Actually, they are only worth what someone is willing to pay for them.

Trainwreck on October 8, 2008 at 8:36 PM

Thank you for having the sense to bring this to our attention :)

One of the most pernicious misunderstandings in our society is that surrounding the concept of ‘value’. This misunderstanding leads most people to believe that their property has ‘a value’ that can be injured by market forces.

Stupid people.

There is a connection there somewhere.

Not really the same thing. Working people are not tied to their stock portfolios the way they are tied to their houses. If your house value falls but you need to move for work reasons, you’re screwed. And if you happen to live and work in an area that is experiencing a major downturn in both housing and jobs, you’re doubly screwed.

I’m not saying we should be happy about the bailout or buyout, but I don’t think it’s right to be so hostile to people who are facing tough economic times.

Y-not on October 8, 2008 at 5:15 PM

Thanks for understanding. Here around Detroit if you put 10 percent down on a home in the last few years you have lost double that in value. Since the first few years are mainly interest on a conventional mortgage, you have negative equity here where drops are 20 and 30 percent. And they are.

If like so many you lost your job and were spending your savings to hold the house until it could sell, you do not have a downpayment for a new mortgage, much less to buy out your negative equity on your current mortgage.

Because here the job market was shrinking. People were moving like crazy to follow the jobs. Two years ago there were for sale signs on every block as people scrambled to sell to move out of state, or to another job. But houses had already stopped selling.

When the job market dies, the area becomes undesirable and new people do not move in.

As housing collapses more your job market could be next

Now there are virtually no for sale signs. It is scary. The market has collapsed. Everyone is stuck. Gas is high and underemployed cannot afford a long commute. You wait, for your pension check, or your next unemployment extension check, or the foreclosure notice

A neighbor lost his son in a terrible fire a year and a half ago. The insurance company paid him the current resale value minus the value of the land. That was not enough ($86,000) to build a new house, but he found a modular home builder and gave him half down to build a little home. The guy folded (wonder why) and the money is gone. The insurance company appraised his land at $50K to reduce the payment he received. The land would not sell for half now. And it cost several thousand to demolish the burned home and meet city code.

Consider what replacement value means on homeowner insurance policies even to those who are not in negative equity

A girl I know lost her father to cancer. They could not afford the home without his income but could not sell it because of the negative equity. They lost it, as the mother had developed a serious disease, and then the grandmother.

If a bank holds a mortgage and the liabilities they lose on too many foreclosures. If a bank has packaged and re sold liabilities they gain on high foreclosure volumes because their main profit is the foreclosure fees.

For those who want all the greedy homeowners to tank, understand they will cost you more than you ever dreamed. They will be fighting to get your jobs and increase your tax burden as they transfer to the same ER medical plan the illegals get, and their kids all go on the free lunches at school. They will not be buying the stuff you sell or make, but they will be stealing more of it. They will vote themselves something a lot lot bigger than a bailout if they are not bailed out. Maybe a national health plan, and a lot of government work projects

Because that is the true story in Michigan. Screw the rich flippers. This is not what we have here. I am tired of the insults on these victims.

Let them eat cake if you wish. They are not going to go down silently

Man, am I glad the wife and I put 20% down and man am I glad I live in Texas.

thirteen28 on October 8, 2008 at 6:29 PM

When we moved here to TX (Corpus Christi) ten years ago, we went for a no-downpayment home loan with a decent interest rate for a house that was a bank pre-foreclosure (a little below market value for the neighborhood).

A few years later, when interest rates had gone way down and the value of the house appreciated by a good chunk of change, we re-financed and, to our surprise, we were able to stop paying PMI. Now, ten years after we moved in, we are being forced to move to the Houston area, with the help of a relocation company. Now, our current house is worth more than the house we’re about to move into in Houston. (We found this one brand-new house on inventory, for sale at $20 grand + under market value. We are now able to place our current house equity at over 20 percent deposit, with a little money cushion just in case our house sells a little under market value.)

That’s the good part.

The bad part is that my husband found out that one of the credit report agencies bundled his credit report, which had earned exceptional marks in the past, with the one of someone named almost identical to him who lives somewhere else here in TX, who has two car loans and a huge mortgage he defaulted on. My husband has spent days on the phone trying to solve that issue (someone put an A.K.A. on the guy’s file and placed my poor guy’s name on it, even though they have completely opposite SSNs), but the credit agency will not take personal calls – it leaves him on an endless switchboard loop and no warm body on the other line to speak to,- and will not eliminate their mistake. The other credit agencies have been told of the snafu on this one, and they understand, and he still has very high credit scores. But this one has stopped us from closing on our new house loan: it has delayed us by weeks. We are thinking of hiring a lawyer if that credit agency won’t fix this.

I have two houses, one bought 20 years ago that we rent out. It is in a modest area and has probably dropped 25-30% from the peak of a couple of years ago. The house I live in was bought 8 years ago. It is probably off the peak by about 10-15% at the most. There have been a few foreclosures in our area, people who bought near peak and were probably looking to flip after a couple of years, then freaked when prices started going down. Still, houses sell, not as fast as they did at the peak, but usually in a couple of months max. As long as the area is desirable and there are still some good-paying jobs to be had, the nicer areas will hold their value reasonably well.

All that being said, I though our house was overpriced when I bought it. Even at current prices, I’m still up about 80% from what I paid for it. And no, I’m not rich, and don’t make a huge salary; pretty good, but not huge. I just live within my means, go out for dinner maybe once a week and brown-bag my lunch every day, pay cash for everything but the houses, etc.

Most houses are still grossly overpriced – to see what a house is REALLY worth, take the price in 1998 and add 30% to it.

