Housing Crisis Throughout the Nation

Mortgage foreclosures are at an all-time high, housing prices are falling at record rates, and for the first time on record, homeowners own less than half the value of their homes. This crisis threatens not only to force millions of Americans out of their homes but put hundreds of thousands of Americans out of work and devastate communities across the nation. Mortgage rates may not get back up to the 18% of the 80's the author cites but they are unlikely to go lower any time soon. The author fails to mention that the '91 rate was better than 9%. Mortgages based on initially low gimmick loans that are now "resetting" at higher rates are causing genuine grief in the lives of many people. The fact that big-deal credit-rating agencies such as Moody's gave high ratings to bonds backed by subprime or gimmick mortgages reminds us again how much quackery there is at the top of American financial institutions.

As many observers indicated several years ago, if you borrow and consume in excess of production, sometime in the future, you may have to pay back by producing in excess of consumption. Interestingly the number of folks in denial directly correlates to the severity of the fall in prices. In the Western U.S., where 88% of all homes have fallen in value, fewer people think their homes have increased. Interested to know what a starter home price point is in Phoenix. Here in Northern NV, starter homes are beginning to become available below $200,000, in reasonable neighborhoods.

American society is on the verge of an epic clash between two conflicting rights: the right to maximize profits versus the right to decent, affordable housing. The heightened contradictions of today's economic crisis have brought this conflict to the forefront. Americans were soon faced with the realization that the price of homes would not keep going up indefinitely. Worse yet, prices could actually come down. Americans are growing anxious that the equity they've paid into their homes may not provide the financial security that home ownership once guaranteed.

Bankers expected house prices to keep increasing, that's why they were giving more loans, even to people who did not have enough credit rating. And this excessive buying helped keep house prices up. Banks are slashing prices to move inventory, but they are barely keeping up with all of the new foreclosures. The good news is that we are at the peak of the ARM loan resets, so I believe the situation will begin to improve next year.

Article by Andre B office space in Miami