ΒιΆΉΤΌΕΔ

California was paying people to leave the state because it was cheaper than supporting them with welfare.

"Lost Wages" got cheap labor and caught up in the "pawn the equity in your home" scheme so "the shrubs" numbers would get him back in for a second term. Figures can lie and liars can figure.

If you want to destroy a nation just pick a deadly sin and exploit it. Greed has worked in this case.

After 9/11/01 America changed forever. We have not found our balance, but we will. Our spirit is still willing.

Jon,

Bravo on this one. Yes, many folks bought houses that they could not afford based on what they were told by lenders, and then the bubble burst. But the spirit of the folks that say.."I can pay it back" that is part of what makes Americans Americans.

I was struck by this comment, ""Everybody's going to save us. You know what? When I was going through it, nobody saved me."

That, I think, is the major change we're going through. Used to be, no one but your own family was your "support group." Then things changed to "the government needs to save us." Now, we're learning that perhaps it's our responsibility after all.

I'm all for the government doing what it can, but taking care of ourselves and our families needs to be top priority.

yeah,i can offer a couple of remedies for luxury coach travel sickness syndrome;
1drink plenty of water
2WALK
that seems to work for me jon after ive paid my license fee!
have a nice trip jon boy!

When hard time hit with high interest rate and job hard to come by, those living on the bread line suffered more severely. I am speaking from experience as I recalled the late seventies when UK interest rate was between 12-14%. I had to work three jobs to keep a roof on my head. Two dish wisher job in Hotel and restarant and one full time as a technician repairing teleprinters machine. It was hard but satisfying when one pulled through the hard time. I just hoped the world economy will not goes into a deep recession as UK will also suffer because we are a global village. UK is major world financial centre, and any slow down in USA will have an impact on UK economy.

Most of these homes were purchased by speculators. Now that the market has tanked, most are simply walking away with really just a bruised on their credit reports. I don't feel sorry for most of them.

I was looking to buy 2 years ago, but I knew what I could and could not afford. And I couldn't afford a home then, regardless of what my mortgage broker told me. Now 2 years later, I am now looking again to buy, most likely I'll be looking at a foreclosed home.

I had deep sympathy for those that had fallen on hard time. Buying a house is one of the biggest investment for most people in their lifetime. Banks must lent responsibily and peole must not be too easily tempted and persuaded to borrow more then they could confortabily able to pay. It will take years for those in this position to get out of debth.

Newnewsread.

*Yawn*

forget sex ed. in kindergarten - why isn't anyone promising to bring back home economics? i don't mean the kind of casserole-cooking, laundry-sorting joke of a class i had in middle school. we need to teach our children how to be financially responsible and we need to start teaching them now. you wouldn't give a kid a sports car without teaching her to drive it. why, then, would you give an 18 year-old a credit card without teaching her about credit?

the housing an lending situation in the US is truly unfortunate, and achieving the β€œamerican dream” may now be out of reach for most of us. however, it’s time for us to realize that *we* are ultimately responsible for our situations, no matter what the lenders promised us. remember that old adage β€œif it sounds to good to be true…”

The worldwide obsession with homeownership, and its attendant speculation, has lead to this. Financial giants are on their knees, families are foreclosed and some speculators are out a bit of cash. If people had only stopped to think, "Maybe this 700 sq ft flat/condo ISN"T worth paying $500,000 for" this would not have occurred. Most people, however, feel compelled to buy not matter what the price and no matter how poor the product is. Bankers strove to find new ways to lend to these people and prices went on a tear. Undeterred, people just kept paying more and more for less and less (and the banks let them). A home, after all, is just a deteriorating pile of chip board, sheet rock, PVC and wires that requires on-going, expensive maintenance. That is especially true in North America where our construction standards are pretty low (my hometown of Vancouver, BC, Canada is especially notorious). If you're lucky, you also get a very small piece of land with it. If rents are close to the cost of ownership, then chasing ownership may make sense. Where i live renting is 50% of the cost of owning (assuming a 10% deposit). If people could only relax and see their homes as a place to live first and an investment second (instead of the other way around) this sort of thing might not happen. Will it happen again? Probably. As the market slides in Europe and crashes in the US, most people in my city still believe in real estate with the sort of fervour fundamentalist Christians reserve for their belief in God.

