Real Estate Reset

I know that most readers are aware that we are in a housing downturn after years of record setting home sales. Soon we will see how far this downturn will go.

Many, many people who purchased homes over the past 6 years did so through the use of an Adjustable Rate Mortgage (ARM). As I'm sure you know, the interest rates on ARMs are based on the established interest rates at the times meaning they fluctuate. Well, now many of these loans are set to reset to much higher interest rates in the coming months; more than 2 million of them to be more precise. This means that the interest rates on these loans could jump by 35% or more, undoubtedly putting far more financial strain on those who have them. It will be interesting to see what happens...

Why discuss this on this blog? Because people in the US, especially those on the coasts and large cities appear to be short sited. They take ARMs on homes that are beyond their means and give little thought to the consequences 5 or 10 years down the line. This issue does not just concern matters of money. Americans consistently look for quick fixes to lifetime problems. Whether it's liposuction, or get rich quick schemes, we look for ways to avoid hard work and perseverance. The result is a rocky, up and down cycle that leaves us with less than we began with.

I'm convinced that about half of what separates the successful entrepreneurs from the non-successful ones is pure perseverance.
Steve Jobs(1955 - ), Interview, 1995