Monday, March 19, 2007

The housing market as Musical Chairs

The Ventura County Star. “A few who qualified for home purchases only a few weeks ago have seen their financing vanish along with their dreams as lenders spurn 100 percent loans. The situation has many who sell real estate in Ventura County worried. By some estimates, at least 20 percent of first-time buyers in recent years have needed 100 percent financing.”

It's not just Ventura County, this is taking place across the U.S. as you read this.

The whole point of the game of buy and flip has been not to be the last guy standing when the music stops.

The whole point of musical chairs is the same.

If for some reason you are unfamiliar with the game:
You remove a chair each time someone is out so you always have one less chair than you have butts to put in them. (Kind of like a diminishing market). The players go round and round while the music plays. (Kind of like housing flippers). Then you all scramble to claim your chair when the music stops, leaving someone out in the cold. (Kind of like the current state of the market).

In this scenario the first time buyer represents the chairs and cheap money is the music. Of course that leaves the flippers as ‘The Butts’. Seems now due to credit standards suddenly tightnening there are more butts than chairs.


Post a Comment

Links to this post:

Create a Link

<< Home

Industry Blogs Real Estate Blogs - Blog Top Sites