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post #1 of 129 (permalink) Old 11-13-2008, 03:10 PM Thread Starter
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Housing crisis: Too many don't deserve pity

I read the article below and all I can think is, "Dear Moron: (1) Nobody needs a $600K house; (2) Nobody with even half a brain finances a house with an interest-only loan. Thanks for f'ing up property values, and the economy as a whole. I hope to first wipe my ass with every one of my tax dollars before Obama gives them to you."

I can't find the link, but the "Today Show" yesterday interviewed a jackass in Miami that bought a $375K house, and when it appreciated $75K in a year, later built a second home for $500K. When both started tanking, he bought a third home while his credit was still good, then allowed the bank to foreclose on the first two homes. This particular cast member of "Idiocracy" gets a tailored CC of my letter above.

I realize a lot of people got into mortgage trouble more innocently. But for every one of them, there are 10 characters like these two above. Every last one of them needs to be put to work for the government (road work, litter pickup, grenade catcher) to work off their cost to the economy.

---

The New York Times
November 11, 2008
A Town Drowns in Debt as Home Values Plunge
By DAVID STREITFELD

MOUNTAIN HOUSE, Calif. — This town, 59 feet above sea level, is the most underwater community in America.

Because of plunging home values, almost 90 percent of homeowners here owe more on their mortgages than their houses are worth, according to figures released Monday. That is the highest percentage in the country. The average homeowner in Mountain House is “underwater,” as it is known, by $122,000.

A visit to the area over the last couple of days shows how the nationwide housing crisis is contributing to a broad slowdown of the American economy, as families who feel burdened by high mortgages are pulling back on their spending.

Jerry Martinez, a general contractor, and his wife, Marcie, an accounts clerk, are among the struggling owners in Mountain House. Burdened with credit card debt and a house losing value by the day, they are learning the necessity of self-denial for themselves and their three children.

No more family bowling night. No more dinners at Chili’s or Applebee’s. No more going to the movies.

“We make decent money, but it takes a tremendous amount to pay the mortgage,” Mr. Martinez, 33, said.

First American CoreLogic, a real estate data company, has calculated that 7.6 million properties in the country were underwater as of Sept. 30, while another 2.1 million were in striking distance. That is nearly a quarter of all homes with mortgages. The 20 hardest-hit ZIP codes are all in four states: California, Florida, Nevada and Arizona.

“Most people pay very little attention to what their equity stake is if they can make the mortgage,” said First American’s chief economist, Mark Fleming. “They think it’s a bummer if the value has gone down, but they are rooted in their house.”

And yet the magnitude of the current declines has little precedent. “When my house is valued at 50 percent less than it was, does this begin to challenge the way I’m going to behave?” he said.

Mountain House, a planned community set among the fields and pastures of the Central Valley about 60 miles east of San Francisco, provides a discomfiting answer.

The cutbacks by the Martinezes and their neighbors are reflected in a modest strip of about a dozen stores in nearby Tracy. Three are empty while a fourth has only a temporary tenant. Some of those that remain say they are just hanging on.

“Before summer, things were O.K. Not now,” said My Phan of Hailey Nails and Spa. “Customers say they cannot afford to do their nails.” She estimated her business had fallen by half.

At Cribs, Kids and Teens, Jason Heinemann says his business is also down 50 percent. He opened the store in early 2006; last month was his worst ever. “Grandparents are big buyers of kids’ furniture, but when their 401(k)’s are dropping $10,000 and $20,000 a week, they don’t come in,” he said.

Mr. Heinemann laid off his one employee, a contribution to an unemployment rate in San Joaquin County that has surpassed 10 percent. He dropped his advertising in the local newspaper and luxury magazines.

As Mr. Heinemann’s sales sink, he is tightening his own belt. “I used to be a big spender,” he said. “We’re setting a budget for Christmas.”

In the window of another tenant, Wells Fargo Home Mortgage, a placard shows two happy homeowners holding a sign saying, “Someday we’ll owe a lot less than we thought.”

