April 22, 2007

"Five months later, I lose $100,000 - I don't think I can take $100,000 into the stock market and lose it faster"


Man, it's really sad to watch the end of a Ponzi Scheme. So many dream-chasers are now so screwed.


They listened to their neighbors (who thought they were rich), they listened to their REALTORs (who got paid), they listened to their mortgage brokers (who got paid), they listened to their developers (who got paid), and they listened to their "ownership society" buffoon of a president (who was too dumb to understand), and they listened to themselves (really bad move).

And now they'll be listening to bankruptcy court judges and debt counselors.

Tulips anyone? Pets.com stock anyone? South Sea shares anyone? Phoenix condos anyone? Anyone? Anyone?

The late great American housing bubble has ended. Prices are crashing (no matter what the government or NAR tell you). Inventory is skyrocketing. Lives are ruined. Millions are asking "what the hell was I thinking". And an epic Ponzi Scheme ends.

'Upside Down' Home Sellers Owe More Than They Get

Jeffrey Taylor and his wife bought their dream home in Purcellville for $538,000 last August. Now they have to sell it because they are getting divorced and neither one can afford the mortgage alone.

The most they could get for it was $430,000. After paying all the real estate commissions and taxes, they will still owe the bank $118,000.

"Five months later, I lose $100,000," Taylor, a high school teacher, said. "I don't think I can take $100,000 into the stock market and lose it faster."

The people most vulnerable are those who bought their homes within the past two or three years and now want to sell, either because of a life change or a financial problem.
Prices in some places are notably lower than they were at the peak of the market, and the costs of selling can eat up even more money.

42 comments:

Andrew Hac said...

How "on God Green Earth" does a coupl e spend over half a million bucks together and then less than a year later decided to have a divorce ? Is this the Americano way of a family culture and tradition ? I pity the Americano...

Anonymous said...

A divorce six months after buying their "dream home"? Let me guess... their marriage was already shaky and they thought they big purchase would save it. Dumb, but not as dumb as an unmarried couple buying a house together.

Anonymous said...

Leverage sucks on the way down

David said...

"A divorce six months after buying their "dream home"? Let me guess... their marriage was already shaky and they thought they big purchase would save it. Dumb, but not as dumb as an unmarried couple buying a house together"

Good guess. The financial stress of the home continuted further to the their deteriorating marriage.

eternitus said...

I can't say I feel bad for them, except for the fact that they probably relied on MSM and the NAR for their data because they were too lazy to take a minute and think things through for themselves.

keith said...

The housing crash will drive up the bankruptcy rate, the unemployment rate, the foreclosure rate, the divorce rate and the crime rate.

It'll drive down the illegal immigration rate, birth rates and interest rates.

Ah, the unintended consequences of the biggest financial mania in human history

Hayley said...

Spare me the pity-party over the financial distress caused by trying to meet the mortgage payments. Money is an issue in most divorces because it provides an easy attribution for the problems noone wants to really address (i.e., selfishness, intimacy problems.)

Just finished "Mania's Panics and Crashes" and am onto "The Go-Go Years" about the late sixties boom on wall street. (Stick to the latter if you want a less technical tackling of the subject.)

The more things change.....

Anonymous said...

Having a baby would have saved the marriage

Anonymous said...

"I'm confident because we're having a good spring," said Realtor Mary Jo Brummer.
In the fray is Rick Jordan, who is selling his Carson City home after buying his dream ranch in Montana. He and his wife will ride horses and raise alpacas in Molt, Mont.
"I don't have to work, so it's time for me to go play," he said. "I'd love to stay here, but I couldn't pass up the deal in Montana."
Westerners are traveling east for affordability. For the Sedano family that means moving to Carson City from Southern California - where paychecks weren't keeping up with the high cost of living.
"To make it, my husband was working in construction, and I was working in electronics. It was good pay, but I worked 6 a.m. to 6 p.m., four days a week," said Margarita Sedano, 37.
She and her husband, Rafael Diaz, purchased a 1,500-square-foot Northridge home for $335,000 last year. This week, they're putting in new tile. Other relatives are following their lead.

