Comments on: Do You Owe More Than Your House is Worth?

By: Lynnie

Lynnie — Sat, 28 Jun 2008 01:52:06 +0000

Well, as one of “those” that bought in 2004, I’ll go ahead and label myself as a victim, never missing a payment, my home is now not worth what I paid. I did plan on staying in it 7 or so years, so, I have to wait it out, but now my property taxes are unfairly assesed on a home that’s not worth the original pricing. YES, I’ve asked to be reassesed months ago…I’ve not heard back as I’m sure they are inundated with the same requests…..ugh. Stinks all around.

By: ozlace

ozlace — Wed, 25 Jun 2008 20:29:54 +0000

I have to say some of you have a very ‘narrow’ view of those people caught in this burst bubble. I bought in 2006 after coming here from overseas, I had no idea what the market was doing or going to do. As a foreigner I took the only mortgage offered to me from a reputable bank. And now I have a house worth $100K less than my mortgage and stuck paying rent (interest only mortgage). I can only hope that values somehow increase before my fixed period is up.

Just remember some of us are innocent victims.

By: Janis Mara

Janis Mara — Wed, 11 Jun 2008 06:17:11 +0000

Wow, dg, sounds like you managed to follow the immortal advice of Warren Buffett, “Buy low, sell high,” to a T! Nice work.

San Mateo Homesellers in Trouble (heretofore SMHT), that’s very well said, “renters are penalized in a silent way.” SMHT, I am wondering if you agree with this article: http://www.businessweek.com/ap/financialnews/D916PT080.htm

MikeW and Scott, you are 100% RIGHT about the professionals like real estate agents and investors – they *had* to know this was an artificially inflated market, as you said. Ah, I’m still sad for the foreclosed homeowners, tho.

Really appreciate hearing from SurveyKid! I did not know that negative equity is the biggest predictor of foreclosure. Thanks for sharing the info and the link to Buy and Bail. But SurveyKid, the percentage of foreclosed homes is so scary high *now.* You think it will get worse? How much worse?

By: SurveyKid

SurveyKid — Wed, 11 Jun 2008 03:56:50 +0000

Buy and Bail, from today’s WSJ.

http://online.wsj.com/article/SB121314811278463077.html?mod=RealEstateMain_1

By: SurveyKid

SurveyKid — Tue, 10 Jun 2008 21:25:39 +0000

The greatest predictor of foreclosure is not loss of job(s). It’s negative equity. The banking industry has known this for a long time. The data is very clear.

People will walk. Smart, educated people who can do the math will walk away from negative equity because they won’t buy the moral invectives against doing so. It’s simply a huge financial mistake to keep paying on your mortgage if you bought at the top and are seriously underwater. People can hurl all the invectives they want at those who walk.

They will walk.

The foreclosure wave is only just beginning.

By: Scott

Scott — Tue, 10 Jun 2008 20:59:47 +0000

I don’t have much sympathy for people who chose to buy during an inflated market and are now underwater. They could have simply compared the costs & risks of renting versus owning. I also have no sympathy for people who bought Wall Street investments with the expectation that they’d rise in value (duh!) but have seen them fall dramatically. That’s a risk that comes with investing, especially those of a speculative nature. Accept your mistake; something is only worth what someone is willing to pay for it.

By: MikeW

MikeW — Tue, 10 Jun 2008 15:51:02 +0000

Janis,

The problem with the real estate market keeping the economy afloat is that is was based on an unsustainable bubble. Too many people entered the real estate industry in some form or another because of the artificially inflated market. Too many people flocked to easy money.

I am not happy to see people losing their jobs, but that is inevitable. Hopefully these people saved money when they were profiting off the unsustainable bubble market. How could these folks not know what was coming?

By: San Mateo Home Sellers in Trouble

San Mateo Home Sellers in Trouble — Tue, 10 Jun 2008 07:07:08 +0000

Actually, at least in the Bay Area, many renters still can’t afford to buy because prices are still way out of line. At the same time, renters’ tax dollars are going to huge bailouts of homebuilders and people who were foreclosed on. Remember that renters never get a tax deduction on rent, so whatever shortfall in taxes collected now are due to the tax relief homeowners and flippers are experiencing. So I would say that renters are penalized in a silent way and very few people seem to care at all. All you hear about are sob stories of people who got foreclosed on, and I have very little sympathy for most of them.

By: dg

dg — Tue, 10 Jun 2008 05:04:21 +0000

Hi Janis,

I “flipped” back to back primary residences in 2003-2005 and then 2005-2007. And now I am back to renting. Even though my intentions may not have been to flip these at the time of purchase, that’s what I ended up doing and therefore fit one definition of a flipper.

While there is no technical definition of a flipper, an investor or an owner-occupier who plans to sell a house within a reasonably short period of time should fall into that category IMO.

And for the record, I feel sorry for very few, if any, in this ordeal.

By: Janis Mara

Janis Mara — Tue, 10 Jun 2008 03:43:21 +0000

MikeW, I agree with you that falling prices will eventually be a good thing (and may already be a good thing) for people around here who want to buy houses. But in other ways it’s brutal, affecting so many areas of the economy, including the job market as the ripples spread.

What was keeping us afloat economically in the Bay Area for some time was the hot real estate market, employing many, many people, from construction workers to appraisers to mortgage brokers to real estate agents. And now many of them are losing their jobs, which in turn affects us all as they stop purchasing goods, taking vacations and so on.

San Mateo Homesellers, you’re got a point, for sure. Perhaps I should have phrased it differently. But why do you think renters were penalized? Don’t you think those folks are now rewarded because more and more of them can finally afford to buy, plus their credit is unscathed by, say, a foreclosure?

Greg, interesting point! I never thought of it that way. I think of flippers as real estate professionals or others who already own a home and who buy a second home with no intent of occupying it and every intention of selling it in a year at least. Do you agree with my definition?