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The Homeownership Obsession

As a society, we overinvest in real estate. We build (and buy) too many extra-big homes and strive to make almost everyone into a buyer.

By Robert J. Samuelson | NEWSWEEK
Published Jul 26, 2008
From the magazine issue dated Aug 4, 2008

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  • Posted By: Abram @ 08/17/2008 12:08:34 PM

    Comment: Everyone in this discussion seems to already be a homeowner, so let me broaden your perspective. The alternative to home-ownership is renting. Personally, my family moved from a rental unit into a house a little bit smaller for a $100/month increase,(not including that meager 3% down paymernt.) ...which we would have had to pay within another year anyway given the market. When Robert mentions that sometimes the only savings a howeowner has is in there home, remember that a renter doesn't have even that modest achievment. I'll concede that some people live beyond there means, but subsidizing housing can be good for families, and the economy; and isn't nearly as bad as subsidizing banks who pushed those failure fraught subprime loans and securities.
    Consider the ratio of minimum wage increases to inflation and rental prices over the last two decades. Now watch as single parent families struggle to make the mortgage payment for someone else while still trying to put food on the table. THEN talk to me about FHA subsidies.

  • Posted By: sky1 @ 08/07/2008 9:38:32 PM

    Comment: Homeowner obsession will likely cause quite a problem for years to come. In general, Americans have taken home ownership to an extreme of sorts; however, so have bank lending pratices of the not-to-distant past. We live in a word of instant gratification -- a buy now and pay later mentality. I'm not against owning a big home, although we don't live in a so-called 'McMansion', we do have sufficient for family needs. We also decided when first looking for a home, not to over do our home ownership by getting a bigger loan and more space/amenities then we really needed. As a consequence of principled, consertive effort to become true homeowners, we paid it off our mortgage in seven years (as of lask week), instead of a 30-year time-frame all on one income. We look at our house as a home not as an investment. Consequently, we're able to save, as we have in the past, for more important things, like retirement and our children's educations; only this time, we have the ability to save more. True home ownership, not to an extreme, is the real american dream.

  • Posted By: 19xxdinosaur @ 08/03/2008 11:59:16 AM

    Comment: I agree that as a general rule increasing home ownership levels has many beneficial effects. I wonder though if people putting only 3% down understand how risky that is. Even if prices do not decline they may face foreclosure if the have to sell in less than about 5 years since they probably won't have built up enough equity to cover their closing costs. There is an article that goes through some of the math at http://observationsandnotes.blogspot.com/2008/07/sub-prime-mess.html

  • Posted By: 19xxdinosaur @ 08/03/2008 11:57:01 AM

    Comment: I agree that as a general rule increasing home ownership levels has many beneficial effects. I wonder though if people putting only 3% down understand how risky that is. Even if prices do not decline they may face foreclosure if the have to sell in less than about 5 years since they probably won't have built up enough equity to cover their closing costs. There is an article that goes through some of the math at http://observationsandnotes.blogspot.com/2008/07/sub-prime-mess.html

  • Posted By: catfancier3 @ 07/31/2008 9:41:59 AM

    Comment: If the people stuck in these mortgages for overpriced homes would just walk away (as many who are not in arrears are now doing), and the people who waited on the sidelines and rented during this whole fiasco would continue to refuse to overpay for housing and keep renting, there will be NO FLOOR on housing. No "wanna be" President of the U.S., nor Congress can force you to buy anything if you feel it is overpriced. They cannot force you to refinance a house you bought during the bubble, which is likely to drop significantly in value even if you do refinance and get some kind of break on the original price. It will pale in comparison to the amount of money these newly refinanced overpriced properties will lose in value over the next two years as renters continue to wait until home prices make fundamental sense. Does the government really think I'm going to cave now? I've waited patiently for the past decade to see this thing implode on itself and now that it has the "government" thinks they can interfere in my choice of whether I want to be indebted to a bank for the rest of my life with no hope of a retiring with any money in the bank, or continue renting. If I never own a home, I really don't care. My future comes first.

