Oh, Those Home Prices

Want to know why real estate prices keep increasing? First it was a huge decline in interest rates. Now, people are moving in mass droves to interest-only loans. Take the case of Washington DC:

About 54 percent of home buyers in the District purchased their homes using interest-only loans so far this year, according to LoanPerformance, a San Francisco-based company that tracks loan originations nationwide. About one-third of buyers in Maryland and Virginia are buying with interest-only loans.

Just five years ago, only about 2 percent of home-purchase loans in the Washington area involved interest-only terms.

Got that? 54% will never pay a dime of principal!!!!! Oh, boy - this is gonna be ugly...