Monday, March 19, 2007

Recycling the News

Will writers in the business press be able to start helping the environment by recycling some old stories? I'm not sure, but either way, I always find it fun -- and instructive -- to take little walks down memory lane...
Collapsing Housing Market Is Taking an Emotional Toll

Across the metropolitan region, thousands of people who bought homes during the long housing boom... are suffering wrenching emotional and financial hardships as the value of their single largest investment slips away.

...Many two-income families borrowed heavily, spending 40 percent to 50 percent of their income on down payments and mortgages, banking on the seemingly endless rise of real-estate values.

...When Mary Anne and Larry Liesner bought a three-story colonial in Bridgeport, Conn.... they had big plans. Real-estate prices were rocketing; the Liesners figured they would renovate the 75-year-old house, sell it in four years, buy a sailboat with the proceeds and cruise the Caribbean.

...The rudest shock came when the couple finally tried to sell: The house they bought in the boom years [attracted only one bid at three-quarters of the price they paid for it.]

"We feel trapped," said Mr. Liesner, who is 41 years old. "This house consumes every dollar we make. It's a beautiful home, but it's also a huge financial burden."

Like many other first-time home buyers, the Liesners chose a variable-rate mortgage with a low initial interest rate. In four years, the couple's mortgage rate has increased [by] $325 a month for them. In addition, they have to pay back a $50,000 loan they took to cover the down payment and renovation costs.

...The Federal Home Loan Bank of New York said 3.7 percent of the mortgage loans outstanding in New York State were at least 60 days delinquent [this year]. That compares with 2.6 percent [last year]. In New Jersey, delinquencies rose to 4.75 percent from 2.9 percent in the same period, and in Connecticut to 2.3 percent from 1.35 percent.

While still a small fraction of residential real-estate loans, the number of foreclosures is slowly rising. In New York, 0.49 percent of all residential loans ended in foreclosure last year, up from 0.47 percent [the year before]. In New Jersey during the same time, the figures increased to 0.83 percent from 0.74 percent. In Connecticut, they rose to 0.26 percent from 0.18 percent.

"The numbers are a sign of financial stress," said Rae D. Rosen, regional economist for the the Federal Home Loan Bank of New York.

"In the past eight years, most people in Orange County had never seen a foreclosure," said Michele Koebrich, a realt-estate agent in Central Valley, N.Y. "Now they're seeing them again."
Source: The New York Times
April 13, 1990

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