Clear Fog Blog

Political musings from Warren E. Peterson

Housing Bubble Deja Vu

Posted by Warren Peterson on August 5, 2009

Glancing at the August 1, 2009 Seattle Times’ New Homes advertising section, I noticed an article (remember, this is advertising) offering; “zero-down financing” on some town homes in Issaquah. Curiosity peeked; I read the story, which included the following quote:

“This offer is truly spectacular,” says Jeff Smallwood, vice president of sales and marketing for Intracorp, Centerra’s developer. “We’re offering zero-down financing with no mortgage insurance, including a 4.123 percent (interest rate) on a 30 year fixed loan, 3.25 percent on a seven-year ARM or 2.875 percent on a five-year ARM interest-only loan. So potentially, you could purchase a home at Centerra for $329,990 and your monthly payments could be as low as $791 (excluding taxes and HOA dues).”

I immediately double-checked the date. No, it wasn’t August 1, 2007 or even 2008 but the words certainly sounded familiar. Nothing was said about qualifying for these loans and hopefully the standards are higher than before the bubble but come on, $791 a month for a $330,000 house! Is the real estate/mortgage industry about to sucker in a new generation of gullible homebuyers? Are they laying the groundwork for Bailout II? Sure, the pressure is on to unload the large volume of unsold homes and every sales ploy in the book is being used, but really, has the burst housing bubble taught us nothing?

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