    The government interference in the real estate market and the audacity of taking taxpayer funds to buy "STOCK" in two companies that are headed for disaster is unprecedented. So why do we allow it? Perhaps its time for the next Civil War. To make matters worse, the claim that they are "HELPING" a select few homedebtors to stay in their overpriced homes is not helpful to these people at all. The value will continue to plummet and, eventually, they will go into foreclosure based on simple math. THEY CAN'T AFFORD TO PAY THE MORTGAGE. We do not need a floor on housing prices because they skyrocketed out of control and were purchased with liar's loans. What we DO need is for the prices to spiral down as fast as they spiraled up.

    If the people who are now being conned by the U.S. government would simply walk away from their properties, they would be able to come back in a few years, buy the same property (possibly for hundreds of thousands less), use the money saved to retire on and be in a much better situation than continuing to overpay for a house that rose too quickly in value to sustain itself.

  • Posted By: catfancier3 @ 07/31/2008 9:41:30 AM

    Comment: If the people stuck in these mortgages for overpriced homes would just walk away (as many who are not in arrears are now doing), and the people who waited on the sidelines and rented during this whole fiasco would continue to refuse to overpay for housing and keep renting, there will be NO FLOOR on housing. No "wanna be" President of the U.S., nor Congress can force you to buy anything if you feel it is overpriced. They cannot force you to refinance a house you bought during the bubble, which is likely to drop significantly in value even if you do refinance and get some kind of break on the original price. It will pale in comparison to the amount of money these newly refinanced overpriced properties will lose in value over the next two years as renters continue to wait until home prices make fundamental sense. Does the government really think I'm going to cave now? I've waited patiently for the past decade to see this thing implode on itself and now that it has the "government" thinks they can interfere in my choice of whether I want to be indebted to a bank for the rest of my life with no hope of a retiring with any money in the bank, or continue renting. If I never own a home, I really don't care. My future comes first.

    The government interference in the real estate market and the audacity of taking taxpayer funds to buy "STOCK" in two companies that are headed for disaster is unprecedented. So why do we allow it? Perhaps its time for the next Civil War. To make matters worse, the claim that they are "HELPING" a select few homedebtors to stay in their overpriced homes is not helpful to these people at all. The value will continue to plummet and, eventually, they will go into foreclosure based on simple math. THEY CAN'T AFFORD TO PAY THE MORTGAGE. We do not need a floor on housing prices because they skyrocketed out of control and were purchased with liar's loans. What we DO need is for the prices to spiral down as fast as they spiraled up.

    If the people who are now being conned by the U.S. government would simply walk away from their properties, they would be able to come back in a few years, buy the same property (possibly for hundreds of thousands less), use the money saved to retire on and be in a much better situation than continuing to overpay for a house that rose too quickly in value to sustain itself.

  • Posted By: justthefactsma'am @ 07/31/2008 2:11:54 AM

    Comment: "Perceived as being backed by the U.S. Treasury, Fannie and Freddie can borrow at preferential rates"
    This just in : they are in fact backed by the US Treasury.

  • Posted By: nmbrldy69 @ 07/30/2008 12:13:17 PM

    Comment: Bottom line - humans don't NEED more/bigger/better everything. Kids can share bedrooms - not everyone needs 1k square feet of space inside the home to survive. Live within your means - don't bank on possibilities. Hope for the best, and plan for the worst. All the old cliches have basis in fact, folks. However, the government will swoop in and rescue the fools who overextend and give them zero tax consequences for their behavior. What is the motivation to stop the behavior? Shame? No such thing any more. Americans wonder why foreign citizens laugh at and criticize us. This American doesn't wonder. Humans don't need a "natural" predator - we are our own worst enemy, and will destroy ourselves, slowly but surely.

