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95 Comments
- sockpuppets, on 11/25/2007, -3/+34They keep trying to repossess my home but I just keep locking the door and drive it to a different neighborhood.
- hdar3415, on 11/25/2007, -2/+30And it's only going to get worse.
- podrag, on 11/25/2007, -3/+22I am suddenly reminded of a song by Bauchman-Turner Overdrive...
'You ain't seen nothin yet. B-, b-, b-, baby, you just ain't seen na-, na-, nothin yet. Here's somethin' that you're never gonna forget. B-, b-, b-, baby, you just ain't seen na-, na-, nothin yet.' - kazamx, on 11/25/2007, -1/+18Don't buy now anyway. While the prices might seem cheap compared to earlier this year or maybe last year, they are still over priced.
Wait. The prices will continue to fall. There is still a long way to fall yet. - dognose, on 11/25/2007, -3/+16Wow, that's like 10 houses.
- inactive, on 11/25/2007, -0/+12I remember during my dot.com days I decided to use my new, bigger salary to pay off my debts until I learned about investing as I didn't know anything about investing. People laughed at me. Told me about the "new economy". Everybody I knew lived beyond their means on credit. After the dot com crash I was expecting to see a lot of riches to rag stories as the bills came do. I haven't seen too many. I guess articles like this one are trickling in now.
- LeeSoong, on 11/25/2007, -2/+11East Coast too - Pennsylvania record foreclosures and tax sheriffs sales,
look around: New York, Ohio - the economic implosion is here, Now.
It is illegal to own property in most states - you rent it from the government,
don't pay property tax and they will kill you to take the land from you. No Joke. - WordsnCollision, on 11/25/2007, -2/+10Auctions are a great way to snap up previously unaffordable homes in hot markets like the Bay Area. I wouldn't want to be the guy living next door who bought his home last year, though...
- catalysis, on 11/25/2007, -1/+9You still probably won't get a very good price at auction. The market just hasn't bottomed out yet.
- edstate, on 11/25/2007, -2/+10I'm confused. Isn't real estate the "American Dream?" ...and isn't the "American Dream" guaranteed to everyone? And doesn't real estate always go up?
Sincerely, Captain Sarcazmo - inactive, on 11/25/2007, -0/+7Real estate has cycles too. It wasn't until the end of the last cycle that people started to think that RE only went one direction. That is pretty much the defining characteristic of every bubble "things have changed" "the old rules don't apply" etc etc. This bubble found fuel in the excess liquidity that was being facilitated by Wall Street packaging/selling/re-selling very risky mortgages.
Things haven't changed and the old rules do apply. Oh yeah, real estate remains a good investment IF you get a good mortgage AND a home you can afford. Hopefully that last part will get easier in the next couple of years. The fact of the matter is you're really supposed to put at least 10% down on a home AND have 10% of the home price held in reserve (before subtracting closing costs). As home prices soared up to 300K that meant you needed 75,000 in positive net worth (outside retirement accounts) just to meet the minimums. Most people could not come close to that and that is where the "no money down, no income check, ARM, etc" mortgage products came in. - frosted, on 11/25/2007, -2/+9Time to buy ONLY WHAT YOU CAN AFFORD. Idiots.
- JordanTW90, on 11/25/2007, -1/+8About time. I expect home prices to lose 50% by the time its all over.
- vertinox, on 11/25/2007, -0/+6Why? Just get a fixed mortgage on house that would be as much as you would rent.
Actually when I bought a house, I just made sure the monthly payments were less than I was paying when I was renting.
Regardless of what happens to the market, if you bought a house you could afford then you'll be fine. Its the people who bought houses with APRs or with loans they really couldn't afford that are in trouble. - dattaway, on 11/25/2007, -2/+8This will be good for renters wanting to buy soon. Houses will be cheap and in plentiful supply.
- brantw, on 11/25/2007, -0/+6Bah, this is why I am going to keep renting.
- Daedalus81, on 11/25/2007, -0/+6And the rich get richer.
- crazywarthog, on 11/25/2007, -2/+8 I enjoy the truth !
In 1998, the U.S. Conference of Mayors blamed "redlining" for the "homeownership gap" in major cities. Though never documented, that was a common complaint for decades. In reality, the gap had less to do with discrimination than low demand for urban housing and banks' reluctance to lend money to people who can't repay.
