As of yesterday, here's how DG is doing with property in foreclosure. We're about in the middle. Naperville, Westmont, Lisle are doing a little better, Woodridge is a little worse. Bolingbrook is getting hammered.
In some cases, these families are living beyond their means and now it all is crashing down; not on them really, but on us. That's too bad, but it doesn't take a rocket scientist to figure out you can't keep drawing more money out of a house forever. Fred Flipper and his family refi'd once and bought new cars. They refi'd again for the time share condo, marina space, and boat up in the Dells. They refi'd again when Fred Jr. went to that prestige college. As long as the house prices kept going up it sorta worked. Now they toss the keys and walk away, leaving the mess for someone else. For us.
In some cases, the buyer simply wasn't smart enough to know when the teaser rate expired, they just couldn't afford it. They didn't get the Alt-A guidelines but the mortgage guy said it was cool, it was designed to help them, a way to buy the home of their dream. Now the mortgage guy is gone, and the office is empty, and some company wants more cash than they can pay, or else. There isn't any smiling face to reassure them they're doing the right thing, just notice after phone call telling them they did the wrong thing and now they have to pay. Shame on them for not knowing better, we say, and shudder in relief: if you've ever been in a room with high pressure sales people, you know how confusing it can be.
In some cases, the family has been hit by other economic woes. Just keeping their noses above water, and the wife's job got downsized. The meager medical insurance just went up another 20% this year. The new higher deductible for the broken arm wiped out the savings account. The car just upped and died. The kid in college still has another year. The recent state, county, and municipal tax hikes push them over the edge. The builder went belly up and left them with a bad roof. There is no rainy day fund.
Hard to lump all these different story's (and many more) into one book. The Fed is bailing out the banks-the companies that started this all in the name of profit. Will they help the buyers, the people who may or may not deserve the help? All of the lenders knew what they were doing: few of the buyers knew what they were really getting into.
I've said this before:
The increasing shortage of affordable housing was becoming a problem for us. This was a lead-up problem several years in the making, and for a while it was actually accelerating.
The key word here is was.
The crash and burn in housing over such a short time frame has changed the parameters of the discussion. Now, we have too many homes on the market and not enough qualified buyers. Why? The most likely to buy the middle priced homes are squeezed out by credit lenders.
Banks and greed are to blame. Spare me the argument that it wasn't banks; that has long been laid to rest, it was the banks. Now we have real estate prices leveling off and on some properties even going down, and first time buyers can't get reasonable rate conventional loans-loans they could make good on-to buy them.
I listened to enough ad hoc meetings, DGHT presentations, and council hand wringing to think we're trying to solve (or ignore, take your pick) the last problem instead of the current one. The problem we have now is too many homes up for sale and not enough buyers with qualified loans. There's where the affordability problem has shifted to.
Two smaller middle income homes. Which house would you rather have next to yours?
2 comments:
If I follow you correctly, it's not a lack of buyers or qualified buyers, it's a lack of lenders willing to write a mortgage to qualified capable buyers.
In a nutshell, and for now, yes...
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