In my years in the business I have seen a lot of ups and downs and have also seen history repeat itself recently. Adjustable rate mortgages were around in the late 70's and by 1981 mortgages reached 17 ½ % and the prime rate hit 21 ½ %. When rates reached this level borrowers were loosing their homes and much was written about why adjustable rate mortgages were so bad and why they would die a deserved death and never be seen again.
Fast forward to 2004/2005 and everyone forgot about the early 80's and adjustable rate mortgages became the means that many used to get into the home of their dreams. It didn't matter what could happen to these rates because we would get the home that we and our families always dreamed of and we would get it now.
I saw another thing happen. In our own community I heard many Realtors, Builders, developers and mortgage lenders make statements like "This (the current real estate market) is going to last for 5 years, 7 years, 10 years, etc. Many Realtors believed this and started buying hummers, boats, vacation homes, sports cars, etc. I even know of young Realtors in their twenties purchasing expensive vehicles with payments as high as $1,100/month and new homes with payments as high as $2,800/month based on the 2005 real estate market. Many of those young Realtors have had creditors knocking on their door and have received demand letters from the IRS.
We will come out of this economic crises many parts of the country are experiencing some day. Our country will climb out of it just like we have climbed out of every challenge we have faced.
I hope when we do climb out of it that someone will carve somewhere on some mountain the importance of learning from history and learning the lesson that Grandpa and Grandma taught us about not buying anything if we either 1) could not pay cash for it or 2) make enough of a down payment to get the monthly payment down to an area where we could comfortably afford it without putting a strain on our financial status and our families.
No market, whatever condition it may be in will ever last forever. The truly "Rich Dads" referenced in the book "Rich Dad, Poor Dad" refers to are all the men and woman that have learned to create cash flows instead of debt and learned to live without in the first few years to have all we could possibly need when we really need it.
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Native Idahoan and Boise Idaho Real Estate specialist serving Boise, Meridian Eagle, Nampa, Caldwell and the surrounding Treasure valley area of southwest Idaho. Specializing in residential, investment, land and commercial real estate. Search thousands of MLS listings at Boise Homes for sale and learn all about Idaho by visiting Search Idaho Homes