Originally Posted By Mr X SDK brings up a salient point, and I'm sorry I was asleep at the time or I'd have answered his quiz in a second. YES, walking away is a popular move in times like these, even for the wealthy (well actually, ESPECIALLY for the wealthy I should say, how the heck do you think they got that way)... And if you don't believe it, lemme tell you it has already occured. In the last bubble, back in the (I believe it was) early 80's.
Originally Posted By Mr X **You can't make a 4000 / month payment on a 60-70K annual income. There would be no money left to eat, etc.** No, no. You missed the point totally. You use the CREDIT CARDS to take care of that stuff, and then every 18 months or so you refinance and take some more equity back and pay those off. Shampoo, rinse, repeat. It's a perfect system!
Originally Posted By fkurucz ^^^Oh the allure of free money. Funny house those schemes never seem to pan out in the long term. The bottom line is that people thought of their houses as ATMs and really thought that they would never have to pay back all that money they borrowed. It boggles my mind when I read about couples with a combined income of about 120K borrowing over 1 million to buy a McMansion in an upscale enclave like Fountain Valley or Tustin.
Originally Posted By Mr X I was listening to a radio show where some woman wanted to know how to "tap into the equity" of her home. She sounded rather shocked when the radio host explained that she could borrow the money but THEN HAVE TO PAY IT BACK WITH INTEREST. Somehow she (and many) had the impression that "homeowner" meant she could tap her house like a tree and money would spew out.
Originally Posted By vbdad55 See around Chicago housng prices in some areas haven't dropped at all, and a few places have seen a 3%-5% hit -- but then we NEVER got that huge 25%- 50% YTY increases that the coasts saw. As I stated earlier , in some of the nicest areas, the housing cost has about doubled - but that is in 18 YEARS or so. Also as far as a % that can afford the 500K houses -- our suburb has 160K people - median income is over 100K and we are far from the wealthiest area outside of Chicago -- there are plenty of people in the range you speak - now of course some of them are buying $2M houses so they are in the same position you are describing - in way over their heads
Originally Posted By vbdad55 oh and btw- for the most part $500K here gets you 3200- 4000 sq ft and 1/2 acre lot, in a nice area - great schools /parks etc. -- I have seen what $500K buys in California ( my rel's live in Newport Beach) - and no thanks - I'll put up with the winters for a while longer
Originally Posted By Mr X There are certainly pockets here and there, VB (and of course California is ground zero for the bursting bubble!)...but the overall stats are quite sobering and have been for close to a year now. And every month someone from the mortgage association promises "this is the bottom for sure, we go up from here!".
Originally Posted By Mr X **now of course some of them are buying $2M houses so they are in the same position you are describing - in way over their heads** Sure, because up until a couple of months ago it was all to easy, and the lenders were all too happy to help. Greedy bastards.
Originally Posted By vbdad55 for some real sobering views -- try this link <a href="http://www.realtytrac.com/" target="_blank">http://www.realtytrac.com/</a> If you don't think it's happening where you live - take a peek at the volume of foreclosures in your area.(by zip code) A few neighbors and I went over this- anmd although our area relatively calm comparatively- the volume is still up significantly from past year.
Originally Posted By vbdad55 Use the maps feature to show all the properties in one area - it is scary the pre foreclosure and bank owned properties ( and auctions ) tell the sad tale -- here is a link for one area in irvine CA <a href="http://www.realtytrac.com/Mapping/Mapping/detailsMap.aspx?propid=13967807&code=0" target="_blank">http://www.realtytrac.com/Mapp ing/Mapping/detailsMap.aspx?propid=13967807&code=0</a>|5456f72&ms=s&cobrandPK=5 ( may have to paste in )
Originally Posted By fkurucz <<Also as far as a % that can afford the 500K houses -- our suburb has 160K people - median income is over 100K and we are far from the wealthiest area outside of Chicago -- there are plenty of people in the range you speak>> The numbers you really need to look at are: 1) What is the median household income in the Chicago metro area. 2) What is the median house price in the same area. If Chicago is like most major metro areas the median house hold income will be around 60K. This means that the median house price should be about 180K for things to be sane. If the median is say 300K then there is a problem (unless the median income is 100K, which I am 100% certain it is not). Not as bad as entry level houses fetching 500K in a California paradise like Fontana, but still overpriced
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Originally Posted By fkurucz <<A few neighbors and I went over this- anmd although our area relatively calm comparatively- the volume is still up significantly from past year.>> We ain't seen nothing yet! The bulk of ARMs have not reset yet to their real interest rates. It will be especially bad in California as virtually all houses sold to first time buyers were sold with ARMs that had super low teaser rates for their first two years (some even had negative amortization). Of course those people bought into the canard that their houses would perpetually appreciate at double digit rates, and they figures (or were told) that once their loan reset they could just refinance into another toxic loan. And since their house would have appreciated 40% during those two years that they could "extract" some equity, pay of the credit cards and buy that 50K car that they most definitely deserved. The problem with false prosperity is actually quite simple....its false. Debt is not wealth, and it has to be paid back. I think that it was no coincidence that personal bankruptcy laws in the US were changed so that it is much harder to walk away from personal debt. The sad truth is that millions of people are going to have their wages garnished for decades to pay back the debts they have accrued. And the foreclosed might be seeing for 1099's in their mailboxes from their lenders, who will be converting (where allowed by law) the unpaid balances on their mortgages (the difference between what they owe and what the house fetched at a foreclosure sale) into a "gift" (since they will write off the loss) and now the IRS will be involved (I wouldn't be surprised if the IRS debt is forgiven by the government).
Originally Posted By fkurucz <<Somehow she (and many) had the impression that "homeowner" meant she could tap her house like a tree and money would spew out.>> You gotta admit, its a tempting concept. I mean, why work and save when you could buy a 500K house for no money down, pay a fake interest rate for 2 years, then after those 2 years cash out the 200 grand appreciation and refinance into another teaser ARM. The smart ones of course sold the house and pocketed the appreciation, and knew better than to keep betting, which only guarantees that you will eventually go bust.
Originally Posted By vbdad55 <Xman, it was fun while it lasted but I guess nobody wants to answer a basic question around here not even ac/dc, imadisneygirl or councilor. World Disney and Road at least have some guts unlike some others. < well you and X were successful in closing a thread - so no one can converse - are you trying to close this one too. And geez, pick one freakin identity already for heavens sake - it's not like we can't figure it out.
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Originally Posted By vbdad55 have no idea if you're talking to me or not - nor do I care - you're attempt at humor ( ? ) - really sad. My only interest is to return the boards to coherent posting.
Originally Posted By SuperDry <<< And the foreclosed might be seeing for 1099's in their mailboxes from their lenders, who will be converting (where allowed by law) the unpaid balances on their mortgages (the difference between what they owe and what the house fetched at a foreclosure sale) into a "gift" (since they will write off the loss) and now the IRS will be involved (I wouldn't be surprised if the IRS debt is forgiven by the government). >>> That won't be the case. Part of the President's (not so much of a) bailout package proposal is to remove the notion that forgiven mortgage debt is taxable income. I would be surprised if this didn't pass.
Originally Posted By SuperDry <<< He should have taken measures BEFORE the bubble burst, but yes by all means do help bail out the custodian with the stated income no money down loan who's living in a mansion...cause that guy really deserves the help! >>> The President is just extrapolating from his personal experience and assuming that it applies to everyone else. After all, he got into his current mansion with no money down, and is at no risk of foreclosure.
