vendredi 25 juillet 2008

Meanwhile, back on the home front...

Remember the housing market disaster? How home prices are plummeting? You don't hear much about that these days, do you. This morning, Joe Scarborough's obsession is "Obama's saccharine speech" in Germany. You know, the one I posted yesterday that was greeted by a huge crowd numbering in the hundreds of thousands.

In normal times, one would expect the value of one's home to appreciate by around 4-5% per year. Our house appreciated by around eight percent between the time we bought it and our first refnance two years later. Today, houses similar to mine are just now falling in price -- and are sitting on the market dangerously close to the number at which my own house should fall.

Unlike many people, we haven't used our house as a piggybank to buy vacations and SUVs -- or even put in gourmet kitchens with granite countertops and stainless steel appliances and Aga cookers on which no one actually cooks. But as prices continue to fall, here in New Jersey, the state I call "The Next Flint, Michigan", I wonder how long it's going to take for the price to get down to what we paid for it.

Because the bottom still hasn't fallen out of the housing market:

In the latest evidence that prices are still sliding, the National Association of Realtors reported Thursday that the median price of existing homes sold in June fell to $215,000, down 6.1 percent from a year ago. Sales fell 2.6 percent from the month before — far more than analysts had expected.

[snip]

Richard Gaylord, president of the Realtors, said a recent survey found that nearly one-quarter of potential home buyers are "waiting on the sidelines." A major housing package passed by the House Wednesday after months of debate could help boost the market by offering a credit to first-time home buyers, the group said.


The problem is that this "credit" is actually just an interest-free loan of a few thousand dollars. Would that spur YOU to buy a house in a market that is still trending down?

Another $250 billion in adjustable-rate mortgages are expected to reset this year and next, and over $700 billion by 2010. That's a huge number of people who are going to be trying to refinance -- into rates they can't afford. Even the new housing package requires that lower-cost government-backed loans be limited to 90% of the value of the house -- far less than what many homeowners would require to bail them out of their creatively-financed McMansions.

The three pillars of the American Dream are education, employment opportunity, and homeownership. In the past eight years and beyond, higher education has become unaffordable for many families and attempts are being made daily to dismantle the public school system in this country. Employment opportunity is diminished by outsourcing and recession. And homeownership is about to drop dramatically, leaving many homeowners with little but what they're wearing on their backs.

If those who created the Republican economic policies that gave rise to what we see around us today had set out deliberately to eliminate the middle class and push its denizens downward, they couldn't have done a better job.

Unless they actually DID have that in mind....

Aucun commentaire:

Enregistrer un commentaire