To Erica:

I am looking to purchase my first home and have been doing alot of research on the subject of home buying. One of the main tings I have noticed is how quickly the value of houses inflated in the last 20 years compared to the wages in the same area. The median household income in Oregon is around 45,000 in 2005 up from 41,000 in 1985 while the price of homes have went from 60k -> 120k 1970-1980 and up to 160k in 2000. They have continued to increase to where most average homes on the market today are in th 200-225k range.

My point on this information is individuals and families are only increasing their wages at around the rate of inflation while housing values have spiked up 200-400% or more in some cases. This rapid loss in value is the market stabalizing itself back into true value of property instead of the inflated bubble pushed by these predatory lending practices.

I feel for those who are having their homes devalued or forclosed upon. But I do not believe a bailout should occur. The property value needs to drop to a value that is affordable for the wages available in a given area. At the very most the government intervention should allow people to renegotiate into a fixed rate. If they cannot afford payments on a fixed rate they should unfortunately loose their homes.

Posted at March 27, 2008 3:29 PM in response to Foreclosing Foreclosures: Mitigating the Housing Crisis