The first thing I read this morning was a featured ActiveRain.com blog post titled “The McMansion Extra Value Package: Is it REALLY the Bank's Fault You Can't Afford Your Home Now?”
Well, I disagree with the premise that all home buyers who took advantage of low-down and no-down loans to buy a home in the early 2000's were greedy. There were a lot of responsible people who purchased homes well within their means that have been hurt in today's real estate market. I don't believe it's entirely their own fault if they and others are in a financial crisis now.
Sure, there were some naysayers predicting a housing collapse, but plenty of experts shunned that idea. To be fair, I think we have to go back to those so-called “bubble years” and remember what the housing market was 5 or 6 years ago: (1) home buyers qualified for loan programs that were widely available, (2) most people felt secure in their jobs, and (3) there was no reason to expect anything other than continued growth in property values. Level off, maybe... but, home prices never went down before. We all knew that declining home values might be possible in theory, but it seemed unlikely based on decades of real estate history in this country – certainly in the D.C.-Baltimore-Annapolis triangle.
It's easy to sit in an ivory tower now, point fingers and, in hindsight, sweep all those home buyers with a broad brush labeled “greedy,” but it’s just not fair or accurate. Responsible people used low-down and no-down loans to purchase an average home - a 2 or 3-bedroom townhouse with an hour-long commute to work or a modest 40-year old split foyer in the D.C. suburbs that needed updating - NOT a McMansion. People felt they had to buy “now” - before home prices went any higher and completely out of reach in their lifetime. They anticipated re-financing in a couple of years, as home prices continued to escalate and their equity grew.
Are you really going to blame them for accepting near-uniform professional advice?!?
(Full credit to M.Woda & ActiveRain for this blog post; edited by ML)
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