Thursday, January 17, 2008

Americans pay for housing booms excess

You got that right!

Tuesday morning, I wrote a page long rant about what the darn housing boom has cost me after seeing my 401K statement for the last quarter of 2007. While I got a healthy 10% return in 2007, the last quarter results were pretty much equivalent to me burning my contributions along with my company's match.

I don't feel bad for the lenders one bit. They created this problem. Made it worse, actually, by providing people who wouldn't have qualified for traditional loans, they inflated the customer base. Here in Washington, DC, that resulted in bidding wars on homes that shot things way out of control.

Now, some people made out on the deal - - like my sister, who purchased a one bedroom condo in Alexandria, VA a year before things got really crazy. She had some help from my mom and dad with closing costs. By the way, I am still bitter about that, as that was what I was trying to save for. Even offered my sister the option of the two of us going together to buy a house - - didn't know she already had a plan. O.k. my blood pressure is rising so I'll cut this short. Basically, she held onto her condo for two years and sold it the year after I bought my townhouse (I had no help from mom and dad) and she made $100,000. She took a year off from work and just worked out, volunteered and studied for the LSAT and GMAT.

I had to continue saving my pennies while working my butt off and bought my house during the upswing - - thankfully before the peak. Thankfully, no sub-prime loans here.

However, thanks to the wacko lending practices which flooded the market with buyers - - I really paid a lot more for my two bedroom townhouse than I should have. Now, hmm, now I'd be lucky to sell it for what I paid for it. Granted, the falling property value does mean lower taxes. (Positive thoughts).

Now, I don't want to continue to get screwed by a federal government bailout. Are you kidding me - - that is just too bad that banks screwed themselves over and are losing money. As a stock holder (via my 401k) in many of these institutions, I'm footing the bill already in losses. I'm paying them interest on my loans (which were higher than they would have been in a normal market). I don't want to fork over more money to them via higher taxes to cover their irresponsibility. I especially don't want to bail them out when the executives of these financial institutions are raking in high dollar bonuses.

1 comment:

Flora said...

Wait... how did you attain $401K? Just wondering. You don't have to say.

Anyway, the situation in America sounds pretty bad. Good thing I'm up here in Canada!