CaptainZoidberg wrote:Broomstick wrote:
Even these days, most homes in suburbia aren't 500k.
Yet many are, and in the resolution you're supporting - suburbia will die. I.e, virtually everyone leaves.
In my area, most homes are still under $250K - that would be 2000 square foot home on a 1/2 acre of land. Most on 1/4 acre plots are under $200k, and 1/8 acre plots under $150k.
Your area's real estate prices are significantly higher than in mine, and so is your cost of living.
And if you get to foreclosure you don't have a choice about it.
How exactly do you see the entirety of Suburbia getting destroyed by foreclosure? Why would the banks take the house back if they couldn't get any return on it?
Please read up on
foreclosure. Now that I have a better idea of your age your confusion on this matter is much more understandable, but you really should educate yourself about these matters.
When you obtain a loan for something YOU do not own the object, the LENDER does until you pay off the loan. When I buy a car whoever holds the loan is the actual owner, they possess the title, and they can, for instance, dictate how much insurance I am required to purchase for the car. Likewise, when you obtain a mortgage from a bank in order to buy a property or home
the bank owns the real estate until you have fully paid off the mortgage.
The bank does not "take the house back" -
they have owned it all along. What they do is boot out the debtor that is no longer paying back the loan. Now, there is actually more than one type of foreclosure. There is
strict foreclosure where the bank gets the house and can do whatever they fuck they want with it. There is judicial or sale foreclosure where the bank is
required to sell the house and various people with a claim line up for the proceeds - the bank, the state IRS, anyone else you owe money to, etc.
Once the house is foreclosed
the debtor has no more debt. It's done, over. The bank can't (usually - there are a couple of rare exceptions) take back the property AND make you keep paying on the mortgage. The mortgage no longer exists after the foreclosure.
If you are foreclosed on there comes a point were you aren't paying any longer. You're bankrupt. Your credit is completely trashed. But since you can't get blood out of a turnip, and at that point you're a turnip, what you owe on the house you used to own is either reduced or eliminated. This means your mortgage lender takes a loss.
You're obviously not a turnip if you can pay rent on an expensive urban apartment (note - very expensive, since everyone in Suburbia is vying for them).
There are several solutions to the "expensive urban apartment" problem. You can live in a completely shitty neighborhood. You can get lots of roommates. You can wind up completely homeless (not so much a solution as a really bad problem).
Remember, after the foreclosure
you no longer have a mortgage to pay. This may enable you to pay for a much reduced but still viable habitation of some sort.
Also, my general point stands. What makes you think people would leave Suburbia when they'll trash their credit in the process?
Foreclosure is NOT the debtor's choice! You, the would-be homeowner, do not "choose" foreclosure - foreclosure is
imposed upon you.
If you have a $2k a month mortgage payment and you lose your job and are now collecting, say $1k a month in unemployment... how long do you think you can pay for that mortgage AND food AND utilities AND gas AND...? Miss three house payments and you'll be in foreclosure. That's not your "choice", it's what the bank will do if you miss three payments. Three months. Right now, in my area, people who lose their jobs are generally taking 12-18 months to regain employment at their prior levels. Who the fuck do you know has 12-18 months worth of money in the bank?
What makes you think the government would let this happen if they knew it would trash the banking industry?
Because the current maladministration believes that regulation is bad and the free market will solve all problems.
Wake the fuck up -
this is happening RIGHT NOW in some parts of the US.
Subsequently, if you have an apartment you pay your landlord rent, not a bank. If you're paying a bank, it's a condo. what's the difference? Renting is usually cheaper on a monthly basis. Usually, not always.
You'd pay the bank for your house, unless of course you foreclose - in which case it's a total mystery how you manage to pay for anything in your new apartment.
Foreclosure terminates your debt. It's like bankruptcy in that sense. Of course, you have zip chance of getting another loan for a decade or so - you just cost someone a 100k or 250k or 500k, who the fuck will lend you money after that?
But your mortgage debt is
terminated. By that time you will probably be otherwise bankrupt, which terminates most of your other debts. That is, essentially, one of the purposes of bankruptcy - to allow you to "reset" from unbearable debt and get back on your feet. There are limits on it - for one thing, you can only declare bankruptcy once every seven years. And people are really reluctant to lend you money without collateral, which you will probably not have for some time.
What this means is that even with severely reduced income you have a chance to survive and rebuild. In time, if you stay out of financial trouble, people will even be willing to lend you money again. Eventually.
