Dr. Housing Bubble takes us all to school for an important lesson on the next phase of the greatest housing crash in American history: $500 billion of option ARM loans waiting to go *POOF* - 60% of which were signed for homes in sunny and delightful California.
True to form, most Americans (and Californians) apparently chose option 1: Minimum monthly payment.
Come on, think about it. How else can one afford the monthly payments to "own" that 7-times-your-annual-salary-home price?
A lot like making that minimum payment on your credit card every time, but not paying down the balance borrowed, so interest charges accrue into a 600 lbs. hungry and angry Silverback gorilla. Oh, nevermind that menacing figure in your rear view mirror. That's just your collossal unpaid loan balance waiting to destroy your future financial livelihood!
Man, I wish they would come out with auto loans structured like this! I would buy a fucking Ferrari!
Oh California! You thought you could have your state budget crisis cake, educational cuts, and housing crash too?
This is goddamned scary.