Land Development Issues > Blog

Housing Slump: Blame Game

September 20, 2007 1:47 pm Stephen Clancy
Filed in Real Estate

For the past few months, we have been inundated with doomsday news reports on the housing market - and the obvious implications on financial markets. Aside from the ever so important updates on OJ Simpson and Britney Spears, our print, internet and television media are consumed by stories of mortgage companies entering bankruptcy, people losing their homes, financial markets declining, possible recession and the impending sky falling. CNN Money even has a section devoted to what they call “Mortgage Meltdown 2007“, reminiscent of the 2000 Election.

The American media prides itself on laying blame for every issue. So, in that spirit, I blame the American consumer (you, me and everybody else). In some way, shape or form, we all contributed to the state of our union. Yes, I am a capitalist. But it is up to us to make responsible, educated decisions - especially when it comes to one of our largest and most important investments, our home.

• Did you get caught up in the hype of an exotic loan without properly educating yourself or simply fell prey to an unscrupulous mortgage broker? Are you payments increasing because your adjustable rate mortgage has increased?
• Did you fall prey to predatory scam artists while trying to remedy your situation?
• Did you get into the Miami condo market because a friend told you of six-digit earnings with no effort?

At what point do we “step back and punt”? Or do we dig our holes deeper? I ask this because a new service, CardIt, allows you to pay your mortgage with a credit card. The sample fees of $44.90 they provide are on a $1,000 loan payment. According to the National Association of Realtors, the national median home sales price in 2006 was $220k. Using a simple mortgage calculator, with 10% down and 7% interest rate, your P&I payments alone are $1,300. What about es-crowed taxes and insurance?

During a time of record setting foreclosures and personal debt at an all-time high, is this fixing the problem or delaying the inevitable? Please post your comments and thoughts.