GoFuckYourself.com - Adult Webmaster Forum - View Single Post - Is the solution to the US housing slump MASSIVE DEBT FORGIVENESS?

kane · 06-28-2009, 01:33 PM

I think negative equity is something we will be dealing with for a while. The US housing market is/was so overpriced that it is ridiculous. I read a little while back that the average wage in the US is $16 per hour. The average house in the US costs 180K. When you add in taxes and insurance what it means is that these days the average wage earner cannot afford the average house. So a lot of people do the wrong thing and overextend themselves. In doing that the continued to drive the market up. now it has come back down to earth, but many of those who bought at the top of the market are feeling like they got screwed. To me it is a big market correction and if you are in it for the long haul you should be okay.

Case in point. A friend of mine bought a house 3 years ago for 270K. It is a nice house in a nice neighborhood. Then as things started to collapse his neighbors got foreclosed on or moved. A few months ago he decided to see about refinancing since rates are pretty low right now for those that have good credit. Turns out even though he put in central AC and did some other things to the house it is now only worth about 235K so he didn't refinance. He is planning on living there for at least the next 10-12 years so over that time it should regain what it has lost, but those that are looking to sell sooner could be screwed.

Bailing everyone out won't fix the problem. If there is a way to refinance someone and lower their payment with a better interest rate and that will allow them to keep the house instead of having it foreclosed on, I say do it. If there is no way to do that, then we just have to take it on the chin. I say you don't fully forgive the loans, but instead you restructure the debt to make it easier for people to pay back. Keeping people in the houses, even if it means longer payback times, is better for everyone in the long run then just letting a ton of houses be foreclosed on.

06-28-2009, 01:33 PM
kane Too lazy to set a custom title Join Date: Aug 2001 Location: portland, OR Posts: 20,684	I think negative equity is something we will be dealing with for a while. The US housing market is/was so overpriced that it is ridiculous. I read a little while back that the average wage in the US is $16 per hour. The average house in the US costs 180K. When you add in taxes and insurance what it means is that these days the average wage earner cannot afford the average house. So a lot of people do the wrong thing and overextend themselves. In doing that the continued to drive the market up. now it has come back down to earth, but many of those who bought at the top of the market are feeling like they got screwed. To me it is a big market correction and if you are in it for the long haul you should be okay. Case in point. A friend of mine bought a house 3 years ago for 270K. It is a nice house in a nice neighborhood. Then as things started to collapse his neighbors got foreclosed on or moved. A few months ago he decided to see about refinancing since rates are pretty low right now for those that have good credit. Turns out even though he put in central AC and did some other things to the house it is now only worth about 235K so he didn't refinance. He is planning on living there for at least the next 10-12 years so over that time it should regain what it has lost, but those that are looking to sell sooner could be screwed. Bailing everyone out won't fix the problem. If there is a way to refinance someone and lower their payment with a better interest rate and that will allow them to keep the house instead of having it foreclosed on, I say do it. If there is no way to do that, then we just have to take it on the chin. I say you don't fully forgive the loans, but instead you restructure the debt to make it easier for people to pay back. Keeping people in the houses, even if it means longer payback times, is better for everyone in the long run then just letting a ton of houses be foreclosed on.