Quote:
Originally Posted by pepper24
As long as they can afford their current mortgage payments and plan to live there for a while they aren't necessarily in a bad position. They say you should plan to live in your home for a minimum of 5 years to make back all real estate related fees in a normal market. The buying, selling and speculation of the market over the past few years wasn't a normal market.
Heck, even if they plan to sell in the short term, they'll be able to buy another home which has also fallen assuming the ratios are close to the same minus all real estate related fees. The opposite holds true in a bull market.
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First paragraph is true, although poorly understood. The lack of understanding of this point helps perpetuate the large swings we see.
Second paragraph is only true if you still have equity in your home.