How badly has your home value been impacted by the recession?

[Jimaz]

I think that kind of distraction has always happened. The difference this time is the enormous amount of money involved.

Here's a question. Is it possible to buy insurance against going underwater? It sounds like there is a market for it. Heh, I doubt flood insurance covers it.

[eno]

I have a theory. It's off the wall so bear with me.

From the fall of 2008 to the spring of 2009, what were the people angry about? The banks....

A major reason why Obama was elected was because the people was angry that the banks were able to run wild during the Bush era [[as well as Clinton, first Bush and Reagan) and tank the economy. People were outraged that these banks got bailed out yet the average joe is told to get out of the bank's house. President Obama had a mandate to get the banks in line yet, the banks are the ultimate. They have all the money including the taxpayers and they suggested that the government focus on something that would distract the people anger towards the banks. What would that be? Healthcare!!!!

From the summer of 2009 to today, people have protested about Obamacare or Obama himself. Tea parties have been formed to protest taxes, Obama, healthcare, Obama, the wars, Obama, civil liberies, Obama, etc... yet at the same time these people are either getting thrown out of their homes or their property values have decreased but they're outraged about healthcare. Your last comment about marching in the streets. I believe they would be marching and protesting but they are a bit distracted at the moment.


http://r8rbob.wordpress.com

Perhaps you haven't seen the bill put forward by Senator Dodd to reform Wall Street and rein in the banks. http://www.nytimes.com/2010/03/16/bu...html?th&emc=th

[Hermod]

I can't understand why people aren't marching in the streets over this. I fear -- and hope -- that many haven't yet awakened to the problem.

Who would you march against??

The banks who got stuck with worthless loans?

The flippers and speculators who bid the prices up?

The builders and developers who overbuilt?

The folks that took out "liars loans" to get into a house they couldn't afford?

The grifters who committed mortgage fraud?

The real estate brokers who pushed clients into houses they couldn't afford?

In the collapse of a bubble, there are lots of guilty parties

[bailey]

I have a theory. It's off the wall so bear with me.

From the fall of 2008 to the spring of 2009, what were the people angry about? The banks....

A major reason why Obama was elected was because the people was angry that the banks were able to run wild during the Bush era [[as well as Clinton, first Bush and Reagan) and tank the economy. People were outraged that these banks got bailed out yet the average joe is told to get out of the bank's house. President Obama had a mandate to get the banks in line yet, the banks are the ultimate. They have all the money including the taxpayers and they suggested that the government focus on something that would distract the people anger towards the banks. What would that be? Healthcare!!!!

From the summer of 2009 to today, people have protested about Obamacare or Obama himself. Tea parties have been formed to protest taxes, Obama, healthcare, Obama, the wars, Obama, civil liberies, Obama, etc... yet at the same time these people are either getting thrown out of their homes or their property values have decreased but they're outraged about healthcare. Your last comment about marching in the streets. I believe they would be marching and protesting but they are a bit distracted at the moment.


http://r8rbob.wordpress.com

Whenever I see the teabaggers and listen to Fox I think of two sayings.
"Never underestimate the power of stupid people in large groups"
and,
"Fascism will come to America wrapped in the flag and carrying a cross."

but, more to the point of the thread, it's interesting that no one has a problem with bubbles until the burst. I mean when people were seeing 10% year over year gains and were treating their houses like ATMs... no one was talking about marching in the streets. It was time to liiiiiiiiive!

[shovelhead]

On paper we lost our a**, but actually we did not. At least in our way of thinking. About 40% as a rough estimate of the inflated appraisals, true cash of what we paid vs. SEV, about 25% loss.

We sold our previous house and put the proceeds into this one. The price of this one was about 12% above what we sold the other one for. The old house was sold just before the market started the slippery slide downhill. We were fortunate as one next to us was for sale before we listed ours. Unfortunately, the owners bought at a high point, redid a lot of things, so they had to sell very high, well above the neighborhood average. While we were not getting a path beaten to our door, being a small tri-level, we at least had traffic. Neighbors could not sell, they finally rented it out.

