home value $200K, mortgage is $350K: what would you do?
Posted: Mon Oct 22, 2007 12:36 pmMike 2 says:
Back in the olden days when buying a home required commitment, savings and dedication it was certainly harder to part with it.
What's old is new again. Instead of buying, though, it will take these things to HOLD ON to the home.
I don't think we're talking a generation gap. People of all age ranges nationwide are facing foreclosure, not just Gen X and Gen Y.
Last time I checked the stats, subprime and prime FIXED rate loans are doing relatively okay. It's the subprime and prime ARM loans where we're seeing dramatic increases in foreclosure.
When we combine an ARM loan with financial distress, now we REALLY see an increase in foreclosures.
Traditionally people with ARM loans who are doing okay financially HAD more options like trying to refinance or sell. Not everyone, no matter what their age, is going to arrive at a logical decision to just walk away.
So, it's not all just the lending climate over the past 9 years and it's not all just financial distress like I'm talking about, it's a combination of many factors. This includes the now present problem of the local real estate market slow down and prices no longer appreciating. The option to sell for these folks might not be there, the option to refi might not be there, which is why foreclosure stats have nowhere to go but slowly up for the next many years.
But they'll go up in relation to financial distress.
I'm with sniglet, I think people will keep living in their house as long as they can.