Hell, yes - your average employer doesn't give a fuck about how difficult it is for an employee to get to work, only that the person get there on time (or, even better, a little early). Employers are not obligated to subsidize the cost of commuting.
Even when suburbia is collapsing? Even when the banking industry is falling apart? You seriously think your employers are going to be that stubborn on such a small issue?
Absolutely.
I hate to play the Old Fart Card, but I've been in the work world for 25 years. Employers really are that Machiavellian. They will resist doing anything that will cost them either money or convenience.
And even if they were - what makes you think the government would let them stay stubborn?
The current maladministration is anti-regulation, anti-interference,
laissaez-faire, and pro-big business. They don't give a fuck about the middle class or anyone below it, except when they want some votes.
We've already seen schools go to 4-day / week schedules in light of hurricane Katrina
But did
businesses move to a 4-day schedule? THAT's the relevant question here.
an event coming nowhere near a suburban exodus.
How many people left New Orleans prior to Katrina?
How many went back?
New Orleans at present only has about 60% of the pre-Katrina levels. That's a shitload of people who went somewhere just before the hurricane, in less than a week, and never came back.
And we are moving in that direction, but we have to overcome entrenched attitudes as well as practical obstacles.
Dude, we're debating the end of American life as we know it. A suburban exodus would not be business as usual, and people would not sacrifices their houses and credit-history over some small cultural obstacle.
You seem to be under a delusion that people
choose to be bankrupt, or
choose foreclosure. That's why people say they were "forced out of the house" or "bankruptcy was imposed".
While in some cases these things are the result of poor choices what we are discussing is a set of circumstances where these things become widespread due to the cost of living skyrocketing, the real estate market collapsing, and wages remaining the same or falling.
The people in my area who are suffering foreclosure did not CHOOSE that option.
It's also impractical because people no longer typically work long-term for one employer.
Sometimes. Some people do work long term though.
It's extremely rare these days.
But in the short term leaving Suburbia probably wouldn't be a wise choice.
Again, I'm not talking about people making a
choice here - if you lose your job and can't make your mortgage payments
you lose your house. That is not a "choice". That is circumstance shitting on your head.
If you were stupid enough to buy into an ARM, then when it resets you can't afford the new payment you will be foreclosed on. That is the result of a poor choice, but the choice to foreclose isn't yours. It is someone else's and they impose it upon you. If, meanwhile, due to a shitty economy you have also lost your job you are REALLY in a shithole.
Alright, what part of sometimes you have no choice is failing to register with you? If you can't keep up house payments you get foreclosure - you lose everything you put into that property.
What's the bank going to sell your house for?
Whatever they can get for it.
Typically, that's a public auction.
I used to be on the board of a credit union. What we dealt with car loans was a smaller version of what a bank deals with in mortgages. Someone asks you for a loan in order to purchase a Large Expensive Object (LEO). You say OK - but until you pay all the loan back I own the LEO even though you're using it and it's in your possession. If you miss too many payments I will take actual as well as legal possession of the LEO, to which you will lose all claims and rights to. This is why you have to apply for a loan, have your credit rating evaluated, and so on - why would anyone lend to an irresponsible jackass, right? After which the person wanting the loan has to sign a multi-page document detailing the conditions under which money is being exchanged.
We didn't have too many people default on the loans, but when they did, if we couldn't come to an agreement (and we didn't
have to negotiate, that was purely voluntary on our part) then we'd repossess the car. Then we would sell it at public auction. After various fees and taxes were paid we might net about $5k for a $30k vehicle. Seriously, we'd take a loss of 3/4 to 5/6 on a repossession. Well, that was one reason we were willing to negotiate a lower payment if we could, or otherwise do anything we could to get the money out of the debtor. But sometimes it just wasn't possible, so the loan would be cancelled, the loaner would take back the property, and it goes to auction.
Likewise, if you can't make a house payment you
really should ask to negotiate with your lender. They won't always do so, but it doesn't hurt to ask and the lender does have some incentive to cut a deal with you. But, if you really can't make the payment the lender will take possession of what they already legally own, put you out on the street (or, if you're renting out the property, they'll put your tenants out on the street), and auction off the property at a loss, for whatever they can get.
That's why too many bad loans can destroy a financial institution. Every business had to deal with occasional loss or bad debt, but NO business can be run at a loss indefinitely.
If you don't have a mortgage but you can't make the tax payments it takes a little longer but you lose everything. That's the way the system works. When you get to that point you no longer have a choice.
Why is the bank going to foreclose your house if they can't sell it for anything?
