Housing crash is getting worse: report

MarketWatch ^ | May 9, 2011 | Brett Arends

[jongaltsr]

I learned quick. Three years ago I walked away from a home.
I would still be making payments of almost $1600 on a run down fixer upper that I spent a lot of time and effort on. Got it fixed up real nice then the market dropped out.
I did what my name sake would have done. I dropped out and live off of the government now, until the government fails and we the living can live again.

Till then - nobody wins - everybody loses.

Unless you are willing to fight and die, the government is going to just spit in your face.

[Paradox]

I live in a heavily real-estate depressed area of Florida, and I can tell you that at least around here, Zillow is just flat out wrong. Well, they are getting closer to the right answer, but there has been a tremendous lag, at least 18 months. Not sure that Zillows method can be considered the Rosetta Stone of Real estate pricing.

[Little Pig]

This is not accurate. Prices in, for example, MA are still wildly inflated and do not show signs of weakening, even out away from the cities. When MA prices drop to where a 1700sq ft house goes for under 200,000, then I’ll concede that prices are falling.

[Tainan]

IMO, that lack of a “sustainable” manufacturing base is the root of all this crap.

[DH]

I have a friend who is contemplating a short sale. How much will this affect his credit?

---

Do a short sale and the IRS will eat you up! You walk into the doors of hell when you do so simply because you will then be reported by the lender to the IRS stating the difference of the balance of the note vs the amount already paid...and guess what......it becomes ORDINARY INCOME on that year’s tax return.

Most people are unaware of this little jewel.

[Jack Hammer]

But wait a minute - the press is telling us the economy’s in recovery....

[kearnyirish2]

“Prices in, for example, MA are still wildly inflated and do not show signs of weakening, even out away from the cities.”

It seemed that was the case here in NJ, but the homes with high prices simply remained unsold (the owners were in no hurry, and thought they’d get “September 10th pricing”, so to speak). Houses that were sold were sold at much lower prices; the property tax situation in NJ practically guarantees that you can’t make money on a house without a major investment of time & money upgrading it.

[dawn53]

Here’s the latest “scheme” around here...sorry I can’t call it a plan (I’m old school, i.e. pay your mortgage if you can.)

Quit paying your mortgage (even though they can afford it, they say it’s a bad investment...so whoever promised that they wouldn’t lose money and if they did then just walk away), save up all those mortgage and tax payments until the bank kicks you out (usually about 2 years) and then just buy a house for cash with the money you’ve saved because that’s how low prices have gotten around here. Only problem is, the folks who choose to honor their contract and stay in their houses are losing too because this type of behavior is driving prices even lower.

[Graybeard58]

Yet they’re raising the property tax assessments where I live. Thanks for nothing.

Here in Illinois they have "special" rates for seniors. When I turned 65 in June 2010, I promptly went to the county and got a really nice discount on my property tax, it came to approximately 35%.

Within 3 months, I received notice that my property had been reevaluated upward. Guess how much.

Yep, that's right but how did you know?

[time4good]

Are you sure about that? We had to do a short-sale in 2007 and last year when my accountant did my taxes, he stated the end of 2007 Congress [Schmucky Schumer - my insert] changed the laws so if primary residence was the one that was short-sold and difference was less than $500K then the forgiven debt wasn't taxable income.

Check on this with your CPA.

[Sawdring]

Guess how much.

8%?

[6SJ7]

Here in Illinois they have "special" rates for seniors. When I turned 65 in June 2010, I promptly went to the county and got a really nice discount on my property tax, it came to approximately 35%. Within 3 months, I received notice that my property had been reevaluated upward. Guess how much.

Cute. They switched from picking your left pocket to picking your right.

[Brett66]

Hurray! This counteracts inflation! < /s >

[Tallguy]

They are lowering property tax assessments where I live because an increasing number of savvy homeowners are challenging their tax assessments... and winning. So to prevent the bleeding of tax dollars our county is doing yet another re-assessment. This re-assessment will lower the assessed values but you can bet that it will be accompanied by a increase in the millage (rate). Net Change in taxes paid will be zero, and those that have already challenged will lose their saving going forward.

[redgolum]

You know, since the price of basic necessities like food and gasoline are rising at a rapid pace... there is less money the average American has to spend on things like housing.

But Comrade! Food and energy are not part of inflation! You are just mistaking, things are wonderful! Someone will be along shortly to take you into the re education camp./sarcasm

[DTogo]

Unless you are willing to fight and die, the government is going to just spit in your face.

That pretty much sums it up.

[Kartographer]

It’s only a ‘scheme’ when a regular ‘Joe’ does it, or its being a ‘Dead Beat’ as several fellow Freepers call it, but as Lazlo pointed out it’s called “Deleveraging” when the ‘To Big to Fail’ do it. I was wondering if possible could you explain the difference?

[dawn53]

Well if I was their mother, I’d say, “Just because so and so does it, doesn’t make it right for you to do it.” I can’t excuse my behavior by saying that someone else is doing the same thing that in my book isn’t ethical. They’re both wrong. Their being wrong is no excuse for me to do wrong.

[Shannon]

If he does a short sale his credit will be adversely effected for a few years. Seeing as his credit will tank, why even do a short sale? Why not just stop paying the mortgage and stay in the home until the lender finally gets around to booting him out? That could take up to two years especially if he's got no equity.

If he waits it out until the lender finally takes the house back, he then needs to ask for "cash for keys". Cash for keys is when the lender gives the homeowner cash in exchange for the homeowner agreeing to give the house back in good condition without trashing it and selling everything but the paint on the walls. I told a woman about this and she stayed in the house for nearly two years making no payments. The lender then gave her $2500 for "the keys".

As far as her ruined credit, when she went to rent a house she told the rental agent right up front what happened with her credit etc. His reply, "You and everybody else". Her ruined credit made no difference.

[Kartographer]

Thanks for the non-answer, but something is seriously wrong when the system allows the ‘To big to Fail’ and out that regular ‘Joes and Janes’ are critical of. I agree its not right and either case, but when was the last time you heard anyone being calling ‘To big to Fail’ schemers?