The Wall Street Journal is explaining a major problem going on now with high end houses.
They’re not selling in many markets. That doesn’t mean every real estate market, but many people across the country are having trouble getting jumbo loans where they have to put down as much as 30 percent.
Consider the mortgage headache that President Obama has with his own jumbo mortgage.
He bought a Chicago house in 2005 and paid $1.65 million for it. That was at the height of the boom.
(Is there a lesson here, Mr. President? Don’t buy at the top of a real estate cycle.)
Now the house is only worth $1.2 million and his mortgage was for $1.3 million. Is he still upside down in his mortgage?
Treasury Secretary Timothy Geither, the man with all the answers, is not doing much better. He can’t sell his high end residential property, so he’s renting it out.
The Wall Street Journal is telling stores of woe about upscale people who have lost their jobs or who have changed jobs and are having to commute to other cities.
Would they like to sell those huge magazine styled dream homes?
What does all this mean for us?
If you’ve got the cash, now is the time to put your family in the manse of their dreams.
All we have to do is go back to the Depression and gleam that nugget. Many fine high end properties were bought for songs during the 1930’s.
I think our current economy is similar to the 1930’s in more ways than the media would like for us to think about…
Which brings me to another point…inflation.
What about the wild card of inflation?
Will it return? We think there is a large possibility.
These properties have lost a lot of value for now. If inflation returns, they could regain lost ground and then some. It’s happened before.
Question is how long would that take?