Have you been hit by the U.S. housing crisis? Do you see evidence of the year-long credit crisis all around? Is a part of the story not being told?
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Solution #1 get off the cheap credit kick. When I started buying houses it was 1983 and interest rates for my first house was 15%. I always said if I can make money the bank should be able to make money and we both did. I have watched prices increase as much as 10 fold since that time and retreat back 40%. The simple answer was time and cheap money. If we could figure out how to raise interest rates then not everyone would be a guru making 100’s of thousands of $$ adding nothing to our world through buying and selling houses. So we all need to settle for a smaller house which uses less fuel to keep warm and houses less personal possessions. Other parts of the world can make due with less personal items and still live comfortable lives. The first credit cards in the U.S. came from Sears and Robuck in the early 1960’s. As you can see living on credit when managed properly can help build our world. Sears was a great company till the mid to late 90’s. Living on credit irresponsible does not help. Sears and the U.S. government can no longer lower interest rates any more and allow the financial systems to run smoothly. So lesson #1 is get us off the credit kick which may hurt like a scab being picked off your arm but when we all heal our world will be a better place.
- Posted by SailorguySo learn to save like my parents in the 1960’s, own a modest home with less debt, and work to get a great education.
It sounds simple and works for me!
Two and a half years ago, my husband and I looked around our five bedroom, three living area home, and decided we were crazy to keep it. Our children were grown; we had one college age daughter remaining at home. Our summer electric bills were unreasonable, our winter gas bills were too high.
- Posted by CookieknitsSo we sold it, and moved to a smaller home, far more inexpensive than the realtor’s charts and tables said we should be paying based on my husband’s income. Several of our casual acquaintances actually wondered if we were in financial difficulties.
Now, come the crash, we are much safer than many people. In fact, housing pricing in our modest neighborhood have actually risen. Our house is worth roughly 12% more than it was two and a half years ago, not including substantial improvements we have made to the interior.
A great deal of the fault for our country’s credit woes lies not just with the banks and lenders for talking the American people into taking on more debt than they could afford, but with the people themselves.
Yes, my husband and I were smart, but we were also blessed by God that we got smart when we did.
The whole credit thing is so bad that I couldn’t get a student loan for school. Some friends of mine had the same problem. Then my credit card companies tried charging me late fees to make more money. My payments were never late.
- Posted by mehstupid is as stupid does.
- Posted by rlsPeople bought in thinking they were gona make a killing in two years or so.
some did, some did not.
Blaming the government, Realtors, Banks, ect is a bunch of BS.
These folks are over 18 and can read.
tuff, suck it up baby, you rolled the dice-you lost.
Here is the key to getting out of this mess. Maybe I am wrong with this but it seems simple. Someone figure out how to run vehicles on the air we breathe. Granted this will devestate other global economies but look at Dubai now. When the oil runs out Dubai will be ready. Anyway, no oil a whole lot more money is left in our pockets. The government needs another New Deal for the American citizen. Our interstates are in rough shape, our bridges need rebuilding, we need new schools, new public utilites, our health care system. Get rid of Unions. Look at the Toyota plant in Alabama that is non unionized. Much greater on the job work and they love what they do. Put people to work this way and the economy will rise. Create mass amount of jobs that pay well and pump money into this economy. I know it is a lot more complicated than this but get something going instead of sitting on our butts waiting for someone else to do it. Americans are inherently lazy. We expect to have everything for free. Quit being this way and this great country will once again be great.
- Posted by AnthonyMy 88-year-old uncle died at the end of June. He came of age during the Great Depression after his father lost the famly farm. A veteran of WWII, he retrained and worked as machinist after a debilitating injury received working as an Army gunnery sergeant. He supported his parents after his father suffered debiiitating strokes and assisted his sister after her divorce. A lifelong bachelor, he lived frugally and honestly and save $88K to be divided among his heirs. Can any of you do what he did with a high school diploma and technical training at a career school?