Anonymous said...

So now the "crash" is causing divorces too. I'm waiting for the day when you morons blame the weather on this supposed crash too.

Anonymous said...

"So now the "crash" is causing divorces too. I'm waiting for the day when you morons blame the weather on this supposed crash too."

Shut up!

Mort said...

A lot of people bought "dream" houses during the bubble years. They were dreaming when they thought they could make the payments.

James Dean said...

My dad's neighbor spent 40K on the white picket fence for his 5 acres. Divorced right afterwards, guess how much of the 40K fence they recouped during resale?

BTW - I read this Washington Post article. The strange thing is my 130K household income brother-in-law just bought at 700K (spring 2006) in this very same Northern Va exurb. The conversation went something like this... It's expensive but you know real estate only goes up.

People in DC area really think themselves immune to market fluctuations on the downside. I guess they don't remember 1987-1995.

az_mtb said...
This comment has been removed by the author.
az_mtb said...

Here is another "boo-hoo" sob story from the Arizona Republic. It never ceases to amaze me how stupid these people are!

http://tinyurl.com/264cum

Veronica Lodge said...

Upside Down' Home Sellers Owe More Than They Get.

There may be a legal way to rescue home debtors with an E-Z OUT ESCAPE CLAUSE. It has to do with the "...Truth in Lending Act, a wide-ranging federal statute that was passed in 1968."

"As part of the statute, a lender has to provide a borrower with a right-to-cancel form indicating that the borrower has three days to review and cancel the loan. The lender is required to disclose on that form when the three-day waiting period begins and ends."

"Failure to properly fill out those dates may extend the cancellation period to as much as three years, granting the borrower the right to rescind the loan and have closing costs, interest and other fees deducted from the balance,..."

"As the booming real estate market fueled a booming mortgage market, lenders got sloppy with the right-to-cancel document... There was a period of time just a few years ago where virtually every loan ... was rescindable."

"The strategy won't work for every borrower who is in over his or her head. For one thing, this part of the law applies only to a homeowner who is refinancing a loan."

Anonymous said...

I have one of those high evaluated places, yet I do not see how its worth a quarter of the local asking prices

Ben Franklin said...

Ha! They raise alpacas, that's funny. What trendy investors, huh?

A few DJs in L.A. (John and Ken on KFI 640) were talking about alpacas as the "new" trendy asset investment bubble for animals, since some think their fleece will be worth a fortune.

This animal mania is spurred on by one more critical factor: a special tax break for raising alpacas that slid thru the Senate a few years ago. Alpacas are cheap to raise and care for ($300 per year) and apparently some doctors and lawyers have bought alpacas, and the rush is off. Alpacas have sold for $500k each!

Hopefully these idiots won't look back at history here: there was a llama bubble a few years ago, with an ostrich rush (remember ostrich meat?) before that: both bubbles burst....

Market rushes are not new, and mass psychosis is actually common human behavior....

Anonymous said...

Was this a late April fool's joke? An article about buyer's remorse has this little tidbit:

"You might think that buyer's remorse could be prevented if people spent more time shopping ... but there's also a nonbuyer's remorse as well," he said. A client of real estate agent Kristy Ryan understands that concept well. The prospective buyer wouldn't budge on his offering price, fearing he would overpay, and another buyer scooped the place up, said the Realtor with Re/Max Fine Properties in Scottsdale, Ariz.
"Now, we can't find him anything remotely as good ... and (the prices) are substantially higher," she said.


HUH? This bitch is saying in Phoenix where there are 60,000 homes for sale, they can't find anything as good and the prices are substantially higher. Is that really what she said and with a straight face? I just want to make sure I read that right and didn't misunderstand.

CashFLo said...

$100,000 k later, still not affordable to many.

Paul E. Math said...

