“Why keep paying all that money to make your landlord rich, when you can buy a house while interest rates are low and build up your nest egg?” is heard around kitchen tables, water coolers and in locker rooms across the country.
“Buy a house and it is yours” is a powerful dream. However the deregulation of the banking industry, one of capitalism’s more mysterious and predatory creatures, started by the Reagan administration, is a large pin pricking the dream bubble. Ability to move capital around the world, at the click of a computer mouse, made real estate one of the 21st century’s growth industries. And interest rates that balloon after two or three years of buying a home, along with stagnant wages and job losses, have created a gushing hole.
In February, RealtyTrac, an online catalogue of foreclosures, reported that in one month 130,000 families lost their homes across the country. That is a 12 percent increase over February 2006. In January, banks foreclosed on 136,113 homes. At that rate, many real estate experts say 1.5 million families will be in the street with their sofas, beds and children’s toys on the curb by the end of the year.
RealtyTrac reports that 1 in every 884 U.S. households are in some stage of the foreclosure process. Those steps include late payment notice, auction sale or bank repossession. The numbers mask the scale of human distress.
“The rise in foreclosures over the past year probably only marks the beginning of the problem,” Jan Hatzius, a Goldman Sachs economist, warned in a March 23 report. “The main reason to expect further deterioration is that house prices are likely to fall significantly in 2007, with further declines possible in subsequent years.”
In February, home sales fell to lowest level in seven years, and the number of unsold homes skyrocketed to the highest rate in 16 years, according to the Commerce Department.
Florida led the foreclosure process in February with 19,144 families losing the roofs over their heads. California was next with 16,273, followed by Texas with 12,386 families forced into homelessness.
Much of the media reporting has compared the deepening housing crisis to the dot-com mess, implying that “well, we got through that, it wasn’t pretty, but it did not signal a full-scale recession.” In sheer size, mortgages represent over $1 trillion, far exceeding the dot-com companies. When the bank forecloses on a family’s home, the family loses everything. Not the case with dot-com companies, many of whom were protected by pro-corporate bankruptcy laws. The high-tech debacle did not see children and moms separated from their dads, spending the night in shelters, or U-Haul trucks pulling up in the dead of night with families furiously loading up as many of their possessions as possible.
If a Martian were following media stories on the housing crisis, he or she would conclude that only the stock market took the hit, not the next-door neighbors.
dwinebr696 @ aol.com
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