The foreclosure naysayers and doomsdayers are making the impact worse then it is. You don't have to believe the hype. Yes, there will be some fallout but nothing like they are anticipating. A majority of the homeowners who purchased their home using ARMs (Adjustable Rate Mortages) are not going to be shocked when all of a sudden it starts adjusting. They either purchased the house this way because they had no choice (subprime) or because they wanted to take advantage of the low rates at the time.
This isn’t exactly what it looks like. There are a lot of businesses, inside and outside, of the housing sector that benefit from the foreclosures. The impact will be mostly felt in the insurance industry and large hedge funds which are betting that foreclosures will increase and thus profit. Similar to certain option trading. You won’t here about that in the mainstream because its not too politically correct to bet on thousands of people will lose their homes, but it’s the realty and lots of money is being made because of it. That is also why the economy will not suffer as bad as certain economist predict.
Consumer spending is what drives the economy, right.
Foreclosures are bad because they place a lot of pressure on the financial institutions, right.
If the foreclosures are being hedged against and the hedge money (profit) is returned to the market in the real estate/manufacturing sector then the impact will be limited, right.
If you were just foreclosed on and you don’t have that high mortgage payment anymore then you will be spending that additional discretionary income in the market place, right.
Conclusion: No doomsday in 2007 or 2008 like many predict.
It’s a different day then many “experts” are used too. Who would have thought that the second largest capitalized company in the US
Foreclosures will have an impact, but the landing will be much softer than many believe.
I’m bullish on the economy and especially real estate in 2007!
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