Roubini: Millions of Americans set to abandon homes

[Eugene]

Source: Reuters

Millions of Americans set to abandon homes
Tue Feb 19, 2008 1:28pm EST

By Patrick Rucker

NEW YORK (Reuters) - Millions of U.S. homeowners who bought
homes with sinking value are set to abandon the properties and
cut their losses on bad investments, a leading housing market
economist said on Tuesday.

"We may face something unprecedented ... that is a situation
where millions of homeowners are going to walk out of their
homes in the next couple of years," said Nouriel Roubini,
professor of economics and international business at New York
University's Stern School of Business and head of Roubini
Global Economics.

Somewhere between 10 million and 15 million homeowners might
soon find that their homes are worth less than the amount of
their loan, Roubini said at the Reuters Housing Summit in New
York.

Such borrowers would be caught in a trap of "negative equity,"
in which they are paying off a loan that no longer represents
the true value of their property.

-snip-

Read more: http://www.reuters.com/article/Housing08/idUSN1927747520080219

[nadinbrzezinski]

1. Don't these people read history?

the liquidity trap led to something very similar in the 1930s, after the 1929 crash.

[nadinbrzezinski]

2. self delete

[Tandalayo_Scheisskopf]

3. A lot of these "homeowners"...

Will be speculators and flippers who got into the game late, own multiple dwellings and want to cut their losses fast. Others will be developers sitting on empty McMansions, condos and commercial real estate. All of these are speculators also. The banks were funding a lot of speculation and are now gonna get caught with the meat in their mouth.

[izquierdista]

4. Unprecedented is it??

[w8liftinglady]

6. this picture always breaks my heart-I dread this happening again

[nadinbrzezinski]

9. Yep unprecedented.... remember Muricans for the most part, don't have

a historic memory. Those events didn't happen here :sarcasm:

[Warpy]

5. I just told a bank guy that today

when he said Countrywide's losses were only going to be 10% or so. I told him to project a 30%-50% loss, meaning BoA will still make money on that deal, but they won't make much. I pointed out that as housing prices finally begin to drop, people who bought at or near the top of the market would find themselves in negative equity and when that happened, they'd just lock the front door and walk.

The major losses will be in "hot" markets like Phoenix, Las Vegas, and much of California, places Countrywide moved into and gave "liar loans" to anyone who was breathing and willing to lie about their income. Fortunately, these were a small minority of loans extended. The problem will be in the prime loans that were given at the top of the market. If rent is cheaper than ownership, they'll just walk.

I can't watch HGTV any more. All those hopeful, sweet young couples getting into those $600,000 bungalows in so-so neighborhoods in California will be the first to lose everything. It's just unbearably sad.

[dasmd]

10. Opposing view...

Here's where you lose my sympathy:

"All those hopeful, sweet young couples getting into those $600,000 bungalows in so-so neighborhoods in California will be the first to lose everything. It's just unbearably sad."

What on Earth possesses young couples to purchase a house costing over 0.5 MILLION dollars? Greed. Everyone was looking for a quick buck, lenders, realtors, and buyers included; nobody can claim ignorance here. People counted on prices continuing to rise, so they could flip the house and entertain their real estate tycoon fantasies. Whoops, music stopped, and they're left without a chair. What burns me, is that some of the legislation on the table (paging Senator Clinton) will effectively force banks to pass the cost onto to new borrowers, to try to float mortgages during the reset, that couples like this couldn't afford from the start. Looks like Obama's my man...

Isn't it more unfair that sweet young couples, who waited patiently and saved, who never owned a house, will have to put that off - possibly for years, to help irresponsible couples like the one you mentioned above make a few more payments before inevitably being foreclosed upon?

My humble opinion, the market's gotten way out of hand, and we can let it fall back to normality now and suffer a few bruises, or watch it come crashing down after the government is through trying to prop it up with a few popsicle sticks.

Regards,

DAS

[sendero]

7. I totally agree..

.... idealistic homeowner who thought they were playing the game correctly are going to walk because they feel cheated.

Speculators or going to walk because they were cheaters to begin with.

How bad it gets depends on just how low prices go. And unfortunately it is a self-reinforcing cycle at some level.

We do live in interesting times :)

[SlowDownFast]

8. Homeless Squat in Foreclosed Houses

Some Homeless Squat in Foreclosed Houses
Sunday February 17, 2:26 pm ET
By Thomas J. Sheeran, Associated Press Writer

Some Homeless People Turn to Empty Houses for Shelter Amid Nation's Foreclosure Crisis

CLEVELAND (AP) -- The nation's foreclosure crisis has led to a painful irony for homeless people: On any given night they are outnumbered in some cities by vacant houses. Some street people are taking advantage of the opportunity by becoming squatters.

Foreclosed homes often have an advantage over boarded-up and dilapidated houses abandoned because of rundown conditions: Sometimes the heat, lights and water are still working.

"That's what you call convenient," said James Bertan, 41, an ex-convict and self-described "bando," or someone who lives in abandoned houses.

While no one keeps numbers of below-the-radar homeless finding shelter in properties left vacant by foreclosure, homeless advocates agree the locations -- even with utilities cut off -- would be inviting to some. There are risks for squatters, including fires from using candles and confrontations with drug dealers, prostitutes, copper thieves or police.

"Many homeless people see the foreclosure crisis as an opportunity to find low-cost housing (FREE!) with some privacy," Brian Davis, director of the Northeast Ohio Coalition for the Homeless, said in the summary of the latest census of homeless sleeping outside in downtown Cleveland.

more:
http://biz.yahoo.com/ap/080217/homeless_foreclosure.html

[cliss]

11. I read over on the Daily Kos,

that a full ONE THIRD of all housing in this country is not needed. Meaning, it will never be lived in or used for residential housing. We simply can't afford it, for a variety of reasons.

Just - unbelievable what's happening in this country.