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Im MAD. They have stripped our savings accounts, some have tapped into their 401 K, and your house is worth less! They have done a great job at stripping people of their wealth. AND THERE ARE STILL NO JOBS! All the hard work for years, savings and sweat to have it all stripped away.
Buying a house is like buying stock. Sometimes the value goes up, sometimes it goes down. Not everyone's home is "worthless."
If you bought over five years ago and put down a deposit and had a conventional loan--except in a very, very few places (Southern CA comes to mind) the only reason you'd have no equity is if you stripped it out.
In my opinion, much of the "wealth" created over the last 5 years was phantom wealth. What I mean by this was that much of the value in the stock market was generated by unsustainable growth created by an over abundance of credit.
Equities (stocks) increased in value due to an overstatement in the value of assets and the value of real property was driven up by wreakless lending practices. These two factors pushed the stock markets to record highs and created unrealistic increases in the value of real estate (both commercial and residential).
As a result, there was alot of phantom wealth was created. Did you really expect the value of your home to continue to increase indefinately at 10-15 percent per year? Did you really expect to realize a 15-20 percent gain in your portfolio (401k) indefinately? At some point it had to end or at the very least, return to a sustainable level...........
I think what we are experiencing now is a revaluing of assets to adjust them downward to their actual value. Truth is, your house was probably really worth about 25-30 percent less and your 401k was probably worth 30-40 less all along.
Some people got rich at this scam. Others lost out. So is life I suppose but I don't think that the wealth eroded, it simply wasn't there to begin with.
Example: Real Estate Flippers. Buy low, quick rehab, sell for the market value in the area in a matter of a couple months or less. A lot of them are being scewered right now with debt, foreclosing on some of their latest flip attempts. It's ugly.
Same with folks who made a killing on stock options at an internet company. I was one of them. By the time I left that company, my stock options weren't worth the paper they were written on. Needless to say, I fell, and HARD. My credit, which was above 700, is now somewere in the low 500's again. Took me four years to clean it up, now I'm right back where I started from because I went from income close to six figures, down to well below $50k.
My own fault. I leveraged myself to the throat, now I get to pay the price. Unfortunately, so do my creditors.
Quote:
Originally Posted by Shift
In my opinion, much of the "wealth" created over the last 5 years was phantom wealth. What I mean by this was that much of the value in the stock market was generated by unsustainable growth created by an over abundance of credit.
Equities (stocks) increased in value due to an overstatement in the value of assets and the value of real property was driven up by wreakless lending practices. These two factors pushed the stock markets to record highs and created unrealistic increases in the value of real estate (both commercial and residential).
As a result, there was alot of phantom wealth was created. Did you really expect the value of your home to continue to increase indefinately at 10-15 percent per year? Did you really expect to realize a 15-20 percent gain in your portfolio (401k) indefinately? At some point it had to end or at the very least, return to a sustainable level...........
I think what we are experiencing now is a revaluing of assets to adjust them downward to their actual value. Truth is, your house was probably really worth about 25-30 percent less and your 401k was probably worth 30-40 less all along.
Some people got rich at this scam. Others lost out. So is life I suppose but I don't think that the wealth eroded, it simply wasn't there to begin with.
As a result, there was alot of phantom wealth was created. Did you really expect the value of your home to continue to increase indefinately at 10-15 percent per year? Did you really expect to realize a 15-20 percent gain in your portfolio (401k) indefinately? At some point it had to end or at the very least, return to a sustainable level............
Exactly, the writing was clearly on the wall, it was a house of cards waiting to crumble. I wasn't greedy, instead I was rather conservative with my investments. It was a strategy that definitely paid off for me.
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