May 12

Underwater Kingdom

Zillow’s report on house prices for the first quarter of 2011 were released today, and the report shows a real-estate market that is perhaps in its worse state of crisis yet. Several reviews of this report still have the nerve to use terms such as “recovery” and claim that prices will hit the bottom soon. Many of these sources have been saying the same thing for four or five years, of course, and has there ever been any evidence to support them?

First of all, the number that has been really sticking out: 28%. Zillow claims that is the percentage of homeowners who owe more than their properties are worth, meaning they are underwater. That’s untold billions of dollars of negative equity that, like, never before, are dragging more and more homeowners down, putting them at risk of foreclosure.

Zillow economist Stan Humphries told it like it is in an interview: “We get tired of telling such a grim story, but unfortunately this is the story that needs to be told….Demand is still quite anemic due to unemployment and the fact that home values are still falling. And that tends to make people more cautious about buying.”

This, of course, didn’t stop financial writers and bloggers from blowing smoke about the impending turn-around, including a CBS writer who after going into detail about the terrors of the housing market, finished her report with : “…I would be taking advantage of low mortgage rates and not attempt to buy the rock bottom. Find the right place to live and take the plunge!”

Ms. Schlesinger’s closing pitch reveals the usual false optimism evident in those that see the foreclosure crisis as just another profit game, rather than facing its reality: That these statistics and dollar signs hide the massive suffering of a growing humanitarian and civil rights crisis.

The ever-weakening value of the dollar, rising food and gas costs, and world-wide austerity measures targeted at social and public services show a common root cause with the foreclosure crisis that homeowners should heed well: predatory financial interests. Raiding anything of value that they can get their hands on, American homes are especially at risk of being taken through paperwork tricks, lax judicial review, and uninterested regulators.

Homeowners looking at lowering equity or payment problems should seek a consultation with foreclosure defense professionals. With a massive foreclosure crisis that includes victims who were never late on payments or were tricked into defaulting, or foreclosed on in spite of clear-cut federal law, borrowers need to take as many precautions as they can to ensure the safety of their homes!

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