Housing Crisis Likely to Wipe Out Two Decades of Family-Earned Wealth

This article has 28 comments:

•  
  mlimberg

  Aug 03 03:53 PM
  When will people get it? Until the value of "0" changes, which it won't, home prices can only go so high, and they went way beyond what people could ever hope to afford, thye had to reset. Currently we are in the process of resetting. The real value of a home is thousands of dollars less than everyone paid for the past 15 years.
  
  Face it, lose a job in a two income family, it is highly likely you will lose your home, since you likely bought it based on two incomes. Unemployment pays next to nothing. No income is "0" income. Can't amke huge unreasonable house payments on that amount. So, moral of the story, until the value of "0" increases, it is possible that some day you too could find yourself understanding the value of "0" first hand.
•  
  fatcat

  Aug 03 04:17 PM
  There is another factor in housing besides the amount to service the debt...I call it carrying cost.Average houses have become larger in recent years,resulting in larger carry costs..heating,cooling... maintainence ,and the big bugaboo...property taxes.
  
  As financials worsen for local governments,they will attempt to hike taxes and fees on everything you have,including your dog!
•  
  neeb??

  Aug 03 06:07 PM
  Let us try this question on for size the next time you hear someone mention homebuying... and why are you actually buying a home. Really??
•  
  MiMi

  Aug 03 06:24 PM
  Though your article is factual, I do not believe it is truthful. The wealth "earned" by families in their homes, had less to do with earning than it had to do with riding an artificial wave of monetary idiocy courtesy of Alan Greenspan. All most homeowners had to do was hold tight, take out home equity loans with which to make ever larger purchases, and mindlessly watch the pretty bubbles as they floated by. La di da.
•  
  TBTer

  Aug 04 02:02 AM
  I lived well below my means for my entire life. I saved. The places I saved ultimately traded my green dollars for FM & FM paper to pay my interest.
  Now I get to pay higher taxes to insure that the FM paper that my banker bought with my deposits, doesn't default.
  If I had my way I'd hold the little rodents, that way overbought, in servitude until such time as they paid off their debt. No BK outs.
  Then I would put a bullet in the appropriate bankers that knew damned good and well what was going on. Too strong?
  Try me.
  
•  
  CLH

  Aug 04 06:15 AM
  All people want more than they can afford. Most of us restrain ourselves but many dont. Why should the rest of us pay for the uncollectable debts of the few?
•  
  User 201843

  Aug 04 08:10 AM
  I agree with RVC. Right on the money!
  
  When they sznd the Tax Bill for this mess that so many made tonns of money on (lenders, banks, builders and the govt... through increassed taxes)... Now they are sending the bill back to us for the fancy times that they lived in for the past 7 years.
  
  I think I'll leave the country for 15 years and have the tax bill marked " return to sender" ! Hey we did not make any money on this.... we did not engage in "risk".... why should folks that ventured nothing and as a result had nothing to gain have to loose?
  
  
•  
  HedgeFundMan
  ip

  Aug 04 08:18 AM

  My Website
  Great analysis. I love the chart. It really shows that despite housing prices dropping the most in history over an period of time, that due to a total lack of financing, the spread between home prices and affordability is as wide as ever.
•  
  Marty

  Aug 04 08:33 AM

  My Website
  Id argue that housing is sympton not a cause of the wealth wipe out.
  The outsourcing of jobs and inflation running well over announced rates combined with a lack of investment in this country has produced a situation where costs of living are way in excess of the ability people have to pay their bills. Sub-prime borrowers were just the weakest link. Look at AMEX and other banks recent news on their prime borrowers increasing their defaults. When gas, heating oil and the cost of food soar to create another monthly mortgage amount something has to give.
  
  Much of the divide between the "high saving types accusing the younger generation" and the "wasteful types in the young generation" is merely because the former rode the bubble up and cashed down.
  
  My dad bought his first home for 20k, sold it for 60k, his second for 107k (a real stretch for him at the time) and sold it for $450k.
  
  Many people like him only had money because they could tap the equity to send kids to school, trade down to cash out to retirement.
  
  Some of this younger group gets out a college which costs 10x as much as when their parents went, into a housing market which was high and if everything else didnt go haywire they would be able to afford the mortgage as well.
  
  Right now the lack of opportunity, outsourcing of not only manufacturing but service jobs as well, combined with a total lack of investment in the infrastructure and technologies of the future here at home has led to a longer term problem that wont be easily fixed..
  