    • Posted By: catfancier3 @ 07/31/2008 9:48:16 AM

      Comment: This is America. Americans don't have to live on only what they "need." If you have a great deal of money to spend, you should be able to spend it on whatever you want to make your life more interesting or comfortable. However, don't use my tax dollars to subsidize those who CANNOT AFFORD their mortgages as they are now written!

      • Posted By: nmbrldy69 @ 08/01/2008 12:11:07 PM

        Comment: No one "has" to live on only what they "need". However, it's about making better choices, for themselves, society and life in general. Our tax dollars provide earned income credit. That means we all support lower income individuals and families, usually with children involved. If I had WANTED to support a child forever, I would have HAD one. Our tax dollars subsidize so many "classes" I'm surprised there's any left over to actually run the country.

      • Posted By: nmbrldy69 @ 08/01/2008 9:57:47 AM

        Comment: And this is the same person who touts money to retire on, the future.....blah, blah, blah? It's about living within your means, and not expecting more government welfare to bail you out of bad choices. Find a true stand, and stay with it, versus hopping around like a politician.

      • Posted By: LIKEITIS @ 07/31/2008 12:32:04 PM

        Comment: WELL SAID..........................IF NOT THERE IS NO AMERICAN DREAM LEFT...........................

        P.S. I LOVE CATS TOO...................................I JUST CAN'T EAT A WHOLE ONE BY MYSELF!

  • Posted By: beachbum75006 @ 07/30/2008 7:03:43 AM

    Comment: What a grinch! Everybody knows that you buy a 3500 square foot McMansion for no money down, pay interest only and sell it two years later for a profit which is enough to buy a 100-foot yacht. Furthermore, what if you're 8-10 payments late. It's the right for all Americans to make a killing on real estate while dummies go to work each day and make an honest living. If your credit stinks and you get turned down, call the Justice Department (discrimmination against people with bad credit!)

    In all seriousness, I live in a very nice subdivision with 4 bedroom, three bath homes, with sizes ranging from 2200-3000 square feet, serviced by excellent schools. Most sales are to childness couples (if you can get them to accept such small homes), as the American dream is you own castle with little or no out of pocket cost for the long run and a windfall profit for a retirement for which few people save adequate funds.

    Most of this is enabled by a government which wants everybody to have everthing. Like most government programs--Good Idea, Bad Execution!

  • Posted By: panhandle @ 07/29/2008 11:59:11 AM

    Comment: Samuelson, call your buddy Phil Gramm. He'll fix it.

  • Posted By: tsmith99 @ 07/29/2008 10:02:09 AM

    Comment: Fairly typical commentary re "subsidizing" of housing. Author says we "overspend" on housing because of it, and should/would be spending or saving otherwise. The comments are true to a point, except that our economy is a web of subsidies, so it is hard for anyone to see or say which ones provide more of an advantage than others. It is entirely possible that they all cancel each other out. ALL of the things we produce and buy - oil, food, housing, health care, education - enjoy some form of subsidy, so I don't see the author's point. I'd rather he did a piece on subsidies to Wall Street and Corporate Executives; the real root of our economic problems. That is where subsidies and competitive advantages for the rich have a massive and adverse impact for everyone else. And the impact doesn't come from the money they make (the focus of nearly every conventional journalistic account of executive-pay-run-amok); it comes from the business decisions it drives.

  • Posted By: summer1216 @ 07/28/2008 10:06:25 PM

    Comment: I think that most of the people who bought homes SHOULD have been able to buy homes. I think most of them were middle class, and a home should be within their reach. I agree that we as a society succumbed to the idea of the huge house, with the combination kitchen-family room, and more square feet than our parents and grandparents owned. I believe that's a problem. But to say that middle class people shouldn't be in the housing market -- I don't buy that. The author didn't say it directly, but I don't think lenders were in general offering mortgages to poor people.

    • Posted By: catfancier3 @ 07/31/2008 9:52:41 AM

      Comment: What salary range do you believe the "middle class" encompasses? I saw who the loans were being given to prior to the bubble bursting and I've seen who is getting them since the burst. It was low income prior and upper/middle income currently. It's all about how much money your have, you know, AFFORDABILITY.