Jon

Never mind home foreclosures and the feckless, please can you find some fierce looking hockey moms? And if you can find any with bee-hive hair and bright lipstick, even better.

About 10years ago, the greedy real estate industry decided treat houses as commodities like pork bellies instead of "homes" where people have families and communities. Real Estate agents showed people homes they couldn't afford, shady lending practices and fine print. Then there's the "flip this house" attitude of speculators thinking they can make a quick, easy buck. This is what created all this mess but some areas adopted smart growth (which was considered liberal and too regulatory) and those areas are doing fine and have a good future. It's time we, as Americans, do what's right for the future and not just what's profitable in the short term.

This comment has been referred for further consideration. Explain.

Jon, I have followed your travels and your reports since you started your tour. Too often I have read comments on the ΒιΆΉΤΌΕΔ from our friends across the pond on the general ignorance of Americans towards other people and other cultures but I have often seen the same ignorance of our people and culture (though many outside the US say we don't have one) returned by the same people who claim to know all about our country and our people. What astonishes me more is how many of those same people blatanly accuse you of abusing the funds their license fee provides. I admire and thank you for what you are doing but it seems people from the UK have made up their minds about us yanks. If nothing else I hope you have a wonderful time in our country and, oh yes, if you run into a good steak joint, have a nice thick, juicy T-bone or two courtesy of the British taxpayer.

GoonerPetronius is absolutely spot on - the collusion between estate agents, banks and the greed of speculators has lead to this mess - yet I don't see them paying the price just yet - criminal investigations and widespread checks need to be made in all 3 sectors - especially the first 2...

I had just finished medical school in 2005 and moved to california for residency. Somehow, most of my college friends, were in real estate business. As a resident, I was making less $/hour than my high schooler brother. Anyhow, my friend stated that he would use my future income (as a physician) to qualify for a loan and all I had to pay was part of the interest monthly....essentially I could've bought a million dollar house on a $38000/year income. It seemed too good to be true and it took a lot of guts/emotions to decide not to buy as everyone else's house was essentially doubling every so often. But, it seemed too good to be true. While my heart brakes for people who have lost their livelihood, most people can't blame anyone else for this blunder, but themselves.

Seems the American media is doing everything it can to push this idea that it was a speculative homeowner with a high school diploma who was in the wrong, and not the Economics PHD's in the banking industry who suggested this to them. How dumb are we?

And also, I second the motion on the steak. Drop the gavel and head to dinner.

As a Realtor in central Florida, I have seen how the market shift is affecting everyone around me. I started in Real Estate in November, 2005 just as the market "fell." At first I was frustrated as I had "missed the boat." But have since realized how fortunate I am. Many of my associates (both Realtors and Lenders) were themselves investing in the housing market during the boom. Many are in foreclosure, as their income and the equity plummeted. But I can honestly say, since January the market has been improving. We still have a lot of inventory to chisel away at. But its starting to chip away as people take advantage of the price drop. But, just like in the UK, it is harder to get financing. The investors buying now have more renters then ever. By missing the boom,I have a home and a car I can afford. Plus I have learned a valuable lesson from those around me. If you can't keep a property as an investment for at least 5-7 years, it is a high risk investment. Can you rent it for the monthly payments?

I'm surprised more people didn't realize in 2003-2005 how insane the prices were becoming. I live in California and there is no way someone with an "average salary" can support a family of four and purchase a home. With a market driven economy, we just need to refuse to pay those insane prices and they will come down. Like now, no one can afford the mortgages on a $650,000 home, especially with the shoddy economy, so no one is buying and the prices are coming down.

I could see it coming and I didn't even study economics! And Bush was touting proudly "home ownership is at its highest rate ever!"