Someday, maybe, but not now. First American has been refining its figures on underwater mortgages, formally known as negative equity. The data company evaluated 42 million residential properties with mortgages. (Though Maine, Mississippi, North Dakota, South Dakota, Vermont, West Virginia and Wyoming were excluded because of insufficient data, none of those states have been central to the mortgage crisis.) A computer model was used to calculate current values, using comparable sales. More than 10 million homes do not have mortgages.

The figures rank the 20 ZIP codes that are furthest underwater. The 95391 ZIP code, which includes all of Mountain House and some properties outside it, has the unwelcome distinction of being first in the country.

Out of 1,856 mortgages in the ZIP code, First American calculates that nearly 90 percent are underwater. Only 209 owners owe less on their mortgages than the homes are worth.


The first homes in Mountain House were sold in 2003, just as the real estate boom began to go into overdrive. Its relative proximity to San Francisco drew many who traded a longer commuting trip for a bigger place.

The Martinezes bought their house in early 2005 for $630,000. It is now worth about $420,000. They have an interest-only mortgage, a popular loan during the boom that allows owners to forgo principal payments for a time.

But these loans eventually become unmanageable. In 2015, Mr. Martinez said, his monthly payments will be $12,000 a month. He laughed and shook his head at the absurdity of it.

They fear the future, so they stay home. They rent movies. They play board games. (But not Monopoly — with its real estate theme, it reminds them too much of real life.)

“It’s a vicious circle,” Mr. Martinez said. The economy is faltering because he and millions of others are not spending. This killed his career in home remodeling this year, and threatens his current work as a contractor on commercial properties.

For the moment, the family is just trying to hold on. But Mr. Martinez acknowledges that it has entered his mind to turn his house back over to the bank. “By next June, if things aren’t better, I’m walking,” Mr. Martinez said.

Many in Mountain House have already taken that option. Banks took over 101 properties in the 95391 ZIP code in the third quarter, according to DataQuick Information Systems.

Even relatively recent arrivals are feeling a pinch.

Kenny Rogers, a data security specialist, moved into Mountain House last year, buying a foreclosed property on Prosperity Street for $380,000. But the decline in values has been so fierce that he too is underwater.

He has cut his DVD buying from 50 a month to perhaps one, and is waiting until the Christmas sales to buy a high-definition television. He does not indulge much anymore in his hobbies of scuba diving and flying. “Best to wait for a better price, or do without,” Mr. Rogers, 52, said.

People deciding to do without are hurting a second mall close to Mountain House. There is a shuttered Linens ’n Things, part of a chain that went bankrupt. Another empty storefront used to be a Fashion Bug. Soccer World could not make it. Shoe Pavilion is festooned with going-out-of-business signs.

Chris and Janet Ackerson can survey this carnage from their own store with a certain equanimity. Their business, a member of the Vino 100 chain of wine outlets, is doing well.

The store opened at the beginning of the year, so long-term trends are not clear. But sales did not plunge in the last few months as they did for so many other retailers. Four more people joined the store’s wine club last weekend.

“My house is underwater, so I’m not doing too much impulse shopping or any renovation. But I’m not cutting back on this,” said Ray Lopez, a database administrator, as he placed a $24 petite sirah on the counter. “Life’s too short.”


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post #2 of 129 (permalink) Old 11-13-2008, 05:06 PM
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Re: Housing crisis: Too many don't deserve pity

Bold statements which I don't agree on. But there are some things I agree with you on. People got a little too high on the hog and spent way too much on a house that they couldn't really afford even when times were "good". We may not want to face it but Americans got a wee bit too greedy in this land of plenty.

