in any town in the country. This bubble is being fueled by massive speculation that is very easily shown to be way ahead of incomes in most areas.

I think the real bad rush to get out of these homes will start happening this summer.