Homeowners Feel the Pinch of Lost Equity
By PETER S. GOODMAN
Published: November 8, 2007
RENO, Nev., Nov. 5 — As his wedding day approached last spring, Marshall Whittey found that his money could not keep pace with the grandiosity of his plans. But rather than scale back, he chose instead, like millions of homeowners across the country, to borrow against the soaring value of his home.
He and his bride, Holly Whittey, exchanged vows on the grounds of a sumptuous private estate in the Napa Valley. They spent their honeymoon at a resort in Tahiti.
But now, in an ominous portent for the national economy, Mr. Whittey has grown tight with his money. His home is worth far less than it was a year ago, and his equity has evaporated. And like many other involuntary adopters of a newly economical lifestyle, he can borrow no more.
“It used to be that if I wanted it, I’d just go and buy it and finance it,” Mr. Whittey, 33, said. “I’m feeling the crunch, and my spending is down significantly.”
Until recently, he and his wife regularly embarked on shopping sprees of $1,000 and up.
He bought a 21-foot boat and two flat-screen televisions for their home. He sold his old truck and bought a new one, he said, “just ’cause I didn’t like the color.” Mr. Whittey could live in such fashion because his company was making good money and his house was appreciating.
But today, the value of his own home, which reached $500,000, has fallen and a separate investment property he bought seems likely to fetch far less than the $580,000 he owes the bank. His commissions have diminished, so his income is down. His neighbor recently fell behind on house payments, prompting the bank to foreclose. Anxiety reigns.
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http://www.nytimes.com/2007/11/08/bu...in&oref=slogin
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Nothing really new in this story, but if you read the entire article it seems as if the writer thinks that we should feel sorry for this moron.
Of course, the NYTimes runs a "boo hoo" story about the housing crisis - no doubt, blamed on Bush, rather than Greenspan - and they find this moron! The guy borrows to finance his every little selfish whim, including buying a new truck because he didn't like the color of the old one. Coupled with the hubris of the California real estate market, this guy shows a real ignorance.
The Fed reduced rates to assist these morons and others with about the same story. Now the dollar is in the crapper and
oil is near $100. Hold onto your wallet.