Tuesday, October 17, 2006

Inflated Home Prices....oh my!

The Nashua Telegraph had an article today titled "Perks may be inflating home prices".

What kind of perks you ask....for one, I guess sellers are so desparate to sell that they are offering the buyer money back (under the table) in order to entice them to bite. The mortgage company knows nothing of the "kickback". All they know is that the house was on the market for $600,000, and the buyer pays $600,000.

Little do they know, the seller might have paid the buyer $20,000 in cash to close the deal. The $20,000 is under the radar screen, except for the fact that the transaction for the house was really $20,000 less.

In other words, the already slipping housing market may in fact be slipping even more than is reported!

Another shocking finding from the article is that the percentage of people taking out what they call "non-standard" financing has gone from less than 10% in 2002 to about 31% in 2004. Those would be things like ARMS, interest only loans, etc.... People seem to continue to crawl even further out on the limb.

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