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Reality v. Media Fear Mongering December 13, 2007

Posted by shaferfinancial in Uncategorized.
Tags: , ,

Check out this chart:

 WSJ Marketbeat & Peridot Capitalist):

Now what idea about foreclosure has dominated the media and the politicians for the last couple of months?  It you said adjusting variable rate mortgages are leading to record foreclosure give yourself a gold star!

Now look at the chart again.

What are the leading causes of foreclosure?  The same as always, layoffs and business failures.  What’s next? Illness or health issues.  Then divorces.  What about those adjusting rates?  Accounts for 1.4% of foreclosures.  So what has all the attention being given to?  You got it, the smallest foreclosure reason of all.  Why?  We love to find “victims.” We love to villify folks.  The truth is much harder to swallow.  Folks lose jobs. Folks get sick and sometimes die.  This is especially catostrophic in an environment where you have a hard time selling a home.  And of course hits moderate income folks harder who tend to not have other resources available (your sub-prime market).  Much easier to blame the mortgage companies or the mortgage broker for taking advantage of people. 

By now it is too late.  It is now “common knowledge” that the real estate market has tanked, that folks in variable rate loans are in trouble, that real estate values have plummeted.  Don’t let the facts get in your way!

I bought my Florida home in the year 2000.  It is now worth conservatively 2 1/2 times what I paid for it.  Is  it worth what it was in 2006? No, but if you look at the total rate of return over the 7 and 3/4 years I have owned the home, it is astounding.  How long would it take to sell? Probably several months, not that I am interested in selling.  But I have taken home equity out to pump up my investments!  Is my home a good asset to own?  One of the best.  See my article about equity harvesting here: http://shaferfinancial.thewrittenblog.com/?p=797&comment=true

Reality can sometimes be different than what most people think it is.  You just have to change your view.  Is it time you changed your view from this doom being pitched at you by the media?



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