kane

I agree 100%. You have a lot of people who purchased homes that were way out of their price range and didn't look ahead. When the interest rates went back to normal they were screwed and they took a lot of other people down with them. I read that about 25% of the homes that were being foreclosed on were second homes. So I think a lot of people bought another house figuring they would flip it and resell it or rent it and get rich and they weren't thinking.

In a town next to mine they had some pretty big growth and over the last 6-7 years built two huge new housing complexes. One of them had houses that started at 300K and went to around 350K. A friend of mine bought one of the 300K houses and the entire first phase sold out before they even had it built. When phase two came around they raised the prices. Same houses, same area but now they were 375K and 425K and most of them sold out before they had them built. Now you drive through there and literally every third house if for sale or has a foreclosure sign on it. My buddy got screwed in all of it. He got divorced right after he bought the house. As per the settlement he had 2 years to either sell the house and split the profit with his ex-wife or if he kept the house he had to pay her half of the equity value of the house when the divorce was drawn up. At the time of the divorce the house was worth close to 350K. Two years later it was worth about 270K. He tried to sell it, but couldn't get an offer above 250K so he had to refinance and dump every cent he had in savings in order to pay the ex her 25K and he was told by the bank the reason for his house's decline in value is the number of for sale and foreclosed on homes in his neighborhood.