- Posted by Martha AndersonLet me get this straight, we are in a credit crisis because people have over extended themselves and defaulted on home loans they couldnt pay… now we are trying to unthaw the credit market so consumers can borrow even more.
To add insult to injury, the government bails out the people who are owed the money, instead of the people who owe the money, with money that is the public’s.
I have no sympathy whatsoever, Dave Ramsey should be required reading in public schools. Maybe the next round of tax paying americans will get the hint.
- Posted by common senseWell, look on the bright side guys… I’m in debt 100k and I have no property or car. Only with a degree in engineering and 100k debt on my resume. Even if I go bankrupt I still won’t be able to clear this debt.
- Posted by brokeengineerBush is a moron. The senate are morons. The house of representatives are morons. The entire government are morons, out of touch and not in any sort of reality completely insulated by the sureness of guaranteed income (taxes). Many of us are in dire straights, lost jobs, losing homes, destroyed neighborhoods and still they spend $10 billion/month on war. And now we get to choose between moron #1 and moron #2 for President of the United States of Amnesia. Wow! Oh yeah, are we got burned really bad by the middle east in the 1970’s and guess what! Why went out and bought bigger stupider cars. Oh yeah, we got burned really bad in 1933, 1987, the mid 1990s and other times as well I’m sure. And our government decides that removing all the financial rules is a good idea in the name of FREE MARKETS –> code words for FREE FOR ALL MARKETS. Oh, have I mentioned education or health care yet? How about Social Insecurity going broke. Or how about the 3rd world state of the national infrastructure. Or perhaps the millions upon millions of illegal aliens that have flooded the country for decades. Or perhaps the fact that they can’t guarantee the food supply network. Or how about moving all the manufacturing jobs (the back bone of the US Economy) overseas in the name of FREE TRADE –> Code words for ADVANTAGED CORPORATE POSITION. Or how about the destruction of the currency. Or the really god awful wages. Rampant inflation. or deteriorating cities. Crime. Drugs. Loss of privacy. Loss of rights and about a million other things…not one of which the morons have addressed let along solve. Housing bubble is a pretty small problem I think sitting on top of an iceberg of deterioration. Man being 3rd world doesn’t bother me that much. What bothers me is going from 1st place to 3rd world. Pretty damned embarrassing I think.
- Posted by DudeThe credit crunch is not only about bank CEO’s making ludicrously high salaries while their banks fold, nor is it about people over mortgaging themselves. It is about people expecting to continue to get pay raises, believing in their earning power, beleiving that America is the land of opportunity for all. It no longer is. It used to be a guy working at a gas station made enough to own a home and support his family.
We are homeless because of health problems and no job. I have a friend whose husband is losing his health and mind because his computer jobs got outsourced to cheaper foriegn labor. The only reason his kids have a roof over their heads is family charity. He has been trying to work for over 5 years. Trying to take any job out there, no matter how low paying. He is only 40 and has gone completely grey. I have a sister who is an engineer, unable to find a job because of foriegn replacements. Her husband, a brilliant engineer, works year to year, no pension, no security, their investments just got burned in the stock fallout.
I know a man who had made a decent living, saved for retirment, had a nice house, and then had a heart attack. He lost everything to pay his medical bills.
I know another man who had a truck accident. He has brain damage, lost an eye, ruined back, ruined leg. Not only did a hospital try and collect his drug and disease free 35 year old organs, by telling his wife he wouldn’t make it and putting him on 100% oxygen and medicine they knew he was allergic to, but for the last 2 years he has been turned down for disability.
Meanwhile rich people buy up the cheap houses and land, bragging about their deals, while ordinary people are becoming landless. The cost of housing is not going to go down, it is only that the rich are going to be richer and land holding lords now.
Once we claimed a chicken in every pot, now people lie in the street and rot. India has a high population, but it doesn’t make ordinary people richer. We were richer when we had fewer people.
