Marty

Housing Crisis Likely to Wipe Out Two Decades of Family-Earned Wealth

Id argue that housing is sympton not a cause of the wealth wipe out.
The outsourcing of jobs and inflation running well over announced rates combined with a lack of investment in this country has produced a situation where costs of living are way in excess of the ability people have to pay their bills. Sub-prime borrowers were just the weakest link. Look at AMEX and other banks recent news on their prime borrowers increasing their defaults. When gas, heating oil and the cost of food soar to create another monthly mortgage amount something has to give.

Much of the divide between the "high saving types accusing the younger generation" and the "wasteful types in the young generation" is merely because the former rode the bubble up and cashed down.

My dad bought his first home for 20k, sold it for 60k, his second for 107k (a real stretch for him at the time) and sold it for $450k.

Many people like him only had money because they could tap the equity to send kids to school, trade down to cash out to retirement.

Some of this younger group gets out a college which costs 10x as much as when their parents went, into a housing market which was high and if everything else didnt go haywire they would be able to afford the mortgage as well.

Right now the lack of opportunity, outsourcing of not only manufacturing but service jobs as well, combined with a total lack of investment in the infrastructure and technologies of the future here at home has led to a longer term problem that wont be easily fixed..

MA in CT