We got our asking price then. Today, anybody's guess if and when it would sell.

Our gut feeling in late 03 was it's now or never, so we jumped. No regrets. As I had posted a few weeks ago, the neighborhood was changing, from ownership to rentals as speculators were buying up the properties as the neighborhood was surrounded at the time by homes 350K and up. And rental apartments being built a short distance away adds more traffic to overburdened streets around there. And at least in my neighborhood, the class of renters left a lot to be desired.

Blame for the crash, a lot of blame to go around. Real estate agents that would not listen to buyers. I had one that tried to PUSH us into spending more money than we felt we could afford, by 25% above our maximum figure. And the home we now live in was bought for about 15% less than our maximum figure. Banks that turn customers down because they did not owe enough on their mortgage. Yes, being told that unless you take equity money out it was not worth writing a loan. And mortgage brokers promoting second mortgages, taking equity for dream vacations, investing in the stock market [[!), buying boats. Yep, like the 1920's, every man is a millionaire.

And we see what happened in 1929 too.

[Packman41]

According to the Case Shiller Housing Index the Detroit Metropolitan Area has the worst housing prices in the country. See: http://www.standardandpoors.com/indi...ashpidff--p-us----

The numbers in the index represent the percentage of home value appreciation since the year 2000. For the Detroit area our index number is 72.59% of what values were in 2000. For the 20 metropolitan areas surveyed the average index is 145.90%. By the way, notice that Detroit is the ONLY area that is below 2000 values and by a long way -- it is not even close.

So let's look at it this way. You and your identical twin cousin both bought the identical model home in identical Pulte subdivisions, but you bought in the Detroit Area and they bought in in Averagetown, USA. You both paid $200,000 in 2000 for the same model home. Today, your home is now worth 72.59% of what you paid for it in 2000 or $145,180. Your identical twin cousin's home in Averagetown is now worth 145.90% more or $291,800. Your cousin's home is now worth $146,620 MORE than your home in the Detroit area. They have had more appreciation than what your house is worth.

If your cousin had moved to the Washington, D.C. area to be part of Big Government their home would be worth 178.82% more than it did in 2000 or $357,640. That is $212,460 more than your home is worth today.

And it is all due to our economy. We have chased out business. Banks are bad, so we chased out Comerica with our tax structure. Big Phamra is bad, so we chased out Pfizer. We wanted the Big 3 and now we have the Detroit 3.

Sad part is that what will turn our economy around? People are moving out of this state, not in. People will not spend a lot of money for a home if they think it will fall in value over time. You are much better off renting for the near term.

Again, Detroit is the ONLY area that has home values below where they were in 2000. It might be 10 to 15 years before the area gets back to 2000 values. In the meantime every other area is passing us by.

What will be the catalyst to change this economy?

[rustic2]

Hermod, you're correct, there are many parties to blame, but we can't just throw up our hands because it's complicated.

Start by marching against a government that allowed this unchecked greed [[on the part of lenders and borrowers, yes, but lenders have the upper hand, as they make the rules, so bear more of the responsibility) and against banks that got bailouts and bonuses while our property values continue to decline.

Bailey, I agree with you about Fox and the tea baggers.

But not all of us used our houses as ATMs. Some simply thought of them as places to live. Buyers can't exactly say, "I want to opt out of this bubble thing and I won't flip my house or take out a home equity loan. Give me a 50-percent discount on the purchase price."

In bubbles like the one that's burst, everybody gets hurt, even those who had no hand in it. Those who played a big role, however, are likely to get bonuses.

[Thames]

Repealing the Glass-Steagall Act had a lot to do with what we are experiencing today.

The banking industry did just fine for almost 70 years with those regulations in place. Once removed, it took less than 10 years to put us right back to where we were in 1929.

I blame the lenders. They didn't have to approve so many risky loans, they could have just said no.

