For the last decade, home buyers and owners have enjoyed the fruit of a very sweet housing market. Owning a home is an American dream for most. However, the disparity between those who own homes and those who do not grows bigger every day. This all changed with the help of our government and it is time for a reversal.
I find it very disturbing as I drive down the road and see the foreclosure signs in the windows of houses someone used to call home. It makes me wonder about their situations. Was it a lack of responsibility? Did they lose their job? Was there an illness or other tragedy in their family? Where do they live now? Are they homeless? Are they renting a house at a price higher than their former house payment was because of the high rental demands?
Let’s take a step back to see how this downward spiral started. I remember when we could not turn on the radio or the television without hearing ads asking you to refinance your existing home or take out a loan for 125% or of the homes appraised value. Or ads asking you to take out a third mortgage or a revolving line of credit based on the equity of your home. And, if you had excellent credit you could walk onto a car lot and walk off with any car on the lot just because you had excellent credit. I remember when we got credit cards randomly sent to us through the mail telling us to sign the back to activate the card and it was ready for use. Income to dept ratios were not even thought about years back. All these things marked an era that encouraged middle class and lower income Americans to live beyond their means.
Now there are many people without homes because they have gone into foreclosure because they are not making house payments due to extenuating circumstances. The banks are in financial peril because of the lack of payments from their customers. They are reducing staff or even going belly up due to lack of accounts receivables to cover their expenses. They have no money to lend to customers wanting to buy cars, so now the auto industry is in trouble. Childcare providers are seeing fewer children because parents are not working. Most stores are seeing a decline in the purchases of unnecessary items, which sparks more layoffs. The vicious cycle is going on and on with no real solutions in sight.
I have been watching the real estate market closely for about a year and a half now as I would like to be a home owner again someday. The home I currently rent was built approximately 50 years ago. This residential area was designed for cheap housing for Navy personnel who wanted to live close to the Idaho Engineering Laboratory where they were stationed. These homes were sold brand new back then for $8,000 dollars. In 2007 these homes were selling from $95,000 to $119,000. During this time, banks were lending money like crazy even to those they knew could not afford the homes were trying to buy. The banks have now tightened their lending criteria, but first time...