Treasury Secretary Paulson said today the housing prices should be allowed to continue to fall in order to allow markets to stabilize and allow buyers to come back into the market.
In other words...That $1.2 Trillion worth of Home Owner equity at stake in the crisis should evaporate. That $1.2T is from a seperate report looking at the write-offs that may happen in regards to loans. It doesn't take into account the lower values of homes that people will hold onto. Regardless $1.2 Trillion equals $4800 for every man women and child in the US, or $24,0000 for my family alone.
The problem with that statement is that it does forget families, which is whose skin this is peeled from. Imagine...they believe the sending my family $2100 is going to be a big stimulus to the economy...what do you think asking me to pay back that $24,000 is gonna do to the economy?
Unless a stabilization plan is put into place, people en masse are going to walk away from their homes. It is already happening. Then the next ripple is to those like me that hold our home and make our payments is that the value further erodes.
Hey...it is my debt, I signed for it. But if you are the government, make sure to see who your are flipping off before you raise the bird!
3 Comments:
Wasn't it Cheney who, in response to 4000 Americans dead in Iraq, said, "So?"
Seems to be endemic in Washington.
I may be a bit naive here, but unless you're actually selling your house right now why would this impact families? If you're still living in it & paying off the original mortgage, then it shouldn't make any difference over the long term should it?
Buying a home doesn't automatically guarantee it will increase in value. Why should your government prop up property prices, isn’t it just the market readjusting after a huge bubble?
Here in Australia, interest rates have gone up about 5 times in the last 6 months to slow inflation, and our dollar is really strong against yours. In the US you get rebates & lower interest rates to stimulate the economy.
It will be interesting to see how it all plays out I guess.
@Funny - The Bird always flies at night! It is amazing the F-You attitude from ALL parties.
@Debt - THe overall point is yes, there are no guarentees and the market sets value...but my point is tht the banks broke that covenant with the buyers by artifically raising home values. So let's say my job make me move. Even if I put 20% down, the bank foreclosed on 3-4 in the near are driving down home values (as they will blow out those repo-ed homes)now my home is worth 30% less then what I paid. I am now 10% underwater on the value of the house.
On top of that even if you don't move, it will take a long time in order to get your home back to $0, much less net positive.
It really will be (IMHO) the homme buyer that stays and pays (like me) that will get whacked.
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