[Ocean2026]

I live on the coast of Texas- and yes that can affect Detroit. I had some raw land I wanted to sell and then was thinking of fixing up an old architecturally nice house and office - at least for summers. That Texas land can't be sold now - no buyers and thus I haven't had funds to even think about Detroit except to read this site.

The only positive is that I know this area will continue its rapid growth after the recession. During recessions people don't leave big cities although Detroit may be somewhat of an exception. One day Rockport will be a great investment again, meanwhile raw land gets hit harder than homes when things are tough.

[Goose]

I blame the lenders. They didn't have to approve so many risky loans, they could have just said no.

they didn't HAVE to but they were almost totally guaranteed by the federal government, it was a no loss situation for them, as also evidenced by the bailouts....

i blame the federal government....

if it was 100% up to the bank and its stock holders on the types of loans they would make, and the risk was 100% on the banks, this would have never happened

but then the government HAD to make sure all those people that couldn't otherwise qualify had access to their rights... to home ownership.... thats in the constitution??? right???

[Goose]

my examples, bought in Grosse Pointe Woods in 1993 for $74,000, house needed a lot of work, probably put in $50,000 worth of improvements..... sold that house in 2004 in one day with multiple bids OVER the asking price, for $209,000..... they would be lucky to get 100K or so for it today.... then bought in SCS for $130,000, house needed a lot of work, probably put $25,000 or so into it, sold in 2008 for $145,000.... again, they would be lucky to see 105 to 110K today for that house..... bought back in GPW july of 2008 for $141,000, house needed a lot of work, so far have put maybe $8,000 into it, city lowered the assessment to $160,000, i think I would be lucky to get what I paid for it right now...... but we moved for the schools and we like the neighborhood... so we are in for the long haul...

[Ray1936]

Well, I've lost a little on the new house I bought in 2006, but on the plus side, I sold my OLD house at the peak of the market before the crash. So overall, I'm way ahead.

[rustic2]

Good way of looking at it, Ray. I must admit, we did benefit from the "bubble" when we sold our house in Livonia and moved here, but, all in all, we're still on the losing end of this thing. I'd be happy just to break even, but chances are slim.

[mjs]

Repealing the Glass-Steagall Act had a lot to do with what we are experiencing today.

The banking industry did just fine for almost 70 years with those regulations in place. Once removed, it took less than 10 years to put us right back to where we were in 1929.

I blame the lenders. They didn't have to approve so many risky loans, they could have just said no.

I agree 100% on the Glass-Steagall part. Killing that had all sorts of bipartisan support and big speeches and back patting and self-congratulatory speechs. Now, that its repeal has proven to be a disaster, why won't Congress simply reinstate it? McCain offered a bill, but the reception has been pretty poor so far. Put the bailouts, buyouts, subsidized home loans, subsidized refrigerators, subsidized cars, and subsidized health care on the back burner until they fix the root cause, lack of banking regulation. Its like trying to get a car with a blown engine to run by painting and detailing it using a credit card you haven't been able to pay off for years.

As for the lenders, they did have to make these bad loans. The banks that behaved logically got bought out by too big to fails that were making the quick buck on an unsustainable business models. It became a matter of act stupid or get bought out and forced out. The Feds not only allowed it; they aided and encouraged it. There's nothing wrong with blocking an acquisition on occassion. These too big too fail certainly didn't get that way through customer retention or organic growth.

[mjs]

they didn't HAVE to but they were almost totally guaranteed by the federal government, it was a no loss situation for them, as also evidenced by the bailouts....

i blame the federal government....

if it was 100% up to the bank and its stock holders on the types of loans they would make, and the risk was 100% on the banks, this would have never happened

but then the government HAD to make sure all those people that couldn't otherwise qualify had access to their rights... to home ownership.... thats in the constitution??? right???

The Feds also allowed way too much shady risk through the REIT's. Places like AIG made the risk look low by insuring this bundling of the high risk home loans, but they called it "credit default swaps" rather than "insurance", so the Feds looked the other way as they were allowed to sell tens of trillions worth of policies with only a few million available for payouts. No suprise the insurers would go belly up when it came time to collect on the policies. A ten year-old would call it theft and a bookie would kill them for betting like that, but the Feds call it fair play.

