scary article

[coldwine]

There is still a massive glut of unsold homes on the market. This, in addition to plummeting prices, depreciation and an estimated 1.7 million foreclosures this year alone. Housing hasn't recovered enough to collapse.

What this indicates is either one of two things. The first is that if you read this and felt informed, you are hopelessly inept and are probably capable of devaluing the dollar just by holding one.

If however you were unsurprised, you stand with the majority of people who wonder how out of touch with reality your average economist is.

[nikitakolata]

Originally Posted by Gunner0325

Yep, agree with all of this. Nicely written. "Ideally (and historically) you'd use your equity & improved credit for a larger down payment to get the larger home, but this is where your timeframe breaks down - you've been paying largely interest, not principal if you're only 5 years in." We actually have intentionally paid down our principal quite a bit in 5 years, as I looked at it as our investment, instead of just paying off the interest. In fact we are almost at 30% loan to value. BUT since we are now listed $10,000 less then what we bought for (and I doubt we can even sell at that price) and then you add the realtor costs, closing costs, that instantly knocks out almost all the equity we built up. So we would basically need to start over....We are not even trying to make money off of our place at this point, I would be so happy just to sell for what we purchased for. I know a ton of people are in this situation, it just sucks for people like us that did it right and bought a place that we could afford, paid down our principal balance quite a bit, and are stuck because we can't even sell for what we bought for 5 years later. I know people are worse off then us in this crazy time , but just venting I guess....

Just wanted to say that I totally understand your frustration. It just feels so unfair to those of us who bought within our means, continued to live within our means, and planned financially for the tough times.

My husband and I bought a really beautiful new construction house in Humboldt Park. We paid what I still believe is a fair price for the house, but I doubt if we could sell it. Last year, we were victims of a lot of petty property crimes and I was really starting to think we had made a huge mistake in choosing to move to HP and desperately wanted out. Luckily, as of now we've been more than a year crime-free (knock on wood) and now I'm really happy with where we are. I actually can say with confidence that I don't want to move.

That's a good thing, too, because our original dumba** neighbors bought their house for waaaay too much. They never even really lived in it, but paid for it long enough for them to get a new house. Then they decided, after renting it out to some dopes for 2 years, to sell it as a short sale so it would sell quickly. Their asking price was $250k less than they paid, but they had nothing to lose because they purchased it with 100% financing and had no equity to lose anyway. Rude. These idiots had 3 different homes at one point. All I know is that I hope the couple who I talked to about the house the other night gets it and moves in. They seem nice and responsible, and I can't wait to have that for neighbors.

But, back to the point, I hate what has happened to our economy and real estate markets. People blame the banks, and I agree that they are definitely not innocent, but come on... why would someone earning $55,000 a year think they could afford a brand new house that is $750,000? That kind of greed and idiocy is also a huge part of the problem. I was laid off for four months earlier this year and didn't miss a single payment of any bill. In fact, I was able to save money because I cut way back on spending and stopped going out to eat.

Eventually things will turn around, and I hope that if nothing else this economic dip has given a lot of the US population a reality check. Living within your means is great, it's worry free. Personally I would not have it any other way, I can't imagine living paycheck to paycheck, the stress alone would make me go insane.

[Chi-town Native]

Originally Posted by nikitakolata

...I hate what has happened to our economy and real estate markets. People blame the banks, and I agree that they are definitely not innocent, but come on... why would someone earning $55,000 a year think they could afford a brand new house that is $750,000?

...because banks, lending institutions, etc. told them they could when 10 years earlier they would have been shown the door. as long as everyone bought into the "real estate only goes up, up, up!" idea, the house of cards could continue rising to the skies.

btw - this is a national issue, but it doesn't impact every region the same way. The new-vs-existing construction distinction is a big one, as what we've seen in Chicago isn't just restricted to the owners of housing, we've seen the huge industry related to construction suffer as well.

And when some suburban sprawl development doesn't sell and the homes sit vacant, the impact stays somewhat contained. But empty homes in a major metro area get looted, squatted in, etc.

[Gunner0325]

Originally Posted by nikitakolata

That's a good thing, too, because our original dumba** neighbors bought their house for waaaay too much. They never even really lived in it, but paid for it long enough for them to get a new house. Then they decided, after renting it out to some dopes for 2 years, to sell it as a short sale so it would sell quickly. Their asking price was $250k less than they paid, but they had nothing to lose because they purchased it with 100% financing and had no equity to lose anyway. Rude. These idiots had 3 different homes at one point. All I know is that I hope the couple who I talked to about the house the other night gets it and moves in. They seem nice and responsible, and I can't wait to have that for neighbors.

That stinks that your neighbor sold so cheap because that screws up the "comps" for anyone in your neighborhood that wants to sell and lessens the value of their home, and it becomes a domino effect...at least you like your neighborhood now and want to stay, that is a plus for sure...

[Chi-town Native]

check this out, fascinating:

Federal Reserve Mortgage Purchase Program : Planet Money : NPR

[Gunner0325]

^^
WHOA..that's pretty scary

[MannheimMadman]

Scary? Yes.

Only loosely related, if at all, to Chicago? Certainly.

These articles are only a small part of the picture which shows how borked this country's finances are.

[aragx6]

Why is it scary? That's an instance of the fed doing what it was created to do. It has to balance growth and inflation. Our inflation rate is ridiculously low, so this is exactly the time when the fed is supposed to spend/create.