Will the Housing Bubble Crush Us All?



Posted: Wednesday, June 15, 2011

by TeamAfro
AfroDaddy.com

AnarchyThere has always been a certain level of decency and fairness in America in relation to the way we do business, pay our bills and interact with one another.  If you did an honest day’s work you expected to receive a fair wage.  At the end of the week you took your wages and used them to pay your bills and feed your family.  Any money you had left over would be used to save for a house and/or future expenses like college and retirement.  This way of life has been turned upside down by the housing collapse.  For many the American dream of owning a home has turned into the American nightmare.  Millions of Americans are now forced into doing what was once unthinkable – walking away from their homes without paying their mortgage.

The sad truth is that walking away from your mortgage makes the most sense for a lot of people.  If you are more than 30% underwater on your home you may live your whole life without ever seeing your home return to the value when you bought it.  In places like Arizona, Florida and California being underwater is the norm, with homes selling for 30 to 50 cents on the dollar.  According to recent reports over 60% of all homes in Las Vegas are underwater.  Paying $500,000 for something that is only worth $300,000 is bad financial management and foolish, yet this is the situation of many California condo owners who bought their homes between 2000 and 2006.  Refinancing with the bank does not get rid of the negative equity in your home.  The home also cannot be sold in this terrible market.  Waiting for the house to return to a value of $500,000 is a fool’s choice.  Bankruptcy or foreclosures are the only legitimate options to get rid of the property and save your financial life.

Taking this road may allow you to get rid of your financial debt and start over, but what about the cost to the country.  Every foreclosure lowers the value of the properties in the neighborhood.  Every foreclosure also delays the country’s economic recovery.  Foreclosed homes left uncared for are popping up everywhere, causing blight on neighborhoods and running down what once were clean, beautiful suburbs and living areas.  In some areas whole subdivisions are left nearly abandoned before they have even been completed.  It will take years to undo this damage, if at all.

Even worse than the economic effect on the country and the visual effect on our landscape is the damage the bubble has done to the psyche of American families.  John Public who used to pay his mortgage on time has now had his whole world turned upside down.  He has been forced to learn that not paying your bills sometimes is the smartest thing to do.  When faced with a terrible mortgage and 6-digit negative equity (combined with other bills) bankruptcy is the way to wipe the slate clean. Individual Americans may have run up the bills, but many don’t feel responsible for having to pay them.

Many Americans are feeling duped by banks, corporations and the government that allowed this to happen, and feel completely justified in not paying their bills.  As this mentality spreads, America runs the risk of anarchy.  John Public is getting increasingly upset and rebellious and forcing him to the only logical way out may have unlocked the door leading to a full blown revolution where bankruptcy and foreclosure exponentially increases and damages the economy beyond repair.  Many analysts are predicting this, just as they predicted the bubble.  Look around your neighborhoods.  When I take a local drive I think this is a real possibility.  What do you think?
Team Afro is the writing team for AfroDaddy.com - The Black Man's Survival Guide. The website is http://www.afrodaddy.com and you can reach the author of this article at teamafro@afrodaddy.com

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