I even knew a 20-year-old girl who was a mortgage broker. If someone didn't have big enough savings in the bank, she would cut, paste and xerox numbers onto their statement so she could get the loan approved. She was driving a Mercedes at 20. It was obvious this was happening on a large scale. The government should have stepped in at that point, but they didn't and now we all suffer because of the bankers greed!

I really don't have much sympathy with those subprime and alt A borrowers who are falling. They gambled. What goes up, must come down. If you don't get out before it goes down, you are it. Las Vegas is built on that philosophy. No bail out by the government.

I think the question should be, "Was what is happening predictable, and was it avoidable?" I think the answer is yes to both questions. Many conservative (with a small "c") commentators and economists were highly and vocally concerned about this housing bubble and the explosion of credit, fuelled by greedy banks, finance companies, speculators, a corrupt and incompetent management of two giant mortgage suppliers, pork-barrel politics and kick-backs, and grossly inadequate monetary controls and an incompetent government and Federal Reserve. Some people posting seems quite happy to blame the house buyers, but that isn't helpful, because this housing bubble is now threatening the entire world economy. In other words, the healthy functioning of a national economy isn't just the province of the "market", but of government through effective regulation, with a long-term and sustainable strategy for the whole economy. The "credit crunch" (actually a solvency crunch) is a prime example of the absurdity that the "market" is the final arbiter of our national and international economies, and those very companies and executives who keep repeating ad-infinitum "keep government out of business" are the very ones now begging and screaming for government help to save them. And because bank and financial market failure could bring down the entire economy we are saving them, the rats are leaving with their multi-million dollar bonuses and retiring to the Bahamas, whilst the taxpayer, the ordinary citizen, the majority of them actually relatively poor, pick up the bill, hundreds of billions of dollars, trillions even, which could have gone instead to a health system in the USA that might actually work, or a railway system that might actually deliver a service or a renewable energy strategy that might begin to save our planet.

I hope during his travels your reporter stops to speak with some of the homeowners who did not take out interest only loans. There are many of us in the US who stayed in a home we could afford and refinanced for shorter terms and lower rates. We might not have granite counter tops and commercial appliances but even with the decline in value we are still in a positive equity position. And yes, our loans will be paid off in the next decade! People like Ms. Weems took a risk that many others felt to be unacceptable, she lost. I would be interested to see how many people who have lost their homes during this bubble also lost investments during the dot-com stock craze.

Interest only loans. When my husband and I heard from two of our friends in California that they were going to purchase their home in California this way, we told them they were insane---no equity will be built, not at all! They told us "everyone" in California was doing it, and they forged ahead. Total financial disaster for our friends when the market dropped----and for nearly 3 years we've been warned that the housing market was OVER-inflated and headed for a fall.

In a way, interest only loans are worse than simply renting a place to live. When you rent, you don't have the expectation of ownership (and all the hard work that goes into buying and maintaining a home). "Buying" a home through interest only loans lets the home owner assume the home is his/hers when it actually is not. Not a penny was paid toward the equity (unless it was a minimal down payment that wouldn't offset a normal economic market bounce). The market shifts and the home is gone. It's so sad, and truthfully an ignorant, risky decision.

As to adjustable rate mortages (ARM's), I have sympathy with those who are enduring a heartbreaking situation of losing their homes, but I don't sympathize with the risk-taking decision in the first place. And I'm very angry at what will have to be collected and paid in our taxes to pay for this fiasco in the future.

In 1989, my husband and I bought our first home. We were in our middle twenties and the interest rate at the time was 10% (yikes!). Our bank offered us a "balloon mortgage" which is basically the same as ARM except the name was changed (hmm....wonder why? because the interest rate COULD balloon and the name turned borrowers off).
Anyway, my husband and I were young, buying our first home, but we still had the presence of our own minds and instincts to know that a balloon mortage was not the sensible way to go. If interest rate was 10% one day, it could balloon to 12, 15, 30%, whatever the bank wanted to charge, changing the rate whenever they wanted to in the future. THAT'S HOW IT WORKS!

We opted to go with 10% fixed rate, and three years later refinanced when the rates dropped.

