by Calculated Risk on 1/01/2006 09:18:00 PM

Happy New Year to All! It does appear we are living in interesting times. The biggest story of the New Year is the Constitutional Crisis concerning the warrantless surveillance of US citizens. And on the economic front, housing is still the hot topic.

The San Diego Union has a series of articles on housing:

Understand risks of 'creative' loans

Creative loans push overextended owners into dangerous waters

When she bought her two-bedroom condominium in Mira Mesa in mid-2004, Elizabeth Eure didn't envision herself one day sleeping on an egg-crate mattress in an empty unit.

The furniture was gone in December because Eure was preparing to move, awaiting the close of escrow. After living there less than a year and a half, she had sold her home to cut her losses. Her monthly mortgage payment of $2,500 was too much for her to handle.

"It was a mistake," Eure, 29, said of the purchase. "If I could do it all over again, I would have rented an apartment."

Richard Mehren, a real estate agent who specializes in condominiums, said Eure's predicament is a common one. Many recent buyers are beginning to realize they have taken on too much debt.

Pressure grows as market cools

And from the Southwest Florida Herald Tribune: Clock is running down on 'cheap' mortgages

Lenders who started making those teaser-rate loans a few years ago are getting ready to charge real-world payments on them.

Starting in 2006 and accelerating into 2007, as much as $2.5 trillion worth of the fancy mortgages called "hybrids" are coming to the end of the free-lunch part of the deal.

And while prices in Southwest Florida are hovering at twice those of three years ago, the house party seems to have ended in July. Since then, as mortgage rates continue their upward creep, inventories are stacking up, while the rate of closings is slowing down.