Why housing market speculators stay out of Palm Springs
I recently read this posting that explains why Palm Springs and in general Indian Reservations are less subject to a housing bubble than other areas.
One of the contributing factors to the run-up in house prices are the lose lending practices. People get 100% financed if their credit record is clean, on top of that interest only options, adjustable rates etc.
Here's what a buyer of a home in Palm Springs experienced:
Just an alternatve story - my partner and I live in San Francisco and, being priced out of the market, even on a combined salary of 160K, decided to purchase a condo in Palm Springs. We came upon some surprising requirements for our purchase.
It's on Indian Reservation land and subject to the Bureau of Indian Affairs, which reviews all loan terms. They rejected our 10% down, 10% 2nd mortgage to satisfy a 20% downpayment requirement. As a result,we had to provide 20% cash *and* were then refused again due to an interest only loan. Thankfully, our preliminary loan can celled out due to time and when the second loan was prepared, the interest rates had dropped a bit. The result was a larger downpayment of 40K, but no second mortage, we're paying toward principal *and* our monthly payments stayed the same due to the lower interest rate.
I realize this must be a highly unusual situation but I think it has seriously helped to keep speculators out of that market and keep prices low.