Reply #30: This is a sad but unsurprising result of the speculative housing bubble. [View All]

But I also would like to point out that all of the handwringing over it is the result of incorrect thinking on the part of homebuyers.

In recent years people bought a home on the expectation that its value would appreciate 10 or 15 % per year and that they could sell it at some point for a tidy profit (or borrow against its illusory "value" in the form of a HELOC.

But that is NOT what you get when you buy a house. There is no more a promise of a windfall than there is with junk bonds.

When buying a house, you should spend the amount that is is WORTH TO YOU, not the amount you think it might be worth in 5 years.

None of these people who have "lost equity" have lost anything real. They agreed to buy a house, probably with little down payment and an ARM mortgage, but they got what they agreed to pay for.

I understand the rationale of these people wanting to "walk away" from these mortgages, but they are NOT victims. The ones who had intended to stay in their homes can still do so. Their payments would be jumping even if the house bubble hadn't popped. They should have known how ARMs work

The ones who were using a house as a casino or an ATM had this coming to them.


A house is a place to live, not an "investment". If there is a lien on it, it represents a large debt, not an "investment".

I hope that the ongoing crash will drill this point into people's minds and that it will stick for at least a couple of generations. (people always eventually forget and repeat history - this happened in 1925 in Florida, and long before that, it happened with tulips...)