Still, it wasn't long before lenders cowed by political correctness began lowering their underwriting standards and issuing variable-rate mortgages to high-risk borrowers. The Department of Treasury says 21 percent of all mortgages written from 2004-06 were so-called subprime, up from 9 percent from 1996-2004. And naturally, it wasn't long before rising interest rates hung subprime borrowers out to dry.
At their annual meeting this year, the mayors absolutely savaged the mortgage industry for doing precisely what they demanded nine years ago and called on the government to end predatory lending schemes. Then as now, the conference's criticisms ignored personal responsibility, specifically borrowers' obligation to understand the terms of their loan before signing. Not surprisingly, that angle also was absent from nearly two-thirds of the nightly news coverage on the "subprime crisis" in the 10 months ending Aug. 31, a new Media Research Center report reveals. - GeorgeClayton, on 11/25/2007, -1/+6This is what happens to societies who live in debt. Sure you could temporarily "fix" the situation by dropping interest rates, but it'll only make the problems worse and worse and worse in the future. Any profits made from usury will always be reflected by a similar level of foreclosures.
- chocobomog, on 11/25/2007, -1/+6Simple rule: DO NOT BUY A HOUSE THAT COSTS MORE THAN 3x YOUR ANNUAL SALARY
Yes, in California this probably means you won't get a very good house/shack. But banks are very tricky and can convince you that even though the house costs more than 10x your salary you can afford it with tricky financing. If your house/rent costs more than 1/3 your gross salary, you are living beyond your means.
If you must have a house, rent and save your money for a big downpayment that will lower overall payments significantly. Or rent for a while and move to an area that has reasonable house prices. Right now is a wonderful time to rent because houses aren't selling and people are hurting for money. I just moved my family from a small two-bedroom apartment to a large 4 bedroom house that costs $100 less in monthly rent (the house never sold and the owner needed money). Sadly, my rent in Cali costs more than my parents mortgage payment on their house but they live in the South. - raada, on 11/25/2007, -0/+5I wish people would read this.... and understand it.
- MindTrigger, on 11/25/2007, -0/+5See folks, this is an example of "rich getting richer, the poor get poorer" and "the end of the middle class". The people who have the funds to buy up all the foreclosures are doing do, compressing the nation's wealth down to fewer and fewer people. Why? Well in the case of housing, it has a lot to do with banks giving adjustable loans to just about *anyone* over the past several years, despite their financial / credit problems. "Creative Lending" is what I like to call it. Now all of the hard working middle class and lower will feel the bite from this, while the rich increase their holdings. Enjoy.
- madk, on 11/25/2007, -0/+5I'm not sure why you are being buried. Our personal debt is the sole reason for all of these problems.
- h3smith, on 11/25/2007, -0/+4Good. Housing prices are out of control. There is no way they can double and triple in 10 years. How are 20yo's supposed to be able to afford places to live? They cant and this is the market correcting itself.
- dragonopolis, on 11/26/2007, -0/+4The other problem is Property Tax. Long time ago States had issues with people not wanting to raise property taxes to pay for things that were desperately needed (like new schools, etc..) so the idea was born if you can't get people to raise their taxes - raise their value on the home to get that extra money while the tax rate remains the same. Of course the original owner will be delighted to be in the positives but the second and third owner would continue to have to fork out more money to pay for the same house. Houses often go up in value regardless of what condition it is in because often the value of the home is a perceived value not base on any real value. The government plays this cat and mouse game for years with the public until prices of the homes are so high nobody can afford it and on top of this you have issues like mention above with creditors giving out easy loans on variable interest.
I mention early on another biggie which is that homes in American are not based on any real value but a perceive value (like location - close it is to the beach or some movie stars house - lame) thus it is controlled by peoples perceptions and Americans tend to have green dollar signs in their eyes. Kind of like the saying "My eyes were bigger than stomach" but change stomach to wallet and you get my meaning. We have over priced ourselves. The houses should be sold like cars. Value should drop based on certain criteria but generally like most cars get cheaper with age (unless kept in immaculate condition and is close to original condition) and will generally lose value thus making it cheaper to buy for the next individual. Car sales people generally make more money on use cars than new (unless the new car is considered deluxe like an SUV, sports car, or luxury sedan). The same would work with realtors. Also, because value of the home is now based on actual value rather than a perceived value based on the original price and condition of the home when it was built people are more than likely going to try to keep it looking like new rather than let it rot (like a lot of houses are in my small town but they are still selling more than they were worth when they were built 20 - 30 years ago.)
