Housing Boom Threatens American Dream

[Pamela Crowley (Florida)]

Housing Boom Threatens American Dream


http://www.rismedia.com/index.php/article/...eview/7785/1/1/

By William Sluis
Chicago Tribune

RISMedia Sept. 20, 2004 (KRT) - More Americans are becoming house-poor.

It's an ugly downside of the soaring real estate market: Many of those who put a toe in the housing water are finding themselves unable to afford more than the basic necessities, unless they try to survive with a credit card lifestyle.

"Americans are in over their heads when it comes to debt," said economist A. Gary Shilling. "The value of real estate assets has zoomed, but people are borrowing more and more against their homes."

A brief layoff or other job interruption can be enough to push many young home buyers over the financial edge to insolvency.

 

[DTB]

Doesn't sound like anything that can't be fixed by hitching your belt up another notch.

My heart bleeds for people who buy things and don't know how to pay for it. :rainfro:

 

[Otis Key]

I've said it before and I'll say it again. No one forced them to buy the house, refi, get credit cards or go into that debt. I, we, don't make the market, we just report it.

 

[Scott Kibler]

I like REO assignments. :twisted:

 

[Terrel L. Shields]

Ah, Scott, the eternal optimist...what would we do without 'em?

 

[Tim The Enchanter]

A brief layoff or other job interruption can be enough to push many young home buyers over the financial edge to insolvency.

The ride up was a blast. The other direction is painful to those caught in the vise. The credit card lifestyle doesn't work so good then.

 

[Terrel L. Shields]

Business cycles are a fact of life and if you don't have a cash reserve, you cannot survive even the shortest of downturns. I know builders in the early 80's who went belly up over 90 days of slow work and a couple of spec houses unsold in a development.

 

[Dee Dee]

Times have changed so much over the past 30 years!

When I was a senior in high school we were required to take a one semester course in basic survival economics. I clearly remember being required to crunch numbers to figure out how much we could afford to pay for housing expenses. 25% was the magic number. If we made $1500 per month, then we were pushing it if our rent was more than $375. Debt was a dirty word. If we didn't have it in our pocket then we couldn't afford it. Credit cards weren't even mentioned because very few people had them. 10% per month needed to be put into savings, and until you had at least 6 months worth of paychecks stashed in a savings account you were at risk. All other expenses....food, clothing, vehicles, etc...had to be squeezed out of what was left. Bankruptcy was not an option.

I lived by those numbers, and my husband and I bought our first home when we were 21 & 22 years old with 5% down with an FHA loan. We rented out extra bedrooms in the house to my brothers and friends for about 5 years until our own income was high enough that we could handle the full mortgage payment at 25% of our own paychecks and we had 6 months worth of income stashed. We drove older cars, ate maccaroni and cheese and cruised yard sales or the Salvation Army for other necessities.

In many ways I think that our own society is guilty of letting down our young people. Although times have obviously changed, why don't our public schools still require basic economic survival skills to kids before they run right out and get into debt? Why do parents remain silent and assume that kids understand how to handle finances or how debt can ruin the most productive times of their lives? It's as if we set them up to be sucked into the game before they can even get a foothold.

 

[Pamela Crowley (Florida)]

Because our society has become:

"I want it all right now and will do anything to get it today no matter what it will do to me, my family, my community, my country tomorrow."

 

[Terrel L. Shields]

30 years!

When I was a senior in high school

You look like justa pup to me...are you sure you are that old?

Today kids have credit cards - cell phone bills that are double mine - really, they need a good economic lesson....hate to think a lot of them are going to learn it the hard way.

Then again with modern thought, they might be taught how to maximize the benefits of bankruptcy.