    • Posted By: summer4077 @ 07/29/2008 8:54:36 AM

      Comment: Exactly. I also think another problem that added to this was the huge problem of credit card debt. Many families got to a point where they couldn't afford their McMansion and $40k in credit cards. Also, many didn't have down payments and accepted shaky ARMs and balloon payments. To say that the middle class shouldn't be in a home is silly, but the middle class of today is vastly different from 50 years ago. They want the biggest house, newest car, and expensive vacations. They bought houses that were not worth what they paid, and they got caught. I think the middle class needs to come back down to earth on what the difference between NEEDS and WANTS are.

      • Posted By: LIKEITIS @ 07/29/2008 2:12:17 PM

        Comment: TWO SUMMERS? WHY YOU TWO GOT SUCH "SUNNY" DISPOSITIONS? OK, THAT ENOUGH!........SORRY

        SHOULD HAVE BEEN ABLE...............OR DESERVE TO ARE THE EXACT REASONS MOST OF THESE PEOPLE ARE IN THESE PROBLEMS.

  • Posted By: slimpundit @ 07/28/2008 8:59:25 PM

    Comment: Check out a great blog at: http://slimpundit.wordpress.com/ ... this covers how to overcome all sorts of addictions, and you can support the author by sending a small donation to the author's paypal account: digital_velocity@hotmail.com

  • Posted By: phiomalibumalibu @ 07/28/2008 8:36:29 PM

    Comment: 2 million jobs (professional) have been outsourced to India in the last 8 years. Middle Class? What middle class?

    note: you may be next ... don't worry, it's going to be okay...it's a good thing... go back to sleep

  • Posted By: planner @ 07/28/2008 7:12:58 PM

    Comment: There are many good reasons to own your home - chief among them, in my opinion, is that you will eventually own it outright. You also can make it feel the way you want it to (paint, carpets, additions, etc). And, rent is usually not any less than a house payment. The trouble is the process - not the ownership...

    • Posted By: catfancier3 @ 07/31/2008 9:55:15 AM

      Comment: What world are you living in where you think rent is not SIGNIFICANTLY cheaper than owning a bubble-priced home?

  • Posted By: LIKEITIS @ 07/28/2008 6:53:28 PM

    Comment: MOST OF THE GLUT OF UNINHABITED HOMES AS WELL AS THE HOUSING MARKET AND THE ECONOMY AS A WHOLE WOULD BE FIXED IN ONE SWEEP,.......................IF THE CONGRESS WOULD SEE THEIR WAY TO A SERIOUS G.I. BILL FOR THE MANY WAR HEROS THAT WILL BE COMING HOME SOON.

    ALL THAT MONEY THAT WOULD BE USED BY OUR VETS WOULD GO DIRECTLY BACK INTO THE ECONOMY AND BE A MAJOR BANDAID TO START TO GET OUR NATIONAL DEBT BACK TO A REASONABLE LEVEL.

    THE SCHOOLS WOULD FEEL IT, THE TAX BASTARDS WOULD GET (MORE THAN) THEIR SHARE, AND THE PILE OF EMPTY HOUSES WOULD BE SNAPPED UP IN A HURRY!

  • Posted By: nohobohos1 @ 07/28/2008 6:20:16 PM

    Comment: Everyone...let those houses sit another two - three years...LET THEM SIT EMPTY. Especially in LA. Are you crazy?
    A two bedroom house is just a two bedroom home. NOT worth $500,000 ANYWHERE - not even if it was the garden of eden.
    Then you will get affordable housing. Just need to delay gratification.

  • Posted By: phiomalibumalibu @ 07/28/2008 5:13:52 PM

    Comment: 2 million jobs (professional) have been outsourced to India in the last 8 years. Middle Class? What middle class?

    • Posted By: LIKEITIS @ 07/28/2008 6:05:58 PM

      Comment: THANKS FOR NOTICING!

