From the Herald News:
Cries for help getting louder
By HEATHER HADDON and TOM MEAGHER
“Mike,” 26, was trying his best to pay a $1,600 mortgage on the Clifton home where he grew up. Since his father died and his mother doesn’t work, the burden falls on his shoulders alone.
His income of roughly $40,000 to $50,000 a year hasn’t grown over the past few years. He drew down on some of his house’s equity, which had grown in value. But the situation still worsened.
“I ended up almost losing it,” said Mike, who didn’t want his real name used because he has yet to inform his family about how bad the situation got.
Mike is one of the many local residents who are house rich but cash poor. Median home values have roughly doubled in Passaic County between 2000 and 2005, according to data released by the Census Bureau on Tuesday. Yet median household incomes in the county have flattened or fallen when adjusted for inflation.
…
That lopsided equation has local housing specialists worried that buyers have gotten in over their heads.“It’s heartbreaking,” said Mary T. Johnson of Consumer Credit Counseling Service of New Jersey, a nonprofit agency based in Cedar Knolls.
“We are seeing people that are literally facing homelessness.”
…
People’s pocketbooks didn’t benefit from the boom. Between 2000 and 2005, median household income fell by an average of 13 percent in Passaic County, when adjusting for inflation. Nationally, incomes dropped by 2.8 percent during the same period.But they still bought homes. The number of new mortgages in Passaic County increased by more than two-thirds between 2000 and 2005, according to Home Mortgage Disclosure Act data.
Many turned to exotic mortgages in order to afford their home.
New Jersey had one of the highest concentrations of these nontraditional mortgages, according to a federal Government Accountability Office report released last week.
They feature initially low interest rates, making it possible for lower- or middle-income people to buy their first home, or move to a bigger one. But the products are subject to sudden monthly payment increases, and the majority of them were written to homeowners without adequately documenting they had sufficient resources, the GAO found.
…
Johnson has counseled clients whose monthly mortgage payments exceeded their take-home pay. Triano says she’s worked with 20 people a week who are in over their head, and the calls keep coming.“People are now calling and saying, ‘Help,'” she said.
Mike was able to stave off foreclosure through Triano’s assistance, and because he had not overly tapped his house’s equity. Others aren’t so lucky.
“Every day there’s more and more foreclosures being filed,” said Charles Barbarow, a Totowa-based Realtor.
James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said it was too early to predict what will happen to those who over extended themselves. He did say that the high housing values are bad for the regional economy.
“The housing costs are a real deterrent for young workers to move here,” he said.
Sorry, I don’t know how I missed this piece this morning.
jb
“something stupid this way comes” in this article
it doesn’t add up
someone got the money in the family??
The “family home” doesn’t still have a $1600 mortgage payment. Something tells me the equity is sitting in someone’s driveway.
similar to Enron employees with all their money invested in company stock
original contributions $75,000;
worth at peak $1M;
never bothered to diversify;
don’t tell me they lost their nest egg;
you live by the sword……
New Jersey Taxing Downloaded Music and Video
Mike is one of the many local residents who are house rich but cash poor.
I disagree with this statement, you are not house rich unless you have EQUITY in your home. If you have any open liens or mortgages, you are HOUSE POOR and CASH POOR.
It’s not worth anything unless you sell it.
-Richie
sorry to get off the subject but can anyone tell me what “T” means under the status of a listing
thanks
Temporarily Withdrawn
I agree, can keep from laughing everytime I hear something stupid like that.
-Sapiens
“Mike was able to stave off foreclosure through Triano’s assistance, and because he had not overly tapped his house’s equity”
does this mean mike went and again tapped more equity?
“James Hughes, dean of the Edward J. Bloustein School of Planning and Public Policy at Rutgers University, said it was too early to predict what will happen to those who over extended themselves He did say that the high housing values are bad for the regional economy”
over extended people cant be good for the regional economy nevermind high housing values.
JB didnt you post the rutgers study saying nj economy would only grow by %0.6. was the housing slowdown taken into consideration for that study?
“
I know people who bought luxury cars cash using equity in their homes. They thought it was the best thing going. “I can now right off my car note at the end of the year”.
Reality: home value depreciating from a over valued market and car value depreciating (nature of the car business) equals double whammy.
whats that write off worth now?
Does anyone know anything about Kara Homes. I’m getting a number of people to my sight by people googling “kara homes bankruptcy.”
Hey Grim, check your logs to see if you are getting the same thing.
http://tinyurl.com/pbbq6
http://shorebubble.blogspot.com/
Did you guys see the Economy.com projections in the news earlier today? http://news.yahoo.com/s/ap/20061003/ap_on_bi_ge/troubled_housing_6
We’re all patiently waiting it’s public release tomorrow.
jb
To bastardize a Bob Toll [hubris-laden] phrase: “wake me up when the job losses start”.
it was too early to predict what will happen to those who over extended themselves He did say that the high housing values are bad for the regional economy”
Let’s assume for a minute that we have the soft landing that the Realotrs® promise us. Let’s also assume that these “affordability tools” result in a negligible number of foreclosures.
What is supposed to happen to consumer spending in NJ when a huge chunk of disposable income is going to meet debt service on a mortgage
Light reads
http://www.recordonline.com/apps/pbcs.dll/article?AID=/20061001/NEWS/610010353/-1/NEWS14
“The price is right in the mid-$300,000s, where homes are moving briskly…”
http://www.nj.com/news/ledger/sussex/index.ssf?/base/news-1/1159852267126120.xml&coll=1
“Amanda Sacco, spokeswoman for the New Jersey Association of Realtors, said no one in her Edison-based group would comment on eBay real estate sales because they were all too unfamiliar with them”
This story reminds me of last Thanksgiving, when I ran into an old friend down in VA. He worked in the IT department for a company that was about to make it’s IPO, so he was going to take out $20k worth of equity in his townhome to buy it’s stock. I haven’t talked to him recently to see how it went, but I wonder if he might be considered not only cash poor and house poor, but also IQ poor?
It’s amazing that it has gotten to this point already and the onslaught of ARM resets has barely started. Next year will be much worse.
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