Dig Deep

How to Solve the Excess Supply in Housing

The banks stopped lending and that's that. They shot themselves in the foot, and the bullet ricocheted into all of us. SOOO, people can't refinance out of a bad situation, as they had always been able to before. AND, new buyers can't enter the market because they can't get financing. And the people in bad situations can't sell, and foreclosures rise, and banks tighten further, and home prices fall, and foreclosures rise, and people empty their life savings in a desperate attempt to keep their home, and foreclosures rise, and people live on credit cards to try to keep their home, and foreclosures rise, and unemployment keeps rising, and foreclosures rise....get the picture. This is not a correction, it is a collapse. Please spare me your ignorance if anyone wants to say :we've been through this before". PLEASE, do some real research before spouting a pat answer like that which I have heard over and over again (it's false, by the way).

And, please stop saying things like "people who couldn't afford their house anyway"....that is truly a small segment of the problem. A small segment. There are a lot of people who can't afford their houses now, for a lot of reasons, but to say that homeowners brought this problem on themselves, and the rest of us, is really and truly a profession of ignorance about the facts of this crisis.

Oh, by the way, not everyone who takes out an Adjustable Rate Mortgage (ARM) is trying to beat the system, buy more house than they can afford, etc. That's like saying everyone should only buy bonds, and not stocks, commodities, etc. There are diferent vehicles for different people for different objectives. Not all subprime loans were taken out by idiots or put in place by predatory lenders. Same reason. Problem is: because banks stopped lending and home values dropped like a rock (your opinion of home values is irrelevant) these people got stuck and then of course their housing expenses got too high. They were never supposed to be in these loans when they adjusted. They wouldn't have been if, oh I don't know, if the banks hadn't stopped lending and home values hadn't dropped like a rock. Say what you want, no one saw this coming, not on the scale it currently is. Think you did? Think again....

(BTW...I've been in the real estate and finance industry for years, and have made it an obsession to study this global crisis deep, real deep, so strap your boots on if you want to go toe-to-toe.)