      TOO BAD OUR SO CALLED REPRESENTATIVE CAN'T SEE THAT!

  • Posted By: labelmarc @ 07/28/2008 5:07:29 PM

    Comment: You are so out of touch about alleged "benefits to the upper middle class". I and property tax deductions for us are ancient history as the AMT has largely taken away our ability to deduct these any longer. We just pay and pay and pay.....

    • Posted By: nmbrldy69 @ 07/30/2008 1:27:51 PM

      Comment: As someone who works in the tax industry, I see a lot of questionable things, but very seldom is there anything "unfair". To whom is given much, much is expected. Everyone should pay something - regardless of age, etc. However, the more you have, the more you pay. If a family of 4 has $200k in income, that is MORE THAN ENOUGH to pay for necessities - food, shelter & clothing. If it's not enough, then the breadwinners need to do some serious reevaluating. If you have a large income, an accompanying large mortgage note or any other AMT issues, maybe you should also have a larger savings account to pay for your "larger" lifestyle.

    • Posted By: LIKEITIS @ 07/28/2008 6:08:50 PM

      Comment: THE INFINITECEMAL UPPER MIDDLE CLASS NOW MAKES BETWEEN $200,000.00 AND $500,000.00............
      VERY FEW IN THAT AREA.................ESPECIALLY SINCE GOVERNMENT STARTED REPRESENTING BIG BUSINESS INSTEAD OF IT'S CONSTITUENTS!

  • Posted By: alfacanguro @ 07/28/2008 4:42:27 PM

    Comment: The article quotes an economist, Mark Zandi, as stating: "In 2005, mortgage delinquencies were low. Regulators couldn't easily make "the case to lenders that their lending standards were out of whack." What kind of excuse is that for what is clearly a failure by the Federal Reserve Bank to properly regulate the financial industry? We've all been talking and reading for the last several years about how over-priced the housing market was becoming, and how over-extended new homeowners were getting, all with irresponsible no money-down, interest-only or interest deferred loans. The job of regulators is to help identify and AVOID problems; not to REACT to them after the economy goes to hell in a handbasket. Where is the accountability? The good news is that foreign investors won't ever be suckered again into buying the securitized garbage issued by American financial institutions. Just as it took $4 a gallon gas to get Americans to ditch their gas hogs, a credit squeeze is just what this country needs to change the spendthrift mindset of the American consumer.

  • Posted By: alfacanguro @ 07/28/2008 4:38:42 PM

    Comment: The article quotes an economist, Mark Zandi, as stating: "In 2005, mortgage delinquencies were low. Regulators couldn't easily make "the case to lenders that their lending standards were out of whack." What kind of excuse is that for what is clearly a failure by the Federal Reserve Bank to properly regulate the financial industry? We've all been talking and reading for the last several years about how over-priced the housing market was becoming, and how over-extended new homeowners were getting, all with irresponsible no money-down, interest-only or interest deferred loans. The job of regulators is to help identify and AVOID problems; not to REACT to them after the economy goes to hell in a handbasket. Where is the accountability? The good news is that foreign investors won't ever be suckered again into buying the securitized garbage issued by American financial institutions. Just as it took $4 a gallon gas to get Americans to ditch their gas hogs, a credit squeeze is just what this country needs to change the spendthrift mindset of the American consumer.

  • Posted By: pinget @ 07/28/2008 4:37:39 PM

    Comment: Having paid nearly $14,000 this year so far on urgent home repair issues, I agree with you completely. My husband and I will be able to save nothing toward retirement this year because of home maintenance. I would gladly rent again, so urgent repairs would no longer be my problem.

  • Posted By: kshortSD @ 07/28/2008 4:30:32 PM

    Comment: I don't think most people will learn anything from this housing disaster. People, for the most part, have short attention spans and large appetites for "stuff". It's clear, when noting the ridiculous amount of credit card debt that most people carry, that some folks are just not willing to go without. They want something, so they figure out how to get it. Don't have the money? Charge it. Can't afford the big new house with room for the big screen TV you plan to buy? Get a ridiculous adjustable rate loan that will skyrocket in a couple of years.

