Affordable Housing At All Time Low In Spite Of Record Market

2004 saw record growth in the housing market, but a shift in the economy could be disasterous to owners.

1 minute read

June 17, 2005, 12:00 PM PDT

By Brenda Meyer

"This years State of the Nations Housing report from the Joint Center for Housing Studies cautions that creative financing is adding to risk. Although interest-only and adjustable loans can initially save a typical home buyer hundreds of dollars in monthly payments, these loans also leave borrowers vulnerable to sharply higher payments when interest rates adjust or principal payments start to become due. With the number of borrowers vulnerable to payment shocks up, default rates predictably several times higher for subprime than prime loans, and house prices growing at such rapid rates, the housing market could deteriorate if the economy softens or if rates increase sharply, explains Retsinas."

Thanks to Brenda Meyer

FULL STORY: Hot Housing Market Masks Eroding Affordability and Mounting Risks, Harvard Study Reports

Thursday, June 16, 2005 in RISMedia

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