Posted on 09/10/2011 5:48:34 PM PDT by evilrooster
The Obama administration seems surprised by how cautious consumers have been in the two years since the recession officially ended.
Officially ended?
I’d hasten to say the government’s definition of “officially ended” differs slightly from that of middle class America (i.e. those without the last name of Hilton, Buffet, etc.).
When our homes regain the value they once had, maybe the recession has ended. When we no longer spend half our salary just to travel to work, maybe the recession has ended.
Falling home prices, coupled with high energy costs and high unemployment has drained middle class America of what little wealth they had.
Forget the impending doom predicted for Social Security 20 years down the road, or the predicted Medicare/Medicaid funding issues, this country is facing a much more serious crisis, and it’s upon us right now - The loss of a generation!
What wealth our parents left us, coupled with what was set aside during our working years is no longer there to pass along to our children, much less fund our retirements. No college funds, no help with the purchase of a first home, not even enough for a loan in a time of crisis.
For the first time in memory, our children will be left worse off than the previous generation.
And, the government’s solution to this crisis is to spend more money – further increasing the burden on those who have lost most…Let’s build more roads, that will put people back to work!
Notwithstanding the fact our government will have to borrow more money to fund these projects, they don’t seem to realize a $20K salary can’t replace a $50K salary, no matter how you do the math.
Unless something is done now to reverse the policies of this administration, I fear for the future. Lack of wealth and education is a recipe for disaster in today’s world, and the road we’re traveling insures a society filled with nothing but.
I still have no idea how falling home prices should affect other than a tiny sliver of homeowners.
You buy a home for $X dollars and you pay $Y dollars a month. The “value” of said home should be irrelevant.
The nanosecond you buy a car, its value is less than what you have contracted to pay. Until the very end of the note, ALL financed vehicles are “upside down.”
Homes are the same. Except for idiots who refinanced and took the equity out in the hopes of the price going up. They can stew in their juices.
“When we no longer spend half our salary just to travel to work.”
And the other half of your salary to travel from work to home?
Perhaps, you should get a job closer to home.
I think it’s for the “poor flippers” who got caught holding the bag when the bottom dropped out of the housing market. These people should stop looking at homes as investments and look at them as shelter for them and their kids.
I do not feel sorry for flippers.
I just don’t know. It’s gotten to the point that if the feds were to issue a notice that the sun will come up in the morning, I’d go put fresh batteries in my flashlight.
For much if not most of the middle class, the home makes up the majority of wealth. It has become sort of a saving grace so to speak - the equity was tapped in times of emergency, to help fund college etc, and it’s value was eventually passed along to the children.
It wasn’t as if the equity magically appeared, it existed after years of paying $Y a month and disappeared in the snap of the finger.
Agree or not with the methodology, but what had become common practice for much of society, is no longer available. And won’t be again until years $y is paid again.
I never quite got that either. If home prices are falling, sure, I'll get less when I sell my home. But that should be offset by the fact that my next home will be similarly discounted - unless I step up to a bigger house or downgrade to a smaller house, in which case you would expect to pay more for a bigger house or less for a smaller house in any housing market).
Curiously, now is a great time to extract equity from property you own outright to pursue other ventures. There’s a lot of blood out there, in the streets.
When we change jobs, or downsize because the kids are grown, or upsize because the kids need more room, or because an ailing parent is moving in with us, we do become conscious of the home's market value. We need to sell it to pay for (at least some) of the new house. However, if all houses have fallen in price by roughly the same amount, then the original price is of historical interest only. A house that would have been "affordable" before is still "affordable," because its market value has fallen too. A house that wasn't "affordable" before is still not "affordable." Sell your house for what you can get, buy the new one at its shrunken price, and apply the capital loss to your income tax.
Unless Bernanke gets away with stoking the fires of inflation, housing prices are never going to go back to where they were five years ago. The housing market was in a bubble, pumped by by Fannie and Freddie, and that bubble has been popped. Deal with it.
Unless you choose to build. Most new construction is upside down when the key is turned these days. Materials are too damn high!
>>It wasn’t as if the equity magically appeared, it existed after years of paying $Y a month and disappeared in the snap of the finger.<<
No it didn’t. Equity is the sum total of your mortgage payments applied to principle. It doesn’t change a hair based on the valuation of the underlying asset. If you have a 30 year fixed mortgage of $200,000 at 6% after 5 years you have about $20,000 of equity. Nothing can really remove that equity.
The only factor that value affects is attempting to get a loan against the house or selling. If you just live there it is totally meaningless.
Tapping it as a source of funding for anything other than a life or death emergency is reckless to the point of extreme negligence.
Obama is surprised at nothing.. he has a phalanx of anti-american advisors guiding him to do the worst..
They are selected specifically for ability to perform Cloward-Piven tactics..
All very true the “Rules for Radicals” by Saul Alinsky..
Total ideologues with religious fervor.. central government is their GOD..
The american system on several fronts is being assaulted ON PURPOSE...
“When our homes regain the value they once had.”
That’s part of the problem. They aren’t going to regain that value anytime soon, because it was a gigantic real estate boom fueled by easy money, idiot politicians, and speculators.
In fact, the truth is, houses are a depreciating asset. They require maintenance, repairs, replacement of big ticket items, property tax, insurance - the government did incalcuble damage by allowing or encouraging banks to do away with sound lending practices.
It just seems foolish from a casual lookback to wish for housing prices to return to the levels prior to the banking collapse.
We’re back to the incredibly touchy-feely concept of Racism and how very, very bad it is. To find one so adroit at playing the race card sitting in Ronald Reagan’s chair and not be the janitor, having less IQ than most janitors and sold on Keynesian economics, We have us, ladies and gentlemen, an African kleptocracy firmly established in the good old U.S. of A.
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