LODGE4 on October 8, 2008 at 3:21 PM

Actually, they are only worth what someone is willing to pay for them.

We couldn’t even dump our house for half its value, that’s how bad things are. And this is a mighty sour subject for me, because it is entirely my husband’s and my fault. At least the lesson has been learned for this family.

and of course the banking industry in Charlotte over the last decade. I think the bust of the banks will impact NC in the coming years.

unseen on October 8, 2008 at 3:19 PM

Even “too big to fail” Bank of America is falling fast. Down another 7% today to 22.

$1.1 million for a 2-3 year old 2000 sq ft tract home with a postage stamp yard. Very hot dry summers, mild winters

at the northern end of the Bay Area, it took 1.3 million to get a 20 year old tract home in Healdsburg, in northern Santa Rosa County. About the same in Santa Rosa itself

…two or three per kid? Which side of beyond do you live on?! If I were to buy four or five gifts at Christmas, it’d be Easter before I was allowed to come out of the crawlspace under our house…Dad better either deliver or sleep with one eye open in my house! My daughter is a diva!

…then again, it’s all about the expectations you set….

That’s true! When my sister’s first boy was little she told him that the Disney store was a museum. Pretty smart mom.

Or they will only buy two Christmas gifts for each kid this year instead of three or four.

…two or three per kid? Which side of beyond do you live on?! If I were to buy four or five gifts at Christmas, it’d be Easter before I was allowed to come out of the crawlspace under our house…Dad better either deliver or sleep with one eye open in my house! My daughter is a diva!

…then again, it’s all about the expectations you set….

These are not huge sacrifices for families, but when you multiply these cutbacks by millions of households, you get real layoffs and real business failures.

rockmom on October 8, 2008 at 5:29 PM

…and this, like nothing else, shows why Obama’s a complete ignoramus when it comes to the economy…we all need to tighten our belts…that won’t hurt Wal*Mart or major manufacturers….

Where it hurts will be the small business sector…the guy who depends on discretionary spending…set the expectation of further bad times, and Mr. Brown the customer “discreets” to stop spending, sending Mr. Green the florist into a tailspin….

…a little more understanding of things out on Main Street, and the head pulled out of the sphincter called “ACORN” or “activist economics” or “social justice” — where nobody actually lives and all people are cyphers — and you’d see that every action has an unequal, rippling, multiplying-as-it-ripples reaction….

…and now Pelosi is talking about another $150Bil in “stimulus” money…bread and circuses…

…”stimulus packages” won’t help Mr. Green the florist beyond 12 hours after the checks are cashed…where $150Bil into bridges, roads, general infrastructure, innovation, automation, and other things that require folks to build, supply, direct and maintain just might…per Newt, that is….

…we’re being bailed out into oblivion….

You can get a picture of the housing market in an area at Zillow.

Y-not on October 8, 2008 at 4:42 PM

…thanks a lot….

CC

rockmom on October 8, 2008 at 5:29 PM

+1 to you, rockmom.

Saying people are getting what they deserve ignores the fact that we are all going to feel it, whether we deserve it or not.

Now multiply that by 12 million households and you have a severe cutback in consumer spending. And no, it is not just people deciding not to buy that third flat screen TV with their credit card. It is people deciding not to buy a new backpack or bike or raincoat for their kid this year. It is office workers deciding that maybe they really don’t have to have a new suit this fall. It is regular families deciding that they will stay home for Thanksgiving this year instead of traveling to see Grandma and staying in a hotel. Or they will only buy two Christmas gifts for each kid this year instead of three or four. These are not huge sacrifices for families, but when you multiply these cutbacks by millions of households, you get real layoffs and real business failures.

I like where I live, and checking Zillow, I’m not underwater, but I’m close enough to be within spitting distance.

meep on October 8, 2008 at 5:08 PM

Just fyi — I find Zillow to be a little low in its estimates. It doesn’t do a great job taking into account upgrades and micro-neighborhood effects (parks, schools, etc).

I’m not a realtor, but I used to use it in my work (fundraising). I’d be curious to hear what realtors think about it.

Probably 5 out of 6 stock holders are “upside down” for this year, so let’s bail them out too.

Not really the same thing. Working people are not tied to their stock portfolios the way they are tied to their houses. If your house value falls but you need to move for work reasons, you’re screwed. And if you happen to live and work in an area that is experiencing a major downturn in both housing and jobs, you’re doubly screwed.

I realize we are all unsympathetic to the people who over-bought or were speculators or whatnot, but I doubt they are the majority of the upside-downers. If we had bought in San Bernardino County last year (which we almost did), we’d find ourselves in a neighborhood with foreclosed homes and vacant properties, depressing our home’s value further.

And you know what? People in S.B. are pretty conservative, regular folks who are trying to build a good life for themselves. I’m not from California originally — I’ve only been here a short time — but SoCal still has pockets of Reagan country.

I’m not saying we should be happy about the bailout or buyout, but I don’t think it’s right to be so hostile to people who are facing tough economic times.

I like where I live, and checking Zillow, I’m not underwater, but I’m close enough to be within spitting distance. But there’s little danger of me defaulting, because I have to live somewhere and, more importantly, I have no trouble making my mortgage payments. Shee.

It’s not enough to say people are underwater on mortgages. They’ve got to be underwater, and either can’t make the payments or it’s just an investment property.

This is the only way we can fix this economy.

On a brighter note, the decline has brought home prices much closer to their historical relationship to income.

This is a good thing. Why then do you support McCain’s mortgage renegotitation plan?

WHINERS AND PANDERERS!