Anonymous_IHB
New member
<p>Was reading this article <a href="http://finance.yahoo.com/real-estate/article/104405/Why-Your-Nest-Is-Not-Your-Nest-Egg;_ylt=AsHAFAnvz.N2HtO2PawrnVe7YWsA">http://finance.yahoo.com/real-estate/article/104405/Why-Your-Nest-Is-Not-Your-Nest-Egg;_ylt=AsHAFAnvz.N2HtO2PawrnVe7YWsA</a></p>
<p>and was struck by this (pasted below). Could one argue that getting a house one can't afford, and counting being able to refi, is indeed like asking for a potential future margin call? And if so, would that account for the speedy precipitous stock rather than housing like rises and drops that have been occuring in the last few years?</p>
<p><strong>4. You can't get a margin call</strong>.</p>
<p>It's common to take out a mortgage to buy a house, while only aggressive investors use a margin account to buy stocks. This isn't a big surprise. Buying real estate with borrowed money is a whole lot safer than buying stocks with borrowed money.</p>
<p>How so? If the stock market plunges and you own shares on margin, you could receive a margin call from your broker, asking that you add more cash or securities to your account. If you don't pony up, part or all of your holdings will be sold, locking in your losses.</p>
<p>By contrast, as long as you make your mortgage payments, your neighborhood mortgage banker can't force you to cough up more cash or sell your home, no matter how far your home's price plunges. This ensures you won't be bulldozed into a snap decision. Still, because homeowners don't receive margin calls, it makes it easier to procrastinate over selling and to entertain fanciful ideas about your home's value.</p>
<p>and was struck by this (pasted below). Could one argue that getting a house one can't afford, and counting being able to refi, is indeed like asking for a potential future margin call? And if so, would that account for the speedy precipitous stock rather than housing like rises and drops that have been occuring in the last few years?</p>
<p><strong>4. You can't get a margin call</strong>.</p>
<p>It's common to take out a mortgage to buy a house, while only aggressive investors use a margin account to buy stocks. This isn't a big surprise. Buying real estate with borrowed money is a whole lot safer than buying stocks with borrowed money.</p>
<p>How so? If the stock market plunges and you own shares on margin, you could receive a margin call from your broker, asking that you add more cash or securities to your account. If you don't pony up, part or all of your holdings will be sold, locking in your losses.</p>
<p>By contrast, as long as you make your mortgage payments, your neighborhood mortgage banker can't force you to cough up more cash or sell your home, no matter how far your home's price plunges. This ensures you won't be bulldozed into a snap decision. Still, because homeowners don't receive margin calls, it makes it easier to procrastinate over selling and to entertain fanciful ideas about your home's value.</p>