They'll foreclose your house because you aren't paying your debt.
They don't sell it with a real estate agent - it goes to public auction. They will
not recover the full value of the property. Frankly, they'd probably be thrilled to cover taxes, fees, and expenses, basically to break even. That's why lenders screen (or are supposed to, or used to) loan applicants. Foreclosure is in
no one's best interests. From the point of a view of lender it's disposing of a property that would otherwise cost them money (taxes, maintenance, liability, other things) so at least they stop bleeding money.
Remember - those speculators have to pay taxes and maintain those properties for 10-20 years. That's a hell of a gamble. Prices go up ONLY if people are buying - if the move back to suburbia occurs at a trickle rather than a flood the prices won't be so inflated.
If electric cars became an option than people would flood back in to escape the horribly overcrowded cities.
Would they?
If you suffer a foreclosure you probably will NOT be able to get a mortgage for at least 10 years. By that time a large percentage of people with have built a life doing something else. They may have adapted to the city and not want to take that level of financial risk again. Or if they do move back to suburbia they might choose to rent instead of buy (there is far more renting going on in suburbia than most people know, both apartments and entire homes).
That only works if you have a choice. You don't seem to understand that sometimes there isn't a choice.
But most people would have a choice.
On what do you base that? The idea that things won't change much?
If it becomes too expensive for people to people to live in suburbia (for whatever reason) then they will have
no choice. You can't control everything that happens in your life. People do not choose to be laid off, get cancer, or pay $5 a gallon for gas. These are things that happen
to you - all you can do is find a way to adapt. Typically, if people can't live in rural or suburban areas (for whatever reason) they flock to cities looking for work. This has happened multiple times in history.
No. But since I have nowhere to plug a car into that's sort of a moot point, isn't it? There are no external outlets on my building, and I don't think I can get a car through the front door so I can recharge it in my front room. Or do you propose I pay for the cost of installing and external plug, too? And how do I keep other people from charging their vehicles on my electric bill?
Buy an extension cord and lock your door when you leave the house?
Meanwhile, because I can't fully close the door while charging my car, all the heat leaks out all winter and I have to pay for THAT! Or a drill a hole in the door for the cord, but then I have to find a way to plug the hole to keep heat or cool from leaking out and vermin from leaking in.
I suppose an entrepreneur could start a business drilling holes in doors for extension cords that are easily plugged when not in use...
What about people living in mutli-unit apartment buildings? Are you going to have extension cords running from every door, up and down stairways, etc? What about the guy on the third floor? The landlord doesn't want a fuckload of holes drilled in all those doors for all those extension cords, the fire department is having a fit due to the fire/inury hazard, and the landlord also doesn't want to spend the money on external charges on the parking lot, which will also have to be metered because SOMEONE has to pay for the electricity and it sure as hell won't be him.
You don't have the
infrastructure for everyone to move to all-electric. That has to be installed. And paid for. Where and from whom is the money coming?
That boggles my mind. My TRUCK gets better mileage than that!
Ever heard of a Hummer?
Yeah - we have far too many on the road around here. I think you should be required to have a commercial driver's license and fuck of a good reason before being allowed to buy one, but they don't let me make the rules on these things...
That is not the case where I live. Then again, I am physically able enough that if I hooked up a trailer to my bicycle I could still do the shopping for us two. My husband, however, is NOT capable of doing that.
You could just carry a couple of bags home... If there's a physically handicapped person I'm sure others could look out for him/her.
You are
pathetically naive.
Let me set something straight - the average person doesn't give a flying fuck about the disabled. Disabled elderly people starve to death because they can't take care of themselves then lie on the couch or the floor for months until the neighbors bitch enough about the smell that the police come out and find them. Muggers see people on crutches or in a wheelchair and think "Ooooo..... easy money!" One of the most terrifying things about being disabled is that not only won't people
help you - they will
target you.
Of course, some people are not like that - but its rare. And most government programs require a person to not only be handicapped but
destitute. They have to sell
everything - home, car, posessions - before the government will help them beyond food stamps.
In my area home prices have fallen 20-40% in the last year.
To be honest, I'm not sure if my economic experience is typical. Living in the suburbs of DC, it seems like the economy is doing pretty well, with the creation of the Department of Homeland security, and all of the new military contracting jobs.
Your experience and location is not typical.
Your point about the Department of Homeland Security is a good one, though - that's why I submitted a job application to them. The hiring process, however, is a loooooooong process and meanwhile I'm scrambling to make ends meet.
