Quite the Distinction for San Diego

According to the article Busting the Housing Bubble, the LoanPerformance LLC group reports that last year San Diego led the nation in the percentage of interest-only loans with a whopping 48% of loans issued during 2004 in San Diego being interest only! Eep.

Here are a breakdown of the top offenders for 2004:

• San Diego, 48%
• Atlanta, 46%
• San Francisco, 45%
• Denver, 43%
• Oakland, 43%

I think my sentiment is best captured by the article Interest Building in Interest Only Morgages: "You'd have to revisit the pre-Depression 1920s to find a time when interest-only mortgages were as popular as they are today among U.S. home buyers."

When the bubble bursts and those who used interest-only (or option ARM) vehicles to finance their debt, we're going to hear a lot (and I mean a lot) of whining from those getting stung. They'll say how "everyone" told them it was the smart move; how "everyone" said house prices would keep going up. Of course, not "everyone" is saying interest-only loans are smart, or that home prices will keep heading north. Read any article that touts interest-only loans and the obligatory "pro" quotes always come from either real estate agents or bankers, the exact people who are profiting from the ill advised growth in interest-only loans.

The more research I do into this housing bubble the more assured I become that the proverbial shit is going to hit the fan. Personally, I am really hoping for a sharp decline in home prices sooner than later, but without affecting the overall economy. Unlikely, if not impossible, I know. Regardless of my personal, selfish wants, though, I really do expect something is going to give and it's going to hurt more than people had or are or will be anticipating.