Foreclosures In HINSDALE? (Chicago: mortgage, bad credit, loans)

[bungalowdweller]

Did anyone catch this article this morning? It just goes to show that foolishness isn't limited to the "regular guy".

Wealthy may be next in line in U.S. home crisis | Reuters

[tcs1366]

pretty scary, isn't it?

I was surprised to see foreclosures in our town too .. one in particular where the bank wanted $625 out of it ... and they were selling that high a few years ago... now nothing is moving. That could be a case where they borrowed against the house... and now ended up losing.

It was years ago.... 5 maybe, the last time i drove thru Hinsdale and i could NOT believe the sizes of the tear downs.... absolutely HUGE homes. I for one would not want that tax bill!!

[Chiguy1957]

Well, you know things are bad when the wealthy areas start to hurt.

No matter one's purse, I have a hard time feeling bad for someone when they knowingly get in over their heads. Greed and pretension are ingredients in a recipe for disaster, IMO.

[vester72]

Foreclosures are EVERYWHERE - surprised the heck out of me the scope of things.

But, as I have come to realize, while there are a lot of foreclosures in high-end areas, those foreclosures are due to people being offered mortgages they cannot afford - prime, sub-prime, does not matter. There is a surprising number of people that have purchased homes without understanding how much they can truly afford and have been lured in by the availability of loans - not understanding property taxes and just the cost to maintain those high-end homes.

Heck, my wife and I were told we could afford a $1.5 mm+ home, but knowing our budgetary constraints knew that was insane. Would it be nice to have a $1.5mm amazing house with more than we ever imagined we could afford? YES, but looking at mortgage payments, property taxes, heating, cooling, lawn maintenance, regular maintenance we realized we would be setting ourselves up for financial devastation.

LOTS of people didn't think that far ahead and just jumped into homes above the level they could realistically afford and now are paying for it.

I have a friend who is a builder - he has a specific home on the market for $650k - over the past year he has had 12 people come in and try to buy it with not only bad credit, but with $5,000 to $15,000 to put down. He has sold several homes to people with interest-only loans for $700k+ (all of which are now in foreclosure).

The things that have been going on have been insane and it was just a matter of time before people realized the scope.

[aragx6]

I think that's just insane. I would never buy a $300,000 house with only 5k. That's just asking for trouble, but I think a lot of people figured the mortgage company knew best. if they said you could afford it, then certainly you must be able to right???
...Uh no.

[Ex-Harvey Resident]

I didn't read it yet. However, I noticed two years ago....scores of foreclosure signs in Hinsdale. My family and I were just enjoying a drive from our favorite restaraunt, and decided to cruise the neighborhoods. I was astounded, to see all of the boarded up beautiful homes. However, it is what it is. You are suppose to live below your means. I mean if you make $100K a year.....why would you buy a $750K home? You can find something fabulous for $350k-$400k.

[crbcrbrgv]

I am a Chicago native. I was always taught that you can afford a house that is worth three times your income before tax. Seeing that the median home price in the Chicago area was about 230,000 recently, you had to be making about 75,000 a year just to own a house playing by those rules. The median household income in the Chicago area is between 45 and 50 k. Using this theory, there are not really a lot of families that can afford to own houses in the first place. Therefore, the housing crunch should not be a surprise to anyone. All I can say is thank God I moved to Houston!

[emmi605]

It seems some people also thought they could do interest-only loans, flip the house for a profit and move on. When the real-estate market started slipping, and homes weren't selling, guess who was stuck with an awfully large mortgage when the "interest-only" part ran out? Sometimes people have to make really bad mistakes in order to learn a lesson about finances. I hate to see anyone homeless, but why people want to be "house-poor" is beyond me. Is looking rich that important?

[aragx6]

Originally Posted by crbcrbrgv

I am a Chicago native. I was always taught that you can afford a house that is worth three times your income before tax. Seeing that the median home price in the Chicago area was about 230,000 recently, you had to be making about 75,000 a year just to own a house playing by those rules. The median household income in the Chicago area is between 45 and 50 k. Using this theory, there are not really a lot of families that can afford to own houses in the first place. Therefore, the housing crunch should not be a surprise to anyone. All I can say is thank God I moved to Houston!

Well not really. Just because 230k is the median home price in Chicago doesn't mean that there aren't many many houses sold below that... think about how many homes are sold over that amount?

[Burr Oak]

As bad as the market is in Chicago, it is positively rosy compared to Florida, Nevada, Arizona, California, and much of the East Coast. I really think that the days of the McMansion (the curse of Hinsdale) are over just as the days of the gas hogging vehicle are coming to a close. Midwesterners should do what they have always done well -- hunker down, accelerate the pay off of their mortgage, and wait for the storm to blow over. It will be years, not months, before that happens.