- Posted by VivianThings will only go back to “normal” if we start creating civic jobs instead of going “private”. Jobs like road crew, recycling, civic maintainance.
To blame the lenders and realtors is just unfair. Historically realestate has been an excellent investment and a big part of the american dream. I personally have profited greatly from homes I have bought and sold as have many people. Each individual should be responsible for themselves. Some people losing their homes are realtors and lenders. In hard economic times things changes. These are things that realtors and lenders could not have predicted. At this time people should try to keep their homes by getting a secound job, adding a roommate to the household, trying to refinance, and stop spending on all extra expenses. We all have to learn to be more conservative in our lives myself included. I think that is the only way to make it through this crisis.
- Posted by jsmDear all, I’m a branch manager of a bank in Belgium. Our office is at the coast of Belgium.
- Posted by colpaert geertEveryone who wants to buy a home and looks for a home-credit has to follow rules, directly from our national bank. Whatever he or she wants to buy, a car, a home, every time he has to prove he has an income and always we see if there is a amount, free of everything, of 800 eur. For example, a couple has an income of 2600 eur. That will means they can see for a monthly repayment of 2600-800= 1800 eur. But here in Belgium no-one looks for such a credit. The all want a bigger free amount, 1000 eur each month, of more. Why ? Belgium is in the center of Europa and near by the city’s Paris, Zurich, Venice, Saint-Tropez, the Alpes, Rome,…. You understand that many of us want to go Christmas shopping in Paris or London. Most of us go for wintersports in the Alpes, France. In summer, to the coast of Nice, Saint-Tropez. We are ‘Bourgondiërs’. That means we like a glass of wine, fine food in restaurants, wellness,… We drive to Epernay to buy our Champagne directly of the producer of champagne, 13 eur for a bottle. When we drive 3 or 8 hours we stand anywhere. That’s the reason why everyone wants a big free amount, every month, to save on a savings-account and use it for all what’s nice. Creditcards, every has one, but we use it carefully. No-one like to pay interest. That’s a loss. My wife and I fly to Barcelone, last week of october, because we wants to visit the sous-chef a a restaurant which has a Michelin-star. For this we saved money.
Kind regards, Geert Colpaert. (DEXIA-bank)
The whole housing market is in the tank because of simple greed. No matter how politicians, journalists, etc. express it…greed was and is the means to the end.
My wife and I have worked hard for our good credit. I was taught to be fiscally responsible by my mother, as was my wife.
We bought a home in Orlando, FL before the real estate crash. We were pushed to go with an ARM or ‘interest only’ loan. We, intelligently, selected a conventional 30 year loan. (We did not let the Mortgage Doctor, and other lenders twist the truth of loan practices).
We paid top dollar for the home. It was a market were we would put in offers above asking price and we were beat out on over ten offers. We finally found a house ‘For Sale Buy Owner’. My wife met with the owner, an offer was made, and a deal was struck. The lady that owned the house fell in love with our then two year old daughter. Sounds like we found our dream home.
We had the money…we loved the house…we had the credit and we were able to put down $60K on a $277K home.
Well, just short of two years in the house, I was fortunate to obtain a new position in a town six hours from Orlando, but ten miles from my wife’s mother. We decided to move. A great job and close to family. “The American Dream” This would put my wife close to her mom and our children close to their grandparents. (Note: both of my parents are deceased)
Well, since December 2006, we have not been able to sell our Orlando home. Orlando’s market is saturated with new homes that have not been sold. The new construction business had already hindered the existing homes sales in Orlando prior to the “crisis”. Local government officials essentially “paid off” construction companies to build new homes. The short-sighted, but greedy and power hungry politicians changed, manipulated and fashioned change in local codes and impact fees to entice builders. Tens of thousands new homes were built, then the ‘crisis’ hit. The builders got creative…they started giving away plasma TVs, cars, big discounts or upgrades and special mortgage breaks. WOW…’a thought’…a buyer looking at a new home vs. an existing home…same size, shape, etc…., but they can get something extra from a builder that they cannot get from an existing home owner. Which home is going to sell first???
