Massive home equity deflation underway(ZT)

Massive home equity deflation underway?	ray_heritage
July 9, 2007 Bloomberg article: Where to Invest If Your Home Equity Evaporates Whilethis article primarily focuses on where to invest when growth in homeequity is lacking, its implications underly what is a sobering reality:home equity is deflating. "The best strategy is to ensure youare getting growth from somewhere. For that, you may have to look farfrom home", write the columnist John Wasik. Massive equitydeflation may be taking place. Fueled by cheap mortgage money, lowlending standards and the willingness of Americans to plunge everdeeper into unsustainable debt, the housing market was due to hit thebrakes. Peter Schiff, an investment adviser and president of Euro Pacific Capital Inc., in Darien, Connecticut, says: ''WallStreet may be able to buy some time by bailing out troubled hedge fundsto keep their worthless subprime mortgage investments off the market,but no such safety nets exist for strapped consumers looking down thebarrel of resetting adjustable rate mortgages.'' ''Inventories will continue to balloon,'' adds Schiff, ''until reluctant homeowners come to their senses and slash prices.'' When supplies exceed demand in a time of rising rates, it could be years before the housing market grows again. Millions who were banking on endless appreciation are now finding they are deeper in debt, with little equity Who would have thought that building home equity in the U.S. was risky? Yetmillions believed that their domicile's nest egg was assured andprovided a firm foundation for retirement. It's still likely that inmany markets, you won't lose much, if any, home equity, provided the current downturn isn't prolonged or severe. Huge "if", in my opinion.... link