Personally, I like the current housing dip. When I finally get to move from Wyoming that's going to be the first thing I buy.
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post #3 of 129 (permalink) Old 11-13-2008, 05:10 PM
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Re: Housing crisis: Too many don't deserve pity

Quote:
He has cut his DVD buying from 50 a month to perhaps one
Oh poor, poor you

What an idiot.
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post #4 of 129 (permalink) Old 11-13-2008, 05:13 PM
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Re: Housing crisis: Too many don't deserve pity

Keep in mind that in certain areas, you'd be lucky to find a $600k home. Here in Santa Barbara, even with the crash, houses are still well above $600k for a 2-3 bedroom. If you actually want somehting nice or in a good neighborhood / school district, it's more like $800k. So not everything is relative to the middle of texas or nebraska.

Well I'm with you fellers.
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post #5 of 129 (permalink) Old 11-13-2008, 05:22 PM Thread Starter
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Re: Housing crisis: Too many don't deserve pity

[quote author=HitIt link=topic=128263.msg2742939#msg2742939 date=1226614408]
Keep in mind that in certain areas, you'd be lucky to find a $600k home. Here in Santa Barbara, even with the crash, houses are still well above $600k for a 2-3 bedroom. If you actually want somehting nice or in a good neighborhood / school district, it's more like $800k. So not everything is relative to the middle of texas or nebraska.
[/quote]

If you can't afford a house in ___, then don't buy a house in ___. Rent an apartment or live somewhere else.

I want to live in Boston, but I know I can't afford it, so I don't.

Basic math > you.


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post #6 of 129 (permalink) Old 11-13-2008, 05:25 PM
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Re: Housing crisis: Too many don't deserve pity

[quote author=HitIt link=topic=128263.msg2742939#msg2742939 date=1226614408]
Keep in mind that in certain areas, you'd be lucky to find a $600k home. Here in Santa Barbara, even with the crash, houses are still well above $600k for a 2-3 bedroom. If you actually want somehting nice or in a good neighborhood / school district, it's more like $800k. So not everything is relative to the middle of texas or nebraska.
[/quote]

I realize that. However, when less than 15% of the city's population can afford the median-priced home, you know you have problems...

I am thankful, however, that I live in DFW. We've been spared the big increases and therefore haven't had a meaningful drop in prices yet. We'll probably weather the economic storm better than any other state.
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post #7 of 129 (permalink) Old 11-13-2008, 05:31 PM
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Re: Housing crisis: Too many don't deserve pity

^^Good point. In areas where the prices never really took off there isn't much in the way of dropping.

WA has seen a slight dip but nothing like other markets have experienced. I sold a place last month after 1 year of ownership and still made a profit.

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post #8 of 129 (permalink) Old 11-13-2008, 06:05 PM
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Re: Housing crisis: Too many don't deserve pity

[quote author=fatabbot link=topic=128263.msg2742931#msg2742931 date=1226614222]
Quote:
He has cut his DVD buying from 50 a month to perhaps one
Oh poor, poor you

What an idiot.
[/quote]

you beat me to it. i had already control c'd that sentence in preparation to rip that asshole to shreds. but now it would just be
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post #9 of 129 (permalink) Old 11-13-2008, 08:17 PM
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Re: Housing crisis: Too many don't deserve pity

Just tonight on the news I saw some guy in San Francisco loading his belongings into a Land Rover while whining about losing his house. Did he really need the Land Rover?? I don't think so. My wife and I got approved for three times what our house cost. We just didn't need something that big and we didn't want to sink so much of our earnings into a house. People think that when the get approved for an amount that they can actually afford that amount. No so if you like to have some cash on hand for discretionary spending. I think that basic budgeting should be taught in every high school, then maybe so many people wouldn't jump off the deep end with their spending. Our governments spending habits don't set a good example either. Hey let's just borrow a shitload more money from China!

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post #10 of 129 (permalink) Old 11-14-2008, 12:16 AM
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Re: Housing crisis: Too many don't deserve pity

This is one of those few times that I am thankful for my disability... otherwise I would have bought a house back in 2003, been mortgaged to my eyeballs and expecting doom at any moment.

Not that condos don't have their drawbacks too, but I'm so much less in the hole that I actually own more of my home than the bank does :shock:

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