Letting air out of the tires or a crash??

A look at the high end data in this report along with info about El Segundo would lead me to believe that peak to trough we could see 10-20% declines. Some people who lived through 2008 think ahh, I made it through 2008 and I’m back above the trough. No biggie.

This logic works for someone that can afford their home, has no change to their job/income and logically have an equity cushion.

For those of us that have to stretch the limits of mortgage affordability to make buying a house in El Segundo work a 10-20% softening can be a killer. An entire down payment and life savings could be washed away while the family hopes for a recovery and continued steady employment. Loss of a job, a large unexpected cash outlay and even these $150-$200k per year households are on the verge of foreclosure.

If the many economists are right and this isn’t just limited to housing and we have a global economic malaise or recession it puts all new homeowners in jeopardy. In situations where people can get away with a 3.5% down payment the potential for disaster is even worse.

But hey, maybe it’s different this time.

Letting air out of the tires or a crash??


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