Dream home. People sure dream big these days, don't they? Even a schoolteacher dreams of a half-million-dollar home, thinks he's entitled to it. So now he takes his lumps and, hopefully, learns a lesson in economics that he can pass on to his students.

Yeah, I guess I still kinda feel sorry for this poor FB. But I don't feel that sorry for him. It's not a tragedy - he still has his health and his job. And now he can rent a nicer house for less money and not have to share it with a shrieking harpie.

Anonymous said...

So, how many buyers during the boom put the loan in their pet's name???

keith said...

If I ever made a financial mistake that cost me $100,000 out of my pocket, I don't know how I'd sleep at night

Man, people made some terrible decisions these past few years. Terrible decisions.

dazed n confuzed said...

I thought schoolteachers were underpaid? I have a graduate degree and still can't afford a $400K house much less $538K

anon 8000 said...

"dazed n confuzed said...
I thought schoolteachers were underpaid? I have a graduate degree and still can't afford a $400K house much less $538K "

Why do people still assume that getting a graduate degree or even worse a PhD entitles them to anything? Aside from an MBA a graduate degree is worth as much as the paper it's printed on.

And schoolteachers are not underpaid. That is what the NEA and MSM want you to believe so that you'll be in favor of higher taxes to help out these poor, poor underpaid souls. Given the free halth insurance, incredibly generous poension, 100% job security and 4 months vacation (3 month summer vacation, 2 weeks Christmas vacation, 1 week spring break and every holiday known to man as a day off) their pay is just fine and if anything too generous.

chris g said...

I agree with the person who said that DC folks think they are immune to these problems. I tell you, there are a lot of people in Fairfax County and Loudoun County who are dependent on us "staying the course" in Iraq. So many contractors in Fairfax County raking in contract money from the Dept of Homeland Security.

Anonymous said...

Mammon worshipping will get you a lot of what we have going on today. Including the idea that advanced degrees are to be valued only for the money they earn and that MBAs are somehow more deserving.

Anonymous said...

anon 8000 said...

And schoolteachers are not underpaid. That is what the NEA and MSM want you to believe so that you'll be in favor of higher taxes to help out these poor, poor underpaid souls. Given the free halth insurance, incredibly generous poension, 100% job security and 4 months vacation (3 month summer vacation, 2 weeks Christmas vacation, 1 week spring break and every holiday known to man as a day off) their pay is just fine and if anything too generous.

April 22, 2007 7:02 PM


Bitter 'cause you flunked spellin'?

Anonymous said...

awesome!

Anonymous said...

"Anonymous said...
anon 8000 said...

And schoolteachers are not underpaid......their pay is just fine and if anything too generous.

April 22, 2007 7:02 PM


Bitter 'cause you flunked spellin'?"

Hey anon 04 22,8:44 PM, bitter 'CAUSE' he made the right call on their overpaid majesties, bad 'SPELLIN' and all?

Let me guess, teacher's union, right?!

TaZ said...

"And schoolteachers are not underpaid. That is what the NEA and MSM want you to believe so that you'll be in favor of higher taxes to help out these poor, poor underpaid souls."

20 years ago schoolteachers were underpaid in comparison to their peers in private sector, but no longer.

In fact, ANY goobermint job pays higher than those to be found in the private industry. The other day an old NYC Bus driver was telling me how he knew of dozens of NYC public employees that are making $100+ a year by signing up for duty in Iraq/Afghanistan and receiving both their NYC pay + USDOD combat pay.

No wonder total expenditures on goobermint in the US is @ 38% of GDP...

Crank-up those printing presses, we need more money!!!

Total

Anonymous said...

Some dipshit said:

Bitter 'cause you flunked spellin'?

As usuel uwen peeple halve nuthin inteligynnt two saigh as a rreebuttall two en erghumint, they look for typos.

Paul E. Math said...

