What about an interest-only loan for us poor schmucks who live in LA? I figure the interest-only payment on a house I would like in my current renting neighborhood would be about $2,800 per month. Let's say I commit to leaving that home in 5 years. Is it really then just a gsamble that the Miracle Mile area of LA housing market won't plummet?
Yes. Gamble that housing prices won't plummet (which has happened before) and that you can sell the house in time.
Yeah, that's what I figure. Do "real" banks actually offer these loans, or is it only internet banks, etc.?
Really banks would be happy to offer you this loan. They're just going to turn around, STRIP/repackage it, and sell it off anyway.
Off the top of my head, interest only loans are offered by Bank of America, Wells Fargo, and HSBC here in Virginia. Are you counting them as internet banks vs "real" banks because the have websites?
Ask someone who bought a house in Cali in 1990. They got crushed and probably did not get above water until the late 90's. It was brutal. Prices fell 20-40% in many areas.