    I'm not saying that every homeowner in trouble is guilty of making bad financial decisions...but probably many of them are. And they will keep doing it for the rest of their lives...

    I think I'm just growing more and more disgusted with the whole "consumer" mentality of most people. How much stuff do you really need? Can't you just drive the same car for more than three years? Can't you go outside and take a walk rather than go to the mall or play some $50 video game you just had to buy? And did you really need to buy the latest Ipod when your old one still works fine? And how much house do you really need?

    • Posted By: summer4077 @ 07/29/2008 8:59:38 AM

      Comment: So true! I'm 26, so I'm in the height of the consumer generation...I just don't get it. I guess I'm just one that likes to see my savings grow nice and fat. I'll be able to retire at 53, who can say that these days? I'm with you...why does someone constantly need newer, more expensive things when what they have is just fine? It's definitely making up for a self-esteem issue or insecurity with themselves. I'd rather have a modest, nicely furnished house that won't throw me into a panic if I have unexpected repairs than a McMansion that sits mostly empty because I can't afford to finish it! Also, those things are usually more shoddily built (look at all the builders in lawsuits right now) and go up like sparklers if a flame gets anywhere near them.

      • Posted By: kshortSD @ 07/29/2008 12:04:36 PM

        Comment: I guess in the long run, this economic downturn might have a positive effect on people's spending habits. But if not, I guess the smart people like us will be okay!

  • Posted By: goeast12 @ 07/28/2008 4:21:58 PM

    Comment: I live in Los Angeles which is definitely not the normal market. For 750k you get a dump in a neighborhood with schools that are very substandard once you get past grade school. Sure all us homeowners have been rewarded with houses worth double, triple, or even quadruple what you paid for them if you bought in 1996 like I did, but what about the future and our kids. They have almost no chance of buying a home if the market "recovers". I think that's sick. They should change the law that allows people to pay no taxes on the profits from the sale of their home if they use it to buy another house within 2 years because that will help to get rid of the speculators and flippers. Banks and mortgage companies also need to be more responsible for their loans. When they are able to sell the loans and take no responsibility as long as payments are made for what I believe is only the first 6 months it gives them incentive to make bad loans. That needs to change because companies were making a profit off of selling the loan and they were giving a loan to anybody because they got rid of the responsibility so quickly. Not everything needs to be a commodity, and homeownership is a quality of life issue for individuals, families, children, and communities. That's what it needs to become once again, and not just something to make big money on. I know been all about the $$ and the promoted religion of unfettered capitalism in the U.S. for the last 20 + years, but maybe quality of life and the good of our citizens and children can start to matter again. Housing, along with health care and education, are some areas where the quality of life of our citizens, families and especially children should come before money and corporate profits.

    • Posted By: nmbrldy69 @ 07/30/2008 1:35:13 PM

      Comment: Who ever said home ownership was a right? Basic needs - food, shelter, and clothing - don't have to consist of a $5k mortgage payment, $85 dining out meals or designer tags. If you're really talking quality of life, downsize the overpriced home (and accompanying mortgage payments) and crazy expenses, cut back on work hours or type of work (now that you don't HAVE to work 80 hour weeks to support this crap) and spend time with the family you speak so much of. Take a step back, and think about what you say.

      • Posted By: goeast12 @ 07/31/2008 2:38:35 AM

        Comment: It's not a right, but it contributes in many ways to the health of families and communities. I bought my house in 1996 for 173k, and it's now worth 700k+. Nothing sells in my neighborhhod for less. It's less than 1200 sq ft and has 1.25 baths. I bought it from someone who couldn't make the payments and was in danger of going into foreclosure, so at the time it was a bit good deal. I always put my children first and never miss any of their activities. I've also coached a few of their teams. L.A. is very expensive so I'm thrifty, but to me it's worth it. I'm from the midwest, and I don't have the California car addiction. I've driven 2 car in 20 years, and my current car is a Civic with 127k. I'm not impressing anybody in L.A., but saving for my retirement and my childrens future is more important to me.