People make decisions for their own lives, and home ownership should be one of the most well thought through, researched decisions of a person's life. Your finances are at stake! If people took the risk of an ARM (which we ourselves had the temptation to do) then the risk should be assumed by the homeowner---not bailed out by the taxpayers who did NOT make risky decisions and are plodding along, working hard and succeeding at paying off our 30 year loans.

Allowing the bank to talk you into something is no excuse for your own common sense and the time it takes to make an intelligent decision. For those who are getting their adjustable rate and interest only mortgaes "bailed out" I wonder if you feel badly, guilty---ashamed possibly---at the number of taxpayers who will now give portions of their paychecks in the future to cover your mistakes.

Blame the government and the banks all your want; in the end, the decision was up to you and no one had a gun to your head.
In a furious and criminal irony, we taxpayers don't have that same decision making luxury now.

As a homeowner, I will chime in. I may not have anything fancy, but it is a roof over my head, no upstairs neighbor, where if their bathroom leaks, it becomes my problem. It gives me a stake in my community and I was careful about what I could afford.
I agree with JMMartinez. I wonder if many who lost our in the housing crisis also lost out in the dot bombs.

I'm a reporter for an American newspaper in a medium-sized market. The point that is never made in any of these stories is that many Americans bought more house than they could afford. No blame is put upon the financial institution or the individual for entering into a risky situation. This is not about failure of the US government (and there is plenty of balme there for other things). This blame lays squarely on people wanting to live "high on the hog" and financial institutions that allowed them to do it. What sensible person would enter into such an agreement? Most of us (Americans and others) were taught during our childhood to live within our means--individuals want everything NOW, not in the future. The people I have profiled for my newspaper have put themselves in this situation and then cry fowl. I have no sympathy.

Well, first of all, who asked these people to buy houses, if they could not afford. They should have done a reality check and then plunge into buying such expensive homes. Why should bankers, politicians be blamed for their ignorance and now other fellow citizens, who were smart enough in not buying 'a dream house' for themselves have to pay for their stupidity and ignorance.

We were offered an 'interest-only' by our bank in 2000, and refused. It was just a gut instinct, but I remember thinking 'This doesn't sound like a good deal for us'.

Four years later, the bank (just before it changed hands) was urging us to refinance, of course we would need to clear all sorts of hurdles, divulge years of tax returns to them, and (oh yes) pay certain fees...

This was a no-brainer--definitely not a good deal for us. I asked the banker, 'Why don't we not pay all those fees, and just accelerate the payments on the mortgage every month? It lowers the effective rate of interest, and increases our equity position. She couldn't provide any valid reason her deal was in our best interests.

This will take years to sort out!

There is a more serious long-term dimension to this that you did not touch on, Jon. Las Vegas may ultimately be a doomed city.

It is situated in one of the most arid regions of the US, and with global climate change most projections anticipate that it will become even more arid in the future. All of the water it needs must be brought in - from distant sources that are themselves drying up or being overutilized. This is not to mention all of its food, energy - everything must be brought in from elsewhere. Even its entire economy is essentially imported from elsewhere, for it is only the steady flow of tourists to the casinos and conventions that bring in any money. As jet fuel prices continue to rise and airlines continue to cut back schedules or go out of business completely, one can only wonder how much longer those tourists will still be coming.

More than a few people have predicted that Las Vegas will eventually and inevitably become an abandoned ruin - a ghost town to end all ghost towns.

Just possibly, those who have lost their homes now have received a blessing in disguise, for they can be amongst the first rather than the last to move out and move on.

...people who for years enjoyed laid back lifestyles here on Maui are leaving in record numbers...guess an island in the middle of the pacific is no place to spend the depression

I don't quite understand the opening example. "The young speculative buyer" was presumably trying to make a profit, so his initial offer price of $1.17 mill must have included that profit. The eventual sale price - at a foreclosure sale - was $0.96 mill. So that's a drop of 18% - which for a "bank fire sale" isn't a big drop at all. Sounds to me if the owner could have sold the house before foreclosure for about $1 million - which I'm guessing is what he had bought it for.......

