Be careful. There are many indicators that the housing bubble is on the verge of collapse. And a bubble it is. According to &uot;The Economist,&uot; the current housing bubble &uot;is larger than the global stock market bubble in the late 1990s, of America’s stock market bubble in the 1920s. In other words, it looks like the biggest bubble in history.&uot;

A 20 percent down payment on a fixed rate mortgage is apparently a relic of ancient times. This traditionally conservative practice of lending and borrowing has been replaced with schemes that could be putting the entire housing market at risk.

According to the New York Times, in 2004, one-fourth of all home buyers, including 42 percent of first-time buyers, made no down payment.

Equally, if not more, troubling is that fact that, again according to the New York Times,

&uot;nearly one third of all new mortgages this year call for interest-only payments (in California, its almost half)&uot;

There are a lot of people living on the edge.

There’s also been a

dramatic surge in speculation in the housing market. A study by the National Association of Realtors (NAR) found that 23 percent of all American houses bought in 2004 were for investment, not owner-occupation,&uot; according to &uot;The Economist.&uot; Another 13 percent were bought as second homes. Investors are prepared to buy houses they will rent out at a loss; just because they think prices will keep rising – &uot;the very definition of a financial bubble.&uot;

So the situation we have is, in the words of writer Mike Whitney, &uot;shaky lending, interest-only loans, no down payments, a U.S. government that is $8 trillion in debt because of Washington’s profligate spending, and a ‘ticking-time bomb’ of adjustable-rate mortgages that will reset within three years; the table is set for a disaster of Biblical proportions. If we hit a bump in the economic road ahead (rising gas prices? recession?) the &uot;Land of the free&uot; will be knee-deep in bankruptcies and foreclosures. We’ll all be fighting for a soft-spot under the freeway on-ramp.&uot;

That’s likely overly dire. Federal Reserve Chairman Alan Greenspan thinks any crisis can be averted by gradually increasing interest rates and regulating the money supply. We hope for all of our sakes he is correct.

In addition hopefully, Hampton Roads in general and Suffolk in particular, because of the large military presence and Suffolk’s tremendous growth, is somewhat immune from any possible looming housing catastrophe, but we wouldn’t bet the ranch on it.

It’s not our intention to be doomsayers or overly pessimistic, just to caution our readers not to get in over their heads on mortgages, and if someone comes along with a good offer for your home, you might want to consider it.