I've seen a lot of theories, but in all the pages I've read (about 20 of the 70) in this thread, I haven't seen anyone who has spoken first-hand about what this crunch has done to them.
So I will. Hope y'all don't mind.
I bought my house in the Paradise Hills area of Henderson in May 2005 for $337K. It's a nice, 3bd 2ba 1,952sf house on a 6,000sf lot - your typical Vegas fare - built in 2001.
I went through Countrywide, thinking I could avoid predatory lending practices by sticking with the nations largest lender (HA!).
I take full responsibility for the Pay-Option ARM I stupidly signed for. Even though I asked all the right questions and my loan officer flat-out lied to my face, it's still my fault that I didn't read every last page of that damn document. Never again.
So my rate adjusted after three months. I knew it would do that, and I was prepared for it. But then it adjusted again after one year.
What the hell?
I thought it was fixed from the 3-month mark to the three year mark?!?
I did this to insure that I could refinance out of that loan before the three year window was up. I'm self-employed and had to do a stated-income loan with 5% down to get into the place. (This becomes important shortly.)
When the rate adjusted again in May 2006, I knew I was in trouble, so I put the house on the market, thinking that I wouldn't be in really deep for another year, and even though the market had slowed down a bit, it couldn't possibly take me an entire year to sell, could it?
19 months later, the house is still on the market.
My first Realtor was overly optimistic and put the house up at $380K - another of the exact same house in the neighborhood had sold at that price a month prior.
As the months went by, I dropped the price to 370, then 360, with my Realtor howling each time.
After six months, I went with another Realtor. She also wanted to start at 380, but I insisted on the 360 I finished with.
Another six months, down we went....360, 350, 345.
$345K was as low as I could go and still pay off the house and Realtor fees, so I stayed there for awhile.
Finally, after a year, I moved to Realtor number three. We started at 345, but quickly and aggressively kept dropping the price as I moved into a short sale situation.
345....335....325...315....305....and finally to where it sits today at $290K.
After 17 months of not receiving *a single offer* I finally got a lowball $250K offer that I had no choice but to present to Countrywide. I'm supposed to hear back sometime in January what their decision will be.
Now during all this time, I was (and continue to be) self-employed. As I began to drown in the payment, I had a choice....
I could pay my mortgage, or I could pay my income taxes, but I couldn't pay both.
I'm now 18 months behind on my taxes, to the tune of $37K.
I also ran up credit card debt by staying in the house and continuing to pay the mortgage longer then I should have. That now totals $27K.
If Countrywide accepts the lowball offer, there will be a shortfall of $90K. I'll either be responsible for that amount, or the taxes on it if it is forgiven. So another amount there of either $23K or $90K.
I moved out of the house in October and rented a cheaper place a few miles away while my credit was still intact.
One way or another, buying a house at the wrong moment is going to cost me somewhere in the ballpark of $100K, and while I might be able to get some of that forgiven/discounted, I'll still be paying it off for years on end with multiple jobs.
I'm not looking for sympathy. I did what I did, and I'm ultimately responsible for it. No one made all those stupid decisions for me.
I only post my story as a reminder to folks who are lucky enough to be above the fray and can talk about the numbers dispassionately.
There are real people with real lives being completely destroyed by this - good people who were trying to do the right thing by buying a home for their children to grow up in. My wife and I didn't feel we over reached on our home. We put $20,000 down, we tried to do the right things.
But it still blew up in our faces.