From Pine View Farm

“The Biggest Investment Most Persons Ever Make” 0

So has sung the real estate industry for decades.

The flaw in that statement is that someone’s primary dwelling–house, condo, coop, whatever–is first a place to live. Any “investment potential” is a nice side-effect. Persons who allow themselves to be deluded into thinking of their houses as “investments” to be day-traded err grievously.

The brokers who sold the houses, with no or minimal down payments and funky time-bomb mortgages, promising “investment returns,” knew this. But left it out of the sales pitch.

More than 8.3 million U.S. mortgage holders owed more on their loans in the fourth quarter than their property was worth as the recession cut home values by $2.4 trillion last year, First American CoreLogic said.

An additional 2.2 million borrowers will be underwater if home prices decline another 5 percent, First American, a Santa Ana, California-based seller of mortgage and economic data, said in a report today. Households with negative equity or near it account for a quarter of all mortgage holders.


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