Not "Double Dip" But "Doubling Down"
August 24, 2010
I saved an article that was published in the July 24, 2010 Wall Street Journal that was headlined "Doubling Down on Housing". The title caught my attention since it referred to a gambling term with which I have become familiar since the popularity of 'World Championship Poker".
The article actually mentions a strategy that some underwater homeowners are using. They sell there house at a loss and write a check to the lender for the difference between the selling price and the mortgage owed in order to purchase twice as much house for not much more money. The ability to use this strategy is made possible by the extremely low prices of houses plus the extremely low mortgage rates. This putting of cash into a closing is a change from the short sale mentality. This strategy has allowed these sellers to trade up to more desirable housing - something short sellers cannot do. These sellers are making a bet on the future of real estate values.
Obviously, these sellers have to have the cash available to make this doubling down bet. They have to believe in the future value of housing and they have to be unconcerned about all the hype for the "double dip".
Yeah, for these optimists, may they win the bet!
I saved an article that was published in the July 24, 2010 Wall Street Journal that was headlined "Doubling Down on Housing". The title caught my attention since it referred to a gambling term with which I have become familiar since the popularity of 'World Championship Poker".
The article actually mentions a strategy that some underwater homeowners are using. They sell there house at a loss and write a check to the lender for the difference between the selling price and the mortgage owed in order to purchase twice as much house for not much more money. The ability to use this strategy is made possible by the extremely low prices of houses plus the extremely low mortgage rates. This putting of cash into a closing is a change from the short sale mentality. This strategy has allowed these sellers to trade up to more desirable housing - something short sellers cannot do. These sellers are making a bet on the future of real estate values.
Obviously, these sellers have to have the cash available to make this doubling down bet. They have to believe in the future value of housing and they have to be unconcerned about all the hype for the "double dip".
Yeah, for these optimists, may they win the bet!
posted by shirley harry at 8:55 AM
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