        • Posted By: nmbrldy69 @ 08/01/2008 10:00:55 AM

          Comment: That's exactly the point. You haven't overextened yourself by getting the "car addiction" or doing other silly things - getting yourself in way over your head. You see your family, and they are first - not the job, which is very different than so many people today behave. Bravo.

  • Posted By: goeast12 @ 07/28/2008 4:21:24 PM

    Comment: I live in Los Angeles which is definitely not the normal market. For 750k you get a dump in a neighborhood with schools that are very substandard once you get past grade school. Sure all us homeowners have been rewarded with houses worth double, triple, or even quadruple what you paid for them if you bought in 1996 like I did, but what about the future and our kids. They have almost no chance of buying a home if the market "recovers". I think that's sick. They should change the law that allows people to pay no taxes on the profits from the sale of their home if they use it to buy another house within 2 years because that will help to get rid of the speculators and flippers. Banks and mortgage companies also need to be more responsible for their loans. When they are able to sell the loans and take no responsibility as long as payments are made for what I believe is only the first 6 months it gives them incentive to make bad loans. That needs to change because companies were making a profit off of selling the loan and they were giving a loan to anybody because they got rid of the responsibility so quickly. Not everything needs to be a commodity, and homeownership is a quality of life issue for individuals, families, children, and communities. That's what it needs to become once again, and not just something to make big money on. I know been all about the $$ and the promoted religion of unfettered capitalism in the U.S. for the last 20 + years, but maybe quality of life and the good of our citizens and children can start to matter again. Housing, along with health care and education, are some areas where the quality of life of our citizens, families and especially children should come before money and corporate profits.

  • Posted By: hankthehorrible @ 07/28/2008 4:19:20 PM

    Comment: I don't mean to sound like a mean individual, but there was something I noticed watching videos of recent foreclosure eviction notice servings: Everytime the sherrif pulled into a driveway of a house that was about to be served an eviction notice, there was @ least 1 or 2 new cars (usually SUV's) in the driveway. Could it be that consumerism has finally taken it's toll on the consumers themselves by making them overspend? Are some folks living beyond their means just to be a homeowner? It just strikes me that in a time when bank practices are suspect, the economy is taking a downturn & the price of everything is going up, frugality may be the step to take. But I guess not. I feel for anyone who has lost their home, but when I see the "bling factor" strewn about the property, I just have to wonder.

    • Posted By: LIKEITIS @ 07/28/2008 6:03:25 PM

      Comment: GOOD OBSERVATION!

  • Posted By: JKnow @ 07/28/2008 3:55:51 PM

    Comment: fantasmic7 - my only question to you would be...if you are so responsible, why didn't you save up to buy your house with a down payment, the way generations of Americans have? Why are you mortgaged 'to the hilt?' You obviously should have bought a house that was 10% less expensive, so that you had the money to put down. But because of this conspicuous consumption America is enthralled with....many are forced to buy homes - like you - that they can barely afford. How is that responsible? All that risk does is continue to drive up the prices of real estate....

    • Posted By: fantasmic7 @ 07/28/2008 4:09:02 PM

      Comment: We are nowhere near mortgaged to the "hilt" as you put it. Hard to say this and sound humble, but we can generally make our monthly mortgage payment 2-3 times over. The point I was making (but didnt really spell out because I didnt want to hog the space here) is that when people are finally done with higher education and have probably 6 figures of education debt, it is severely hard to save tons of money away for a down payment (rents and mortgage payments in my part of CA are not that far apart) So we decided to get in knowing that we had years of guaranteed income increases. But we did not dive in recklessly, we sat down, plotted out a multiple year plan, talked about it and talked about it some more and ended up knowing we could do it comfortably. I know not everyone is in our boat, but planning and being realistic are key to anyone.

