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Housing Bubble News, June 27, 2006

If you’re in trouble with your 30-year mortgage, why not take out a 40-year or 50-year mortgage or an interest only loan? That’s what a Newsday editorial is suggesting.¹ Ugh! If you want to avoid having financial trouble, don’t buy a home bigger than you need. Note that I didn’t say “bigger than you want.” For most families, 3 bedrooms is fine — looking at the new 6 bedroom developments just miles from my home continues to shock me as my local banks report higher foreclosure listings than I’ve ever seen. Good job, Newsday.

MaineToday talks about a figure that shows that 21% of subprime mortgages issued in 1999 are in foreclosure or were foreclosed.² Instead of going after the Federal Reserve for creating this market ripe for bubbling and crashing, they’re going after those who are loaning up the Federal Reserve’s cheap and easy credit. Why? If a bank loans you money, and you don’t pay, the bank is stuck with a home. Isn’t that punishment enough? Why do we need MORE local and national laws restricting the credit market — kids will learn when they’re parents lose their homes, and banks will learn when they go bankrupt from owning too many assets without mortgage payments.

eMediaNewswire says that 300,000 homeowners are facing foreclosure, and the end isn’t in sight.³ That’s a 72% increase from the year before! And some of us continue to believe the real estate industry when they say there is no bubble and no trouble ahead. Can anyone falling out of a 10 story window believe that they’ll witness a “soft landing?” I think not. If you’re one of those homeowners facing foreclosure, get out now. Move in with your parents or your siblings, get a second and third job, work your body to the bone for a few years and never/do/it/again.

I’ve always looked at Boston as the first city to collapse from the housing bubble, and it looks like it is heading that way. The Boston Globe says that houses in Massachusetts have fallen 4% as sales have fallen from lack of demand.⁴ The report also shows that condo prices and numbers have fallen as well in the same time frame. Even more interesting is that foreclosures in the region doubled since the last month, to over 1600 homes facing repossession by the banks.

Georgia ranks in second in terms of foreclosures in the nation, says RealtyTrac in a report covered by the Atlanta Business Chronicle.⁵ They’re showing one new foreclosure for every 537 households. I grew up in a town of 8000 houses, and to think of 15 families in my community losing their home at one time is just amazing. This number in the region has climbed 28% from one year ago, another shocker figure stated in the report.

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