Thread: Walking Away from the American Dream

Walking Away from the American Dream
By Carlton Meyer
Jan/06/2009
While over one trillion dollars of American taxpayer money disappears into the murky world of bank balance sheets, housing prices continue to plummet. The most optimistic predictions are that the bottom will be reached next summer. However, there are several factors that should cause prices to fall for several more years, which would wipe out most middle class wealth in the USA.

Harvard University professor and former chief economic adviser to Ronald Reagan, Martin Feldstein, recently warned of dire problems during a speech at the Economists Club.[1] He said that about 25% of all U.S. mortgages exceed the value of the homes the mortgages finance. In half of these, homeowners are paying a mortgage that is now 20% higher than the value of the home. Nevada leads all states with 48% of homes with negative equity. Florida and Arizona have 29% of homes with underwater mortgages, while 27% of mortgages in California exceed the home value. Before the recent housing boom from 2000 to 2006, homes increased in value at a historical annual rate of 2.3% when adjusted for inflation. This means that homeowners who owe 35% more than their homes' value will take 15 years just to recover and break even on their home investment.[2]

S&P Case-Shiller Home Price Index[3]
Metropolitan Area / 1-Year Change (%)
Atlanta -9.5%
Boston -5.7%
Charlotte -3.5%
Chicago -10.1%
Cleveland -6.4%
Dallas -2.7%
Denver -5.4%
Detroit -18.6%
Las Vegas -31.3%
Los Angeles -27.6%
Miami -28.4%
Minneapolis -14.4%
New York -7.3%
Phoenix -31.9%
Portland -8.6%
San Diego -26.3%
San Francisco -29.5%
Seattle -9.8%
Tampa -18.5%
Washington -17.2%
Source: Standard & Poor's and Fiserv
Data through September 2008
Note that these declines are not since the housing slump began in early 2006 but declined since September 2007. If home prices fall another 10-15%, as measured by the Case/Shiller Home Price Index, then four out of every ten mortgages in the U.S. could be underwater. "At those levels, it's hard to see how many people are going to be willing to keep up with their mortgages," Feldstein said.

This seems likely as the overall U.S. economic picture looks bleak. The world market for one of America’s best exports in recent years, mortgage backed securities, has died. Meanwhile, there are three other factors that may collapse the U.S. housing market: no recourse loans, low interest “teaserâ€

Greed and corruption are the root reasons we are in this housing crisis!

Born out of the CRA.

Home prices went sky high because it was totally acceptable to believe that they had nothing to do with the economic base, such as jobs. My little beach shack in Fla. was sold for five times for what I bought it for 15 years earlier. It was sheer insanity. The guy that bought my place also bought five others at the top of the market, did a little remodeling and put them all on the market for an average of $100,000 more within a few months. No takers and he is still paying the mortgages faithfully, waiting for a market rebound. He is going to have a very long wait.

When my house was foreclosed on a couple of years ago, before this mess, the lady helping me with my foreclosure told me then that apprasiers were pruposely uping the value of houses for the realtors and banks profits. So in reality, the houses are now what they should have been worth a few years ago. i

I heard that La Raza wants and DEMANDS a fincial bailout. I will try to find it for you.

www.LaRaza.com






News Release

Jamet Murguia, President and CEO of LaRaza the largest hispanic civil rights and advocacy organization of the USA will WARN Congress against leaving homeowners of the remaining funds of the bailout bill, ( at the AMERICAN Taxpayers expence ) hearing before the US house of reps Finacial Services Committee on Wed Jan 7 . The hearing on th remaining funds ( AMERICAN TAXPAYERS MONEY ) of the troubled Asset Releif program ( TARP ) will be presided by Chairman Barry Frank and will take place 10.00 am in room 2128 of the Rayburn house office building .

NCLR has urged congress to include the MILLIONS of foreclosures plagued American homeowners in the last year 700 billion relief program., and it is dissappointing that more than half the TARP funds have been spent without providing assistance to homeowners faceing foreclosures an underlying cause of the economic crisis. NCLR believes that the economy demans a new bold foreclosures preventing startegy, starting with a shift in the distribution of the remaining TARP funds.