  • Posted By: Cavallino_Rapante @ 07/28/2008 3:37:22 PM

    Comment: You don't need to 'take up arms' to fight this enemy, for he is 'us'.....GREED. The Forclosures, the economic downturn, the bank failures - they will 'right' America's ship once more. People will learn to spend within their means, because the lenders will learn to force the issue or go into bankrupcy themselves. It is not the Government's responsibility to regulate the spending habits of the individual, capitalism will provide the medicine needed to cure this ill.

    • Posted By: LIKEITIS @ 07/28/2008 4:08:32 PM

      Comment: PARTLY TRUE.....................HOWEVER, AS IT TURNS OUT, THE FEDERAL GOVERNMENT HAS PLAYED A LARGE PART IN PUSHING THE MORTGAGE INDUSTRY TO USE DISTURBING METHODS OF DETERMINING THE ABILITY OF AN APPLICANT TO BORROW ONLY TO TURN AROUND AND RESCUE THE COMPANIES WHO MADE WINDFALL PROFITS ON THESE LOANS THAT WE AS TAXPAYERS ARE STUCK BAILING OUT!

      IN SIMPLER TERMS, WE (OVER)PAID SUPPOSED REPRESNTATIVES TO HELP BIG BUSINESS CRANK IT TO US ....................AGAIN!

      INCIDENTLY..........I PAID MY HOUSE OFF IN 3 YEARS AND TWO MONTHS, BUT I STILL DON'T LIKE THE GOVERNMENT PORKING MY TAX DOLLARS ARE TAKING COMBINED WITH "WE ARE NOT SURE ABOUT YOUR SOCIAL SECURITY"..................NOT A SWEET COMBO!

  • Posted By: fantasmic7 @ 07/28/2008 3:36:26 PM

    Comment: Ok, some thoughts....1) home ownership to me is one of the top personifications of the American dream. And going along with that is the fact that you can deduct your mortgage interest, while if you are a renter, you can deduct practically nothing (in CA there is a renters credit) and after paying months and years of rent, you own nothing, while you do eventually own your home and the equity that comes with it. 2) reducing or eliminating the mortgage interest deduction and requiring 5% down would be a disaster. It would slam the door on a whole lot of people. We bought our house in 2002 with a 103% loan, and if we had to wait until we had 5% of the then purchase price, we would probably still be saving.

    3) what we really need to do is simply eliminate the fraud from the process. 0 down works with people who are responsible. Interest only and subprime loans need to disappear. And if you are not qualified because you want too much house for your income or your credit is bad, then you need to wait a while and prove yourself or buy a cheaper house.

    4) One big problem that occurred in my area is that during the boom, people excessively got equity loans to buy extravagant stuff and then when things went south, they had negative equity and that just harps back on responsibility. We refi'd once to get rid of our ARM and PMI and then again with cash out for an addition to the home. If you got equity out to buy a $50,000 car and flat screen tv and anything else with bells and whistles, then you get what you deserve. We honestly should be looking at cases one at a time to see whether we should be bailing someone out or letting them lose their house. I am sure lots and lots of good people just got bad luck but are otherwise "good bets" and some are just not ready for the responsibility.

    Overall though, home ownership should be encouraged and we can do it without a massive overhaul to the system.

  • Posted By: LIKEITIS @ 07/28/2008 2:42:48 PM

    Comment: ALL THE THINGS SAID WERE AND ARE TRUE...................SO IT ALL MEANS THAT WE A GOVERNMENT OF THE PEOPLE FOR THE CORPORATIONS, GOVERNED BY THE MORALY BANKRUPT, AND DEFENED BY NO ONE!

    ..................CAN YOU SAY...................REVOLUTION.................OR MAYBE ARMED INSURRECTION?

    FORTUNATELY WE HAVE BEEN ALLOWED THE 2ND AMMENDMENT!

 
 
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