And teachers aren't the only public servants who are overpaid. Here in Massachusetts there are cops who make more than the governor. That's the ordinary cops. No, it' doesn't come in the form of salary but rather for working 'details' during their off hours.

For those who don't know, in the state of massachusetts, every road construction crew is required to hire a cop to stand with his hands on his hips and look official. That's what a 'detail' is. The city of Boston is having to hire 100 more police officers because they are all out standing with their arms folded over their flourescent vests with the road construction crews.

There was once a move to end this practice but of course the police union threatened to strike and the abuse continues.

Yeah, they're true heroes.

Anonymous said...

We get Ph.D.'s because we either

1. Have a passion for the work.

or

2. Need one as a ticket into the North American job market as someone born outside of the continent, i.e., China, Sri Lanka, Middle East.

Anonymous said...

well, might as well dump the house if you can, and suck up the loss... boo hoo hoo

Anonymous said...

"I'm waiting for the day when you morons blame the weather on this supposed crash too."

We don't need to blame it in the weather, David Lereah does that for us.

jane said...

Sadly, I have a friend who recently went through the exact same thing. It's easy to look at figures and be detached from this problem -- seeing my friend take such a hit because he had to sell due to a divorce, it's a painful reminder of how devastating the bubble is.

cow_tipping said...

Its called leverage ... real estate is still worth almost 80% of your purchase price. Unfortunately you only put down 0% and paid off 0% in the 6 months you held it. So you owe them the 20%. Simple. Now go tell your moron realtor that, and kick his nuts in ... better yet, introduce him to your ex wife.
Cool.
Cow_tipping.

Anonymous said...

"Five months later, I lose $100,000," Taylor, a high school teacher, said. "I don't think I can take $100,000 into the stock market and lose it faster."


Of course he could lose it a lot faster. At least a house is something physical, it does have SOME value, though it maybe much much less than what you paid for it. You can't live in a stock certificate.

High school teacher, huh? probably public high school. what an idiot.

Anonymous said...

dumbasses.

why the f were they buying a 500k house if they can't suck up a 100k loss? I bought my mcmansion 7 years ago, could have purchased it sooner but I waited until I could lose it all and still not be forced into bankruptcy and not have it effect my retirement.

Because the loan broker and Realtor said they could afford it?

The real kicker would be if he teaches personal finance, math, or economics.

Anonymous said...

"And schoolteachers are not underpaid. That is what the NEA and MSM want you to believe so that you'll be in favor of higher taxes to help out these poor, poor underpaid souls."


Exactly! It is supply and demand. In my area, there are way more people who would like to be teachers than there are openings. If teaching paid so poorly there would eventually be a lack of supply, which is clearly not the case.

You could argue that there is a lack of high qualified teachers, which I would agree with. If you doubled teachers salaries you would eventually bring in a new higher level of candidate who would outclass a lot of the current teachers. If a school district started paying 6 figures at the 5-10 level I think that probably 80% of the current teaching staff couldn't compete with the quality of candidates that would be attracted.

z flynn said...

What kind of teacher was he? This is clearly an example of bad math. If the average household income cannot pay the real mortgage on an average priced home(not an idiotic "interest only" loan that have been 50% of most urban mortgages recently, more in some areas, that the hustlers at banks and mortgage facilities have been pushing) then the market absolutely will collapse. It's just how long you stave off the inevitable is what determines how bad the collapse will be and this one should have happened five, six years ago when the then seriously overvalued prices were about half of what they are now. So this one is going to really stink things up for a long time, possibly lead to a serious depression. And it isn't just the hustling profiteers who are to blame for this one, the general greed of the average person, spending money they don't have for things they don't really need (I'm sure their apartment or smaller house before was quite adequate) with the dreams of ever inflating prices to bail them out and grant them a big profit. The hustling profiteers wouldn't have been cashing in such record numbers if there wasn't such shameful avarice by the average home buyer that they completely deluded themselves with their quick buck house flipping dreams. In this case the saying "you can't cheat an honest man (or woman)" is absolutely true.