Anyway, we did get a renter through a property management company starting this past March 2008. Note: the rent does not cover the entire mortgage - $1250 (minus 10% to the management company).
Mathematically, we paid a $1700+ mortgage for an empty house for 16 months (approx. $27,000).
The value of the home has dropped from $326K mid 2006 to less than $240K now. If you just look at what we paid for the house and what is now the current appraised value plus what we paid while it was empty, we have lost and will never recover approximately $64K.
We are U.S. citizens that have been financially responsible. Apparently, uneducated, financially liable U.S. citizens fell bait to the ‘loansharks’ of the banks and mortgage companies, and realtors and brokers with their eyes on their percentage.
We are holding on to the house in Orlando for now. It is listed again in the MLS. We rent a house in the Panhandle of Florida for $900/month. We are building our dream home there, but we have the proverbial ‘monkey-on-the-back’ with the house in Orlando.
All we wanted to do is sell it to a family that wanted a nice home and not lose or $60K down payment. With the current financial state of the U.S. We could actually lose >$100K.
- Posted by Michael NuccioWow, I don’t know were to start. One thing that gets me is how unthinking people are. I am a Realtor for 14 years now. We have worked hard for all of our clients and enjoy referels from them. People all the time seam to forget a couple things when it comes to Realtors. Blame us for being gready if you want but we don’t loan a $ to anyone. Each one of us has to make the decision to take the loan or not. No one ever says you have to do anything. We are not allowed to make that choice. Sure we make money when the market is good. So do you! Right now I have gotten my 1st closing in 6 months. We where to have 8 deals close over the last 90 days and only 1 did. So where am I getting rich? It was my choice to be in this industry and it is mine to make a go of it. Those of you that get a paycheck every week or 2 have no grounds to talk about not having money. How would you like your boss to tell you that you won’t get paid for 6 months yet you still have to work? We are struggling like the rest of you. Our money is gone. This has been over a year and a half slide. How could we know how much money to save. All of you that blame everyone else need to look at yourself first. Whe are all in the same boat regaurdless how we got there. The goal is to get us out. How do we do that?
By the way if you are a Democrat or plan on voting for one then the rest of us will have someone to complain about. It will be you! Just spend some time online and you will know the real causes of the problems we have.
- Posted by jwgi guess i just think for myself
i shuttered and saw red flags for awhile
like no more pension and we do our own 401k
katrina….no preparedness on peoples or govt part
the blackout that covered several states
i went to a bank one sat to cash a $560 check and they told me only could give me $500 so couldn’t and wouldn’t cash the check..ie, they can say sorry no money that was 3 yrs ago
energy bills doubling every 2 years, oil products which are about 98% of our “stuff” we covet that went from $1.49/gal to $4.29/gal
billboards all over saying get ready….make a plan
i felt helpless because i was, so i made a plan and took the last few years to bring it into being
i sold my condo in 2006 for top dollar, built an energy efficient house on 14 acres for the same money and now my winter heating bills are $60 a month for the whole house….yes it’s not big…but i can heat it..amazing concept..if i were still in the condo…heat bills would be around $300/MO
i just put up several solar panels and i have 3 wind generators going up this week
i have spent every cent i have to provide for myself and also grow organic food for myself , leaned to can food etc
a hell of a lot of work…per se
people said i was crazy…..i don’t think so….i can survive without
- Posted by lizThis is all a cycle and people will need to adjust their standard of living. If you make $40K a year, you should not buy a $35K SUV on credit, even though the car dealer can get you one. Things go back to normal eventually. Unfortunately, the price we all have to pay first is unemployment. If consumption goes back from 150% of what people could afford before the crash to a normal 100%, then obviously companies will need to cut back to this normal consumption level, UNLESS the US can drive up its export significantly. In any case, factories, retailers etc. will all need to cut back because of adjusting to a “normal” level of consumption. Cheaper homes is a good thing too. Younger generations of Americans will be easier able to buy a home and I believe that homes up to $300K or so will start to sell very well again soon. Another thing is that a lower consumption will probably improve the trade balance of the US, as most products are imported. Economy is a very dynamic thing and things that work out bad initially may trigger other things that work out pretty good.