Sorry I have no sympathy for these folks. It is the responsibility of the individual to read the fine print and understand fully understand the contract before he or she signs it! I am a US citizen and firmly believe the government should do nothing to assist these people. This is the wake up call we need! "A fool and his money are soon parted".

As several others have remarked, I too have no sympathy for those who made the decision to obligate themselves to mortgages they could not afford with the expectation that the value of the house would keep rising. The problem is that far too few people have any real understanding of self-responsibility; when so many were kids their parents frequently bailed them out or rescued them whenever there was problem, rather than let them experience the consequences of decisions/actions. A great number (?majority?) of those currently foreclosed are ones who think of government as some great savior rather than a thug stealing from as hir source of funds and then giving some to hir friends, making hir a "good guy" in their eyes.

Government does not "make money"; it only extorts money in various ways via taxes and regulatory fees. So any money going to bail out individuals foreclosed - or companies that fail - comes out of the taxpayers pockets. I am adamantly against this, not simply to keep my own money (and spend it according to my values) but because this practice encourages more of the same. The trend has been towards more individuals who fail to be self-responsible for decisions, but seek solutions from government, which correspondingly grows to offer and to meet these "requests/demands" of many citizens. The consequences of this paternalism is more dependency and increasing taxes for those who continue to produce - but the spiral is upward on dependency, taxes, regulations, etc and downward for self-responsibility, critical thinking, productivity, etc. Continuation of this view of government is what needs to change - a paradigm shift. (For a somewhat rigorous, but short, article on the subject of self-responsibility - "Self-Responsibility and Social Order".)

Kitty Antonik Wakfer
Casa Grande AZ USA and Harcourt Park ON Canada

Government should not help people who made poor financial decisions. These were purchases like a car or anything else. In addition, making financial decisions by trusting someone who tells you anything is going to double in value is incredibily stupid. Unfortunately, America is addicted to credit and cheap imported energy. The absence of both of these is going to alter life as we know it in the US no matter which of the 2 (of the same) candidates gets into office. That being said, the truely gulity parties, meaning the bond appraisers and predatory lenders will get a free ride, while tax payers and individual families pay the price.

1.) Real estate is an investment and like all investments the greedy are shorn much of the time.

The cycle is "real estate will never go up" and real estate will never go down"
And if it is at either extreme it will head to the other extreme. Eventually.

2.) Buying in risky areas is an invitation for disaster. Like the unfortunate people in Happisburgh, UK, written about in another article in this paper. A house next to the sea is one dangerous place. Another is next to those lovely rivers, all of which flood sooner or later.

3.) Be conservative and rest easy.

In a free market economy the profit motive
is a basic element and it is a fine line to draw between greed and market dynamics. Any person who has some knowledge notice
the abusive practices of the real estate market in its different sector. I believe it was gross neglect by the US government not to put strict guide lines to what is permissive for the limit of risk . In a Capitalistic Society, the role of the government is to put norms and guidlines,otherwise we all will be living in a
predatory situation. The financial instructments were developed with such advanced model that few gevernment agency can follow or understand its far reaching effect. Now, this is a sysmic problem for the whhole financial world to solve. Since the government did nothing to prevent it now at least they have to keep
the situation that will cause the least damage . Otherwise more jobs will be lost
and more families will be broken . May God Bless America .

"I can pay it back", as cited by the article subject may not refer to any underlying core value or upstanding spirit but rather a vain or narcissistic trait along the lines of "I can afford THIS...."

What is striking is how many buyers were wagering such a substantial matter. That anyone considers an interest-only loan on a dwelling they intend to inhabit indefinitely is wanting; that others are viewed as "prey" to a big bad lending market discounts all credibility. Just because there's money to be had doesn't mean it's a good idea to have some... such as payroll-advance loans, vehicle title loans, any mortgage transaction where they buyer does not accrue principal value with every repayment...

Simply, stupid is is stupid does; that anyone suffers the loss of a home or the nearness of it that it is just as real and doesn't learn to avoid the same again would be an even worse predicament.