Now houses/properties can still increase the value but it will be base on how much was improved not were it was located or who lived in it. For instance, the original house had the ole fuse box and two prong plugs so the owner remodeled and replaced it with Three prongs and a modern breaker box. Maybe the orginal plans didn't have a garage so the owner added a nice two car garage or a new Barn. Recreational side the owner may have added a swimming pool. All these things and more can increase the value or cost of the home because it "improves" on the original design. Of course, for my theory to work it would require regulation and guidelines but it is possible.
I'm not saying the car sale industry is perfect - it does have flaws. However, so does selling housing/properties. If I had to choose between two systems that have flaws (come on people more and likely there is no "perfect" system), I choose the one system were value was going down rather going up - its easier on the wallet. Both are free market systems and both have proven that good money can be made, however, a system based more on how cars are sold lowers the cost of living for people and gives people with less money a chance to afford a home and at the same time naturally regulate the rising cost of homes. I also say Property tax is a government scam and is should be illegal. It should have never been implemented and has a direct consequence on our cost of living.
If cost of living wasn't so high in the United States people wouldn't need so much stinking money to live. Any Government is a regulatory organization. Yes we should keep these organizations to a minimum but there are things that must be regulated. That's why we have Military and Civil Services to help regulate Peace and Crime. We also need regulatory services to help regulate the economy in places that burden the country as a whole like cost of living (housing, rent, credit/debt. electricity, communications (like internet), medical, education). If we lower the cost of living or even lift the burden of living all together, (like using tax dollars to pay a portion of our electrical needs thus eliminating or at least significantly lowering the cost of electricity per month would help considerably) it would help considerable and the need to raise the minimum wage (or even discuss the need for a living wage) would not be need. - misterhat, on 11/25/2007, -0/+4I live in Orange County (problably the most debt ridden place in the US) and most of the houses being forclosed are not the multi-million dollar ocean front homes in Newport and Laguna Beach. Its mostly homes that were worth around 500k-1mil that middle class people speculated on because it was easy to get a loan.
- MindTrigger, on 11/25/2007, -0/+4Who doesn't understand this?
The problem with doing the ReFi is that most of the loans for these homes were given to people who shouldn't have been given credit in the first place. Now that the economy has changed the banks are actually looking at buyers bad credit, then denying refis instead of ignoring bad credit like they did on the initial sale. Banks pushed through all these bad loans without ever considering the consequences later. The buyers were ignorant, and expected their loans to stay the same forever. - tuxidomasx, on 11/25/2007, -0/+4its not just that they spent their money on something else. some of them flat-out couldn't afford it to begin with. And for a lot of them, the introductory monthly payment was really low, then it kicked up some months later.
- BESTenemy, on 11/25/2007, -0/+4It is illegal to ow property in all states except Texas where few still hold allodial title (physically own the land), but those rights are getting eroded and once the land gets sold, it becomes government property. They are changing the laws to completely eliminate private ownership.
- speezer, on 11/25/2007, -0/+4I sold a house there a couple years ago. The same house is for sale again for 23% less than what I sold it for. Banks were throwing money at people.
- kreneskyp, on 11/25/2007, -1/+4i'm not sure why you're digging him down its pretty accurate.
The thing that doesn't make sense from a long term business perspective is why would you force ARM on someone who won't be able to pay up when rates go up. Its very clear that someone subprime is going to have problems in that situation. They could have offered fixed rates to these people and avoided the situation. Instead they tried to make more money on them because they were desperate for loan approval. They did make short term profit and then went out of business while gutting the housing market at the same time. - Synchro, on 11/25/2007, -0/+3Also remember that the laws around declaring bankruptcy have changed since that time. It is now MUCH more difficult to do it for many people. So it will be particularly hard on certain people for many many years to come. There will even be collateral damage on people who did save well and do well. Just watch.
- adml_shake, on 11/25/2007, -1/+4It's a buyers market right now, a lot of the banks in my area have some pretty low interest rates on their home loans. If you don't go for that variable rate crap and just lock in the rate you get you should be OK, and don't buy some $400,000 house if you can only afford the $100,000
- Leomarth, on 11/25/2007, -0/+3Well, inflation is really a hidden tax on the poor. It demolishes any savings the poor may have, because they usually stick it only in low yield savings accounts with the bank. A low rate of return encourages debt spending instead of saving.