  MA in CT
•  
  User 193395

  Aug 04 10:48 AM
  Yes, RVC. Too strong. Stay civilized, please.
•  
  Werner
  Hoermann

  Aug 04 12:07 PM
  The housing bubble masked the impoverishment of the American middle class and one of the greatest wealth transfers in the history of America. By changing the way the CPI was measured, inflation was hidden and people got by by borrowing ever greater amounts on the increasing equity in their homes, without asking for higher wages. Now they may have still the same Dollar amount of equity in their real estate, but in reality they own less a percentage of their home than before. The difference has gone to the banks, who happily exchanged some paper currency for a greater share of a real asset.
•  
  User 237990

  Aug 04 12:35 PM

  My Website
  There are so many correct voices, in fact too many voices describing problems, but almost no solution except this one voice in the wilderness of internet at perfecteconomy.com/wp/.../
  Peace & prosperity is possible. mms
•  
  User 237999

  Aug 04 12:42 PM
  Pay what back? The lenders create money out of thin air. They then use your house as 'their' collateral and via Fractional Reserve banking inflate to up to an unbelievable 69 times. The economic cycles are created. Boom = debt ridden society, bust, or credit crunch or whatever they call it, equals raking in the assets. The governments then bail out banks resulting in you paying again via taxation. It's fraud, it's robbery and those involved are serious criminals. The whole money system is a total scam run by bankers on behalf of the elite and corporations who have co-opted government. Fascist dictatorship is next after the population cull, deliberately caused food shortage, the peak oil 'lie' and resource theft of things you have already paid for like roads to foreigners who are handling stolen goods. These scum need to be swinging from lamposts. Not paid back!
•  
  User 237999

  Aug 04 12:57 PM
  The answer is to recognise resources are owned by everyone and everyone must be compensated for their use by exploiters paying the people directly, perhaps via micro-payments. This citizens income removes the need for welfare and no professional government removes tax. Free energy has been supressed for decades and anti-gravity (weightloss) has also been invented. As it stands companies in cahoots with bankers and government rob the resources and suppress technology so they can meter you on everything and everything. This also gives an insight into Global warming being the total pack of lies it is. Anyway, to cut a long story short a system such as this seems to result in eradication of poverty, ever rising wealth and once we take space resources into account, a time comes when money would no longer hold any meaning. BUT for some insane reason people keep going along with the mafia, Nazis, Corruption and Crime. It all starts and ends with Resources! All of it.
•  
  hardmanb

  Aug 04 04:04 PM
  Just keep voting for the Democratic Party liberals who are blocking drilling and development of wind/coal and nuclear power. They and the eco-freaks think gas should go up to $8.00 per gallon.
  
  www.marketwatch.com/Ne...
  
•  
  Tadpole

  Aug 04 05:42 PM
  Hey I come from the UK and we are starting to have similar problems with our economy. The problem that I see is this; our economies are totaly underpinned by debt rather than Gold reserves. In other words, our economy needs to keep growing or it will go into total meltdown. For this reason rather than being citizens of our countries the way we used to be, the globalised world now regards us as being consumers. ie as long as we keep buying stuff we cannot afford to have then the economy is growing and everything is fine. I now wonder if these so called city of London and Wall Street bankers actually passed their college exams. The reason I say that is because for years now they have encouraged consumers to take out large mortgages and have multiple credit cards with the stupid mantra that "Credit is Cheap" as if interest rates would never go up again. So now people got into huge debts they could not pay back, and what advice did the bankers give us. Well they said why not take out a debt consolidation loan, youve got loads of equity in your house. The lesson from all this is that bankers are greedy, concerned only with making money for themselves. They are self serving disgusting Rats. And as for the financial media industry. Well they do say the markets are governed by sentiment. So what they do is talk a load of bullshit lies. Lets face the truth. They call us consumers, but this evil empire globalised economy is starting to consume us !
•  
  johnthebear

  Aug 04 10:28 PM
  "Right on" Tadpole. Unfortunately us consumers are also a bunch of rats for trying to take advantage of the dumb banks and credit card companies and then take bankruptcy.
  