[laurin]

We live in NW Detroit. Initially bought for 95k and put in a couple of thousand for improvements-- the exact house next door went into foreclosure and sold for $6200. It needed a bit of work, but was livable. I shudder to think of how much our house is worth now.

The neighborhood is rife with foreclosures and crime has definitely increased. It's no where near the same as when we initially moved-in. For awhile, you couldn't ride around the area without seeing dumpsters parked in front someone's house.

[professorscott]

Be of good cheer and have patience, friends. Remember that the question of what your house is worth only has meaning if you are trying to sell it.

The home in which I and Mrs. Prof live, way out in the boonies, is worth much less than what we paid for it in 2000 and probably a little less than what we owe. But: who gives a shit? We live here, we're doing sort-of OK, and we don't care about some abstract valuation of the place since we plan to continue to live here.

Detroit has a history of boom-bust. Resurget cineribus and all that. Relax. Have a Labatt's and don't worry.

[shovelhead]

And to add to my earlier post, Real Estate agents were not blameless in this either. My old neighbor's selling agent led them down the primrose path on pricing, their house was priced 50K above ours, WAY over what the neighborhood average price was. Our agent priced ours aggressively to SELL. Ours did, in two and one half months.

I still think that a lot of agents were in Real Estate because Mickey D's wasn't hiring that day.

When you walk into an office, specifically tell an agent what you want, where you want it and how much your maximum figure is, you would expect said agent to look in those parameters. But that is not how it worked. Specified that a garage was needed, showed houses without garages. Agent said "you can put one up". I replied 'Do I park my bike in the living room until then?"

Or argue that our price range was too low? And insult my wife and myself by talking down to us?
We were no kids, in our fifties. I guess our problem was that he didn't like how we were dressed [[leathers and jeans, that is us). Suppose we just looked like scooter tramps to him. And the insult on how we need to be realistic on our price. Amazing, one side of the street [[his office) no houses were in our price range, but literally across the street THIRTY SIX houses in our price range with our requirements in the two cities we specified.

Kind of ironic, although this was in 04, the office across the street is vacant, that agency went out of business, while the one we went through is still around. Coincidence, right?

[R8RBOB]

I agree 100% on the Glass-Steagall part. Killing that had all sorts of bipartisan support and big speeches and back patting and self-congratulatory speechs. Now, that its repeal has proven to be a disaster, why won't Congress simply reinstate it? McCain offered a bill, but the reception has been pretty poor so far. Put the bailouts, buyouts, subsidized home loans, subsidized refrigerators, subsidized cars, and subsidized health care on the back burner until they fix the root cause, lack of banking regulation. Its like trying to get a car with a blown engine to run by painting and detailing it using a credit card you haven't been able to pay off for years.

Somewhere in Harlem, Bill Clinton is reading DetroitYes saying, "did I really put my signature on the paper to repeal Glass-Steagall?" We can't forget that he also signed NAFTA.

[reddog289]

You know I myself have been told since I was 13 yrs old. Buy Real Estate.I did just that in 2007. Damn if I'd had known I could have 3 houses for what I paid for mine. I like to say well I gotta live somewhere. But seeing that I owe 130,000 on my house and seeing that the house 4 doors down sold for 15,000. Well that kinda makes me feel like I have been bent over the barrel.
As much as I dread it, I wouldn't mind the "kids" back here if they paid rent.

[Hermod]

The problem is that everybody [[banks, builders, buyers, flippers, agents, etc) thought that nothing really mattered because the price of the house was always going UP.

When the price of houses began to go down, it was like the music stopped and not everybody could find a chair.

[Kevgoblue]

You and I couldn't find a chair. The big banks had "reserved" seating.

