SteveS said:

>I'm astonished at how many baby boomers are continuing to
>refinance ther mortgages to consolidate there credit card and
>other monthly payments. By the time they retire they will still
>owe bundles on there houses and if they don't have adequate
>income at retirement age there will be many foreclosures. If they
>don't have enough money to make all there monthly payments
>and resort to refinancing, then they probably don't have a nest
>egg for retirement and many companies aren't going to keep
>them on the payroll or hire them at retirement age.

Yesterday, we were celebrating my daughter's 5th birthday and invited my daughter's playmates with their parents over for the birthday party. Conversation #1 amongst the parent's was the real estate bubble and what will happen after if pops. Everyone agreed there is a bubble and there will be hell to pay when it pops. I raised the point: Why is there so much money floating around to speculate in residential real estate in the Bay Area? The local economy is still mostly dead from the Dot Com bubble. A response was this money is fantasy money. Many people are living beyond their means and spending down their home equity through home equity loans. It's the same mechanism that SteveS described, i.e. idiots get in over their heads with their credit cards and then pay off the debt with a home equity loan. Another person mentioned that 20 percent of home purchases in the Bay Area are "real estate flips" (a person buys a woofer, gives it a coat of paint and then sells it to a sucker for $50,000 over the purchase price). Supposably, real estate flips are driving the local economy, i.e. fantasy money is flowing out to house painters, people hanging sheet rock, carpenters, etc. We are primed and ready for another major economic hit. I fear this next one will be worse than the Dot Com. How do you sell short on real estate?

Gary