When your home value drops, you are losing years and years of your investment, right?

Question

How isn't that just another way of robbing people. This corrupt mortgage meltdown has served to do just that. Nevermind the millions of subprime foreclosures, we all lose, except the insiders in the mortgage banking industry and the insiders in the u.s. congress. greenspan wrote a paper on this many years ago.

Answer 1

I did.......$10K down the tube in 3.5 years!

Answer 2

Robbing peeple??? Who is robbing who?

that aside...

It takes years and years to build any equity in your home - as an investment.  In fact it usually takes about 2 thirds of your mortgage term to pay off half the principle - without taking into account any sort of down payment - which used to be 20% but today (err yesterday) could have been zero.

Many of the situations you have mentioned are occurring to people who have little to no equity in their home even if the property value stayed the same. And yes many people got rich off of selling these sub-par mortgages and flipping homes.  The people who are losing are the ones who either bought high or should not have been able to afford the property in the first place - sometimes both.

Answer 3

Believing your home value will increase every year for the rest of your life is moronic. It was the left, under Clinton, that said that everyone needed a home, a piece of the American dream, and encouraged the Fed to make credit and mortgage easy to get for everyone. The right didn't protest this either and hopped on board. So we did that and now the housing market has hit a low. Whoever did not see this coming had their head up their rear. Your home value decreased becuase people defaulted on their loans. If you want to blame someone blame Joe stupid for buying a home with a variable rate that he could not afford. Or blame the government for having absolutely 0 foresight on anything and encouraging bad lending procedures. Blame the Fed and our fiat monetary policy.

Please, don't say the same government that caused it now has to fix it or that we have to put it in the stupid voters hands who can't even do simple math to determine their monthly payments.  

Answer 4

No, for most people it is a good thing. The only way you lose money is if you sell when the value is lower than when you bought, which is extremely rare. Most people will actually come out better because their property taxes will go down.

If your property is worth 100K when you buy it, and then goes down to 90K, so what? Unless you sell at 90K the "loss" is purely on paper. A paper loss does not affect the amount of principle you have paid on the house or the equity you have in the house.

Answer 5

There was a time when people thought of their homes primarily as a place to live, not as a piggy bank that could be borrowed against to finance new spending.  -  Home prices have been crazy for years.    People now count on house appreciation..  Hardly anybody would buy a house at today's prices,  if they believed that there would be little inflation and that the house would be worth about as much 10 years from now as it is today.  

Inflation (including home price inflation) hurts people who save their money..   - I am sorry that some people have been hurt, but in some ways the melt down has been healthy.

Answer 6

Do you have a question you need answered?

Answer 7

For the most part the drops correspond to the fake gains during the build-up of the bubble.

You never really know the true value of your home until a buyer makes an offer.