61 % of Mortgages in California are interest only.
The Tahoe Daily Tribune has rather frightful
article. In the article they note that over 61% of mortgages in California in 2005 have been interest only loans. Sorry but that's a clear sign of bubble about to burst. It's especially bad when you consider that in 2002 that number was 8%. Since most of these loans will have the interest rate change in 3 to 5 years, you can almost predict that in the year 2008-2010, there are going to be some very surpised people who will notice that their mortgage payment has doubled. The question remains, will the shortage of homes in California (specifically in the hot areas of Los Angeles, Orange County and San Francisco) keep prices high? If interest rates rise the answer is very clearly, "No." So watch the 30 year fixed rates over the next two years. I am looking forward to the bubble bursting so I can buy CA real estate again. I made plenty on my own California home, I just got out when my home more than doubled in value so I can enjoy the less crowded life here in New Mexico.