- G-RaZoR, on 11/25/2007, -0/+3Well at the same time, it might make more sense to rent while the housing market is taking a nose dive. So instead of mortgaging a house with payments lower then that of an apartment or rental house, you don't have to worry about a depreciating house. You could in theory, rent for 2 years, and then buy a house when it is a steal. So instead of renting an apartment at $900/m vs buying a house at $850/m, you could have apartment $900/m vs $500/m house. I will take the latter.
- ChaosMotor, on 11/26/2007, -0/+3And even though the rental owner's fixed costs remain the same, they make a greater return, which they reinvest into more rental properties, which means less people own their own home, which means more renters, higher rents, more rental purchases... and on and on it goes until the wealthy 'own' all the homes and we're indebted from the moment we're born.
Yet people chuckle and scoff when I tell them Americans are slaves. - bjornski, on 11/26/2007, -0/+3There's no "political correctness" driving the trend for predatory lending practices and signing people up for loans they obviously can't afford.
It's time to tighten the hell out of banking regulations. - ChaosMotor, on 11/26/2007, -0/+3What, you mean an overdraft doesn't REALLY cost the bank $35 plus $8 per day?
- BlackJackJester, on 11/25/2007, -0/+3$100,000 home in california : http://www.unr.edu/hcs/ssw/studentorgs/images/boxe ...
- Synchro, on 11/25/2007, -0/+3I still love seeing the ads from certain place where they say something like "Get the luxury you deserve." Deserve??? Yeah, right.
- bjornski, on 11/26/2007, -0/+2You still owe the money.
And after your insurance company (you DID insure, right?) grudgingly pays you MOST of what your house was worth, and you sink all that money back into your loan, you're left with a paid off loan, and nothing else. No assets. You still need to rebuild, or get another house, with NO COLLATERAL, besides the empty lot the house used to sit on. - bjornski, on 11/26/2007, -0/+2Yup. The entire "put it on credit" mentality is going to sink most of the nation.
Putting things on credit doesn't fix things, it only makes it more expensive.
You get what you want NOW, but you still have to pay for it in the end.
Right, George? - bjornski, on 11/26/2007, -0/+2And with race to the bottom on the wages scales, that's getting trickier all the time.
"We can't afford to pay you what you need to pay your bills, we'll hire this H1-B visa holder instead, because he'll work for less". - bjornski, on 11/26/2007, -0/+2They don't. That's the problem.
- bjornski, on 11/26/2007, -0/+2Well said.
- GoBack2Europe, on 11/25/2007, -0/+2"You couldn't even finance a Yugo without a down payment...so how could they offer home loans with no money down?" - Brother Joe
- ChaosMotor, on 11/26/2007, -0/+2Yeah, great, the average salary is $40k, what kind of shack can you get for 80k? 1200 sq ft, 2 br, 1 bath, built right after WWII? Even 120k isn't going to get you 2k sq ft, 3 br, 2 bath in most places.
- SPRFRKR, on 11/25/2007, -0/+2was "roadtoserfdom.com" taken? WTF is "surfdom"?
- inactive, on 11/26/2007, -0/+2HOW'S YOUR AMERICAN DREAM?
In the United States we promote the "American Dream" --a marketing scheeme-- because it keeps the TAX machine going. People fall for this "American Dream" bullcrap and they fall into the trap. They fund a huge WAR machine with this tax machine scheme, keeping the rich filthy rich, the same political parties in power, and all is well. Keep your eyes closed and keep dreaming the American Dream.
Sleep you silly sheep...sleep and dream the American Dream. - inactive, on 11/25/2007, -1/+3HI MY NAME IS PATTY AND I'M YOUR AGENT!
I'm going to speak really loudly and excited about whatever over-priced piece of cr@p house I try to shove down your throat! Did you notice my makeup and perfume? I put WAY too much on. It's my way of trying to cover up the 45 pounds I gained after I have birth to my kid. My husband then lost interest in me and now has sex with Thai hookers when he goes on business trips for his WIlly Lomanesque sales trips! Can I interest you in this split-level Colonial which has gone 500% in the past six months? The markets fueled by low interest, interest only loans which will entrap you like an 18th century negro south of the Mason Dixon Line- hi, I'm Patty! -
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