Folks who bought 20 or more years ago can sell at the lower prices and still profit, but anyone who bought in the last 5 now has an "upside-down" mortage - they owe more than the house is worth. It's a question of can you make those payments long enough for the values to go up again, or do you cut your losses now and downsize to something more affordable.
I'm sure some will downsize, but a mass exodus won't occur because of these small drops in value.
40% is NOT a "small drop". And the trend is still downward.
I have a co-worker at the candy-store who is staring at foreclosure right now. They're trying to sell - at
half what they paid for the house and people are
still asking them to knock more off that. Mind you, they weren't stupid - they put 15% down and opted for a fixed-rate mortgage. But they both lost their jobs, she's making $7.50 an hour for no more than 15 hours a week, and while he's now in training for a new, full time job
he's not getting a paycheck for another two months. Their savings are
gone. They have no health insurance. They missed the latest payment on their car insurance. They haven't paid for
anything other than food and gas for the last two months. EVERY bill - electricity, gas, water, car, mortgage, insurance, you name it - is now two months overdue. One more month and they are both bankrupt and in foreclosure. They will lose their home, their vehicles, and most of their worldly possessions. These are not spendthrift people - two years ago they had tens of thousands in savings (that became their down payment on the house), good jobs (income six digits), and they cars they drive are modest. But they were unemployed for 8 months, and the one that is working is underemployed.
What do you suggest they do? Run up the credit cards?
How the fuck could they pay that back? They are
out of money.
This same thing is happening to
hundreds of thousands of people right now in the US.
They are not "giving them away", they are abandoning them because they don't have the money to enable them to keep them. Lose your job, lose your home is the typical pattern.
Where is the economic situation that bad?
Northwest Indiana. Chicago South suburbs. Chicago west side. Detroit (the whole metro area). Youngstown, Ohio. New Orleans. That's just off the top of my head - there are probably lots of other hot spots.
If your area is NOT experiencing this then count your blessings.
How can someone who has been laid off and then takes a job earning 1/2 or 1/3 of what they did before (I'm in that group right now) possibly afford to maintain the payments on a property long term? You realize it may be a generation for the values to rise again?
Unless the majority of the suburban population is in that boat, then it's not relevant to the debate of whether suburbia will die.
In the 1970's I watched the city of Detroit go from 2 million people to about 600,000 (it has since rebounded slightly). There is precedent for this happening, don't kid yourself.
Right now, people are hanging on in my area, but it's by the skin of their teeth. We're digging up backyards and planting practical gardens (the local garden suppliers have been bitching this year that no one is buying flowers and they're running out of both started vegetables and seeds). Some of us who were
very conservative, such as myself, have been able to cut back severely and keep going, but others are like my co-worker, facing a very real risk of becoming homeless.
This weekI had a young man come in the candy shop looking for work. I had to tell him sorry, we aren't hiring (because we aren't - those of us working there are scrambling for more hours). He started crying, and dammit, I hate it when men cry, but he's apparently had nothing but rejection, I was (he said) much nicer than most folks had been, and apparently HIS family is in dire financial straits. He wasn't looking for a job for college -
he was looking for a job to help his parents pay the rent. He's
given up on college because he needs a roof over his head and food to eat TODAY. And that is fucking sad, but there's not a damn thing I can do for him because my situation is also precarious.
Where do you get this notion that they keep making payments on these properties? Even if a judge ruled that they had to keep paying if you don't have a job you don't have money. "Abandonment" is just that - they walk away and stop paying.
Then what do they do when they get into the cities? Homeless shelters?
Not too infrequently - yes, that's exactly what happens.
But more commonly, with the relief of not having to pay a mortgage, they can manage rent on
something. It will probably be in a shitty, crime-infested neighborhood and very small and quite possibly infested with roaches and rodents and other vermin, but they'll be able to keep a roof over their head and pay for enough food, or get some from a food pantry, and shop at Goodwill or Salvation Army... this is why I like to give to food pantries. It is very direct help to people very much in need, not all of which are homeless but all of whom are at risk of having nowhere to live.
Yes, I believe you're right. Although those spectators do like to buy people's houses... 
Right now, part of my Other Half's daily medication is paid for (about 1/3) by a county level program for people without health insurance. Wow, that is a HUGE help right now. I'm not using food pantries right now, but I know where they are, just in case. Be resourceful, and don't be afraid to accept help. You can always repay it later, or donate to food pantries when you are able, or otherwise pass the help on by helping someone else later. It's the civilized thing to do.