At 10:05pm on 13 Sep 2008, John Monro wrote:

...the rats are leaving with their multi-million dollar bonuses and retiring to the Bahamas, whilst the taxpayer, the ordinary citizen, the majority of them actually relatively poor, pick up the bill, hundreds of billions of dollars, trillions even, which could have gone instead...


So those taxpayers who defaulted on their loans are absolved in favor of the singular figureheads/scapegoats? By my math the "innocents" are the ones who tanked the billions, trillions even, while the puny million or so dollar bonuses of the "ringleaders" represents a pittance sum of the total problem.

Responsibility where it belongs as a proportion of the offense is albeit straightforward yet unconfusing. Yes, yes, the vilification of the few may be called for but do not hesitate to unmask the irresponsibility which comprises the other 99% of the problem.

To John Monroe.

There are things we agree on. We need effective regulation. There is massive regulation of the banking and finance industry but they may need some adjusting. Pork barrel politics are bad but mostly irrelevant to this industy. Some agents (not all) will try to sell the most expensive house they can disregarding the true ability of the client to pay for it. I want to throw some light on the financial vehicle we're discussing.

There is this perception that ARMs (adjustable rate mortgages) are some new invention of evil management. This is so far from the truth. We could have used an ARM to buy our house in 1976. I have advised folks I know to avoid them like the plague and always consider only a fixed rate mortgage. That said, there are some cases where the ARM may be appropriate. Should we legislate against a financial tool that some use well just because others may abuse it? If so, maybe we better go after credit cards first. These are abused far more than mortgages.

There is a perception that evil companies are perpetrating this on an unsuspecting populace. Far from it, there has been constant reminders of the dangers of ARMs for as long as I can remember. If there is a guilty group, I would assign it mostly to agents that don't fully and explicitly explain the probable future changes to the payment and the pitfalls involved to hurdle in the future. The corporations don't have the ability to peruse each applicant's particular circumstances and future expectations to determine their suitablilty to use an ARM.

Regarding taxes, in this country the bottom 50% of the population pays little or no income tax. They do pay the fixed Social Security/Medicare taxes but not income taxes. Someone that has the exact percentages at their hand might post them here but it's not available to me right now.

If Uncle Sam actually reduced expenses by billions of dollars, the thing to do is not pour the money down some pie in the sky but to reduce the deficit and maybe in the future reduce the debt. Even the folks that use the local county hospitals get better care than the vast majority of the world, including immediate availability of things like MRI's and things like that instead of 3-6 month queues to wait for or having nothing available at all in many places. This is given free by local taxpayers at a much lower cost than sending $2 to Uncle Sam to get back less than $1 in benefits. We can tax little more than that $1 locally to get a $1 benefit.

Personally - I Rent.

I and my husband live with our two children in a two bedroom apartment in an Old Style Black Ghetto in NW Philly. Our building has been tagged by gang graffiti five times this past year and I watch to make sure my 11 yr old son gets on his bus safely each morning without getting mugged or shot.

... so, on one hand - I feel bad for those folks who didn't realize they were getting suckered.

... on the other hand - thanks to the crash, I may actually be able to afford a home on a safe block soon! YAY!

....................................

Meanwhile, back in Las Vegas - city of glitz:

Mr Mark concluded his interview with a subtly poignant statement --
"the Democrats are strong in this area, so I can't see it making too much difference round here,"

Now - I wonder what he means by this?

Does he mean that his vote doesn't matter, because the Democratic Party will win his district no matter how he votes - so he doesn't care?
-- Can anyone say APATHY???

Or - does he actually think that because the Dem.s already have support in his area and the economy still sucks, that a Dem. Pres. won't make much of a difference?
-- Can anyone say SILLY???


.......................
PS: Never been to Vegas, but I hear there's a wonderful Dolphin Show. Ya'll should check it out. A Dolphin Show in the Desert. Only in Vegas. (sick, isn't it?)

Just a short question...
A real estate agent who gets commissions for every house sold is going to blame Hollywood for making people believe in The American Dream? That's a good one. What a joke.