[jackie5275]

It's one thing to pay on a mortgage from 2005 prices for the next 25 years even if you can still afford it, but it's entirely different when the block you live on has abandon homes, becomes majority home renters, or the socia-economic dynamics of your block change. [[I know that might sound sh*tty of me but it's a legitimate factor than most people use in their home buying decisions) Not to mention city services decrease and crime increases. Are you suppose to just keep towing the line? How many break-ins are you suppose to endure? Are you only justified dumping the mortgage after you suffer bodily harm? It's potentially like having an anchor tied to your neck on a sinking ship. It's kind of a drag. Nobody really talks about that.

My neighborhood isn't going down the tubes. It's pretty stable. Most of the homes are owner occupied. There haven't been a whole lot of homes for sale around me either, so I'm trying to understand what else caused my assessed value to take an $11K hit which makes my market value take a $22K hit.

[cman710]

The problem is that everybody [[banks, builders, buyers, flippers, agents, etc) thought that nothing really mattered because the price of the house was always going UP.

When the price of houses began to go down, it was like the music stopped and not everybody could find a chair.

Hermod, I mostly agree your point. There were many, many actors that played a role in the housing bubble.

• The banks clearly played a very significant role by helping the money flow into the industry. In some cases the banks originated the mortgages with customers, but their influence was much greater in two other respects. First, the large banks helped to fund the subprime mortgage originators, giving them their lifeblood. Second, the banks purchased mortgages, put them into pools, and made securities out of them. When the banks sold the securities, they made money, which encouraged them to continue with this process.
• Subprime mortgage originators also played a very significant role, as they were the ones actually giving the mortgages to customers. Over time, these originators' standards became lower and lower, as they sought more and more customers to whom to give loans. Hundreds of these companies have gone under, but some still survive.
• The government played a significant role by facilitating the process of allowing cheap money into the mortgage market. Fannie Mae and Freddie Mac also engaged in transactions that were not wise, and contributed significantly to the problem as well.

This, and nothing on the part of individual mortgage agents or home buyers, caused the bubble. Money was freely flowing from banks. Over time, more and more people were able to afford mortgages than ever before, as subprime originators came up with new, "creative" ways to help people afford mortgages [[e.g., loans for which the interest rate ballooned after several years, or loans that had payments set up as if the mortgage was a 40 year mortgage when the loan actually remained a 30 year mortgage).

Since more people could afford mortgages, there was increased demand for housing. While supply increased, the supply did not keep up with this increased demand, and housing prices went up. This encouraged builders to build more and more homes, as they could sell however many homes as they could build.

The problem is that many of these home buyers were risky home buyers, many of whom would not have been able to qualify for a mortgage in the first place in earlier eras. A second problem was that these mortgages were set up in a way that made it unlikely that the borrower could keep the home after a few years, unless housing prices went up and the borrower could refinance.

When the economy began to falter and people began to have trouble paying back their loans, the house of cards fell apart. The problems existing borrowers experienced rippled through the markets, as the securities based on these loans began to perform terribly. This, combined with other economic problems in the credit markets, meant that credit became tighter.

As credit became tighter, new home buyers could not easily obtain mortgages and borrowers with subprime mortgages could not refinacne. Therefore, the demand for homes went down dramatically. This occurred at the same time as the supply of housing reached a peak, resulting in over-supply and low demand. When the job markets went south as well, this only exacerbated the problem, causing prices to go even lower and leaving us in the situation we are in today.

[Goose]

My neighborhood isn't going down the tubes. It's pretty stable. Most of the homes are owner occupied. There haven't been a whole lot of homes for sale around me either, so I'm trying to understand what else caused my assessed value to take an $11K hit which makes my market value take a $22K hit.

hi... are you living under a rock??..... i am in the real estate field, [[not agent), and always laugh when people think its other people and other areas that are hit, but not theirs, or they didn't get hit as hard... typically, now, when people estimate off hand what their home is worth.... try taking 20-25% off that to get the realistic price if you really wanted to sell...... EVERY HOME GOT HIT.... from the $5000 dumps that are now worth nothing to the $1,000,000 mcmansions that are now having a hard time finding buyers at $350,000....