- Posted by AlexMy husband and I always avoided too much debt and kept our credit scores very high (above 750). We bought houses and stock and saved all our money. We sold our houses in 2006, cashed out. Now we are holding over 1 million in cash, while renting and looking for cheaper home purchase.
the irony is, we are now scrambling and moving our cash around to avoid the collapsing banks left and right. We found out that no lender will lend us any money for a mortgage even if we put 50% down and are credit is near perfect. We will have to pay full cash to buy a house.
At the same time, we have not worked in 3 years despite having masters degrees in finance and engineering due to outsourcing. So we are the “lucky” ones and yet we are still scared about losing our cash in failing banks. I am parking with the “fortress four” banks for now, but we have too much cash to get it all FDIC insured in banks I think wont fail. (I know FDIC insurance applies to failed banks, but we want to avoid waiting in line, should so many banks fail, FDIC has to delay payment–if they ever do in the future.
Now I dont like what wall street did, what realtors, mortgage brokers, subprime and alt-a mortgagors did–they all took on too much risk by borrowing too much money which they cannot pay back.
But I see clearly, that if the US gov’t does not do a systemic bailout—we will have a serious recession-depression. Each day that goes by, there are more layoffs and therefore more foreclosures comming. Companies everywhere cant get short term funds to finance daily operations including payroll.
So the bottom line is WE ARE ALL IN THIS TOGETHER NOW!! So we better start looking for ways to help each other, because we are all going to be supporting each other for a long time to come. I will start….Howdy neighbor…I am going to be here to help. We are now starting to support my sister, nephew, and our 2 mothers. Our hope is that we can keep enough of our cash to take care of them for the next years. Wish us luck.
- Posted by kathyIt seems many don’t really understand the issues. Obama and the Dems want to blame Bush, but they forget that Congress has more Democrats than Republicans. It doesn’t matter what the President wants, Congress makes the final decision. When the government pushed Fannie & Freddie to socialize the mortgage market by pressuring them to offer home loans to people who couldn’t really afford it, that was the beginning of the problem. And what about the fact that Obama profited greatly from it? If anything, Wall Street was stupid. The mortgage industry was stuffing mortgage-backed securities with these bad mortgages - kind of like the Trojan horse. And how about the lack of PROPER regulation of the credit cared industry? Sure, they have the right to sock it to you with high interest if you have bad credit, but then there is also the behavior of the person that has the credit cards . . .
- Posted by ScottFor the most part, housing values have not had a sharp decrease in the Dallas area as in other parts of the country. This year, I eradicated all debt except for my mortgage, which is very affordable at 5.75%. It’s a matter of putting priorities in order, and not trying to keep up with the neighbors who are spending themselves into “eternal debt”. No, I don’t like the price of gas or groceries, but these are a part of the times we are living in, and a little common sense goes a long way.
- Posted by ScottI think we have ALL forgotten when the problem began to unfold. All governments, State as well Federal, allowed the credit card companies cad-blanche, to increase the interest rates for ANY reason, be it late arrival of mail, to negative,(whatever that should be),credit bureau reports.
- Posted by DesiThis,along with the revised Bankrupcy Bill, passed by OUR dear elected officials, that should be working FOR and not AGAINST, their constituents, brought the country to its present state.
These two items contributed to the mess that we find ourselves today. Had the voting public put up as much fuss with e-mailing and calling their elected officials, into the two items above, as they did with the Bail out Bill, we wouldn’t be in the crisis that as occurred.