Then, they sold that old "charmer" and borrowed some more to buy a new McMansion...
And during the whole time, they were borrowing more off their credit cards to shop 'til they dropped at Nordstrom and Saks...
But now, things are changing. People are not as giddy about the real estate market as they were in the not-so-distant past. And though it's not a total disaster here, houses are sitting on the market for longer...
And, of course, people here can't just get another mortgage and keep on shopping the way that they used to. Mortgages just aren't that cheap anymore. Personally, I'm getting afraid that we might start to see more foreclosures as people can no longer afford all those pricey payments: (From Bloomberg)
About 20 percent of sub-prime mortgages granted in the last two years will end in foreclosure as owners struggle to make payments and home prices stagnate.
That rate is almost double the 2002 level and could result in about 2.2 million U.S. borrowers losing their homes, the Center for Responsible Lending said in a report. The non-profit advocacy group's analysis of mortgage data shows homeowners risk losing $164 billion in wealth through 2014.
The weakening U.S. housing market is straining some borrowers. Year-over-year median existing home prices fell for the three months ending Oct. 31 to $221,000, according to the National Association of Realtors. That suggests less equity for consumers who might have used it to pay off sub-prime loans, which account for one in four U.S. mortgages granted today.
``There's a very high rate of trouble in these loans,'' Kathleen Keest, senior policy counsel for the center, said in an interview. ``Those of us who have been on the ground watching the foreclosures had been getting more and more concerned.''
Once upon a time, many of us in Southern California blithely enjoyed our good lives in our McMansions as we continued to borrow off the home to pay the monthly credit card bils for all the fabulous shopping that we did...
But now, that McMansion isn't worth as much asit used to be...
And the neighboring McMansions for sale have been sitting on the market for not just days, but months...
And the mortgage payments on that "interest only" loan are starting to skyrocket...
And those credit card payments look downright frightening...
Our economy has been running on debt for a while, but now that America can't afford all that debt, I'm afraid that America won't be able to heed Bush's call to "do more shopping"...
Sorry, Mr. President. Our credit card is maxed out, and our mortgage is simply unbearable.
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