  Too many rats to escape at the same time without losing our tails! No longer a story of 3 blind mice.
•  
  Money Tree

  Aug 04 10:52 PM
  I think the money tree is dying! My generation has lost contact with reality,the average American has extended themselves beyond their means and yes the bankers are a major contributor to the problem. Check the lastest consumer debt figures as posted by the Federal Reserve. If there are 300 million people in the USA, there is a whole lot of debt out there that needs to be repaid. I am tired of keeping up with the Jones! They don't pay my bills. History repeats itself and historically countries have gone broke and when that happens living becomes a hardship. I did not live back in the days of the depression but I sense something of that nature is going to fall upon us in the near future. Food and jobs will be a big concern when and if that happens. Don't say it can't happen to us because it can.
•  
  JRBH

  Aug 04 11:21 PM

  My Website
  Rubbish! Except California, Nevada, Florida and Arizona and home values are flat for the time period. I have heard this tripe for nearly thirty years mostly from Wall Street types who see real estate as competition for funds. Experience shows that pent up demand occurring during a housing downturn when released [as it always is] creates recovery in sales and prices dramatically faster than predicted. There are a couple of fundamentals that the "smart guys" always resfuse to accept. There are more new families created every day and night and virtually all of them desire to own a home. Do not confuse homeowners and with speculators. Today more than ever, a home is the families best investment. Bar none.
•  
  Jimmy
  Cracked Corn

  Aug 05 06:31 AM
  It is amazing that our government allowed such a fiasco! First the housing bubble fueled by irresponsible borrowing and lending and then the energy crisis. So who is minding the store? Good-bye "American Dream," good-bye middleclass.
•  
  dawn

  Aug 05 12:40 PM
  RVC try making laws for consumer protection in housing into the kind student loan dead beats have to live with. . . I am sure you can find a nice way to make people feel like criminals in their own country for the rest of their lives. . .it's worked for student loan victims/indentured servants/fools/patsies
  
  Remember people. . .
  they came for the jew but I was not jewish so I said nothing
  they came for the gypsy but I was not a gypsy so I said nothing
  they came for the poor but I was not poor so I said nothing
  they came for the vile student loan defaulters but not me so I said nothing
  they came for the house ditchers but not me so I said nothing
  when they finally came for me. . .everyone else cheered.
  
  okay I changed the end. . .what do you think this crisis looks like to those of us who can not have a house because we can't afford it. .
  
  heaven
  salvation
  payback
  as Nelson from the Simpsons would say "Ha ha!"
•  
  Arash

  Aug 05 04:41 PM
  When home prices go down is GREAT for homeowners and Good for buyers.
  
  Why?
  
  Say you are a home owner whos house has gone down from $700 to $350. (hypothetically speaking, not that it happens too often). Now the beautiful house you were eying the that beautiful neighborhood that was $300k away from your budget at $1M now is only $150k away from you and very reachable.
  
  Now lets say its the other way around. You bought your house at $700 and now its worth $1.4M. Now the $1M beautiful house you were eying when you bought yours is now $2M which i $600k away. Now it is probably impossible for you to ever buy that house.
  
  Rising house prices are only good for BANKS since they lend out more money and cash in more interest every month. And guess what? You dont pay? They sell your house and owe you NOTHING from your equity unless they sell it for more which is almost never the case. They will sell your $700k house for the $500 you owe in a heartbeat and you lose your $200k equity. They lose nothing.
  
  And if you have mortgage insurance, they get their FULL equity back from the insurance YOU PAID for and again they lose ZERO while ruining your credit.
  
  Housing bubble is TERRIBLE FOR HOME OWNERS!
•  
  Ales

  Aug 06 12:40 PM
  66,000 is a bogus number
  
  National average according to RealtyTracInc. is about 8,200/day (Now what portion belongs to FNM and FRE they do not one 100% of all mortgages)
•  
  StUdio

  Aug 06 02:43 PM
  Its all dynamics & change...
  nows the time to salvage some of that exaggerated value,
  then buy an unimproved property stick a prefab on it,
  use remaining cash to deversify into stocks>financials&g...
  (if your time horizon allows that model)
  
  if your upsidedown on home, rent out rooms to the already foreclosed souls
•  
  bimbo

  Aug 06 09:05 PM
  Dawn ~
  
  What happened when they came for the pedophiles and the child molesters?
•  
  dawn

  Aug 07 09:56 AM
  okay bimbo. . .
  
  that was so funny and insightful. . .really
  
  
•  
  truthinvesti
  ng

  Aug 07 01:16 PM

  My Website
  People who buy stocks wrong and buy real estate or any other asset wrong will eventually learn that it is unwise
•  
  Andys

  Aug 07 10:59 PM

  My Website
  Lots of conflicting housing information out this week. As I wrote recently, I think the first report is more accurate in terms of the major loss of wealth for Americans.