Housing Problems Because of Education not Race

Welcome to downtown Havre de Grace, MD

http://newpittsburghcourieronline.com/2015/01/27/53-percent-of-black-wealth-wiped-out-foreclosure-crisis-erodes-communities-of-color/?omcamp=es-npco-nl&utm_source=Sailthru&utm_medium=email&utm_term=Pittsburgh%20Subscribers&utm_campaign=Lifestyle

Above is what the experts are saying!

 

After listening to Martin, Fletcher, Monique Pressly, Dr. Wilmer Leon and Michelle Hudgins, about the housing collapse on Black Families, it still comes down to education not race. In America, it is buyer be where. No one is going to hold your hand. You better know what you are doing especially when it comes to Real Estate.

 

 The older generation lives for the minute and that is what they teach the next generation. Back in 2006, I was telling people that housing was overpriced. I wish I had a dollar for everyone that came to me, telling me that buying a house is an investment. They were sold on the myth that housing prices will always go up.

 

My reply, "Go back to the bar and finish what you started." Many people including Black people got the idea that buying a house is an investment. The reason why is because from the 1940s to 2005, the baby boomers were buying houses. So the demand for houses out stripped the supply. Builders where able to sell new houses at a greater price every year. This is called housing inflation. This happened before in the 1920s followed by the collapse of real Estate Market that gave way to the banking collapse. This gave way to the Great Depression.

 

In the 1990s, someone in the Banking, Real Estate, and Investment Businesses got the idea that they can sell over priced houses to people that cannot afford them. Why because the people were already sold on the idea that housing prices always go up. Just like in the 1920s.  

 

Second, the bankers did them a favor in their eyes by giving them a mortgage for the home that they could not afford. The family may only have 5% cash in the home while mortgaging 95%. The less a home owner has in the home, the more risk the homeowner has in keeping the property. Yea, their worth went up but after subtracting the mortgage it did not. But someone sold them on the idea that as the price of the home goes up so will their net worth.  In the stock market, we call that buying on margin which is the most dangerous thing you can do because "you owe your sole to the company store" as Tennessee Ernie Ford would sing in the 1950s.

 

Third, the bankers did not keep the mortgages. They sold them to market makers in the stock market as safe mortgages. The market makers rolled these mortgages into REITs and sold them to pension funds, Foundations, Insurance Companies, Universities, Governments, and other banks.

 

Fourth, these people who have great jobs with the government or utilities thought that they will always have a job. After all, the only people that are not working are the people in cyclical industries. But then the governments started laying off. Workers started getting sick and cannot work, and other problems made it impossible to pay the mortgage. The individual home owner was in serious trouble and could not pay the mortgage, went into default, and lost the home.

 

Fifth, in any economy and in any neighborhood, "shit runs down hill." The mortgages became toxic and was not paying interest and principle. The REITs in the stock market started dropping because investors were not getting the return that they signed up for. The supply of houses out stripped demand for houses in a big hurry. No one was building houses anymore and the Home Builder Workers lost their jobs. Then the Home Builder Suppliers were hit and the ball kept running down hill, laying off people. The first Great Depression of the 21st Century started. The Bush administration ran a public relations program to get the public thinking that this is just a recession, not a depression. The is why we call this the Great Recession, not Depression. Under the Obama Administration, this public relations program is still going on. Now we say that the Great Recession is over pointing to the unemployment statistics. But no one told us that the way this statistic is calculated is different than 50 years ago.

 

Sixth, many people lost their houses, 401K funds of workers, Pension funds, and other institutions lost money.  The nation of Iceland had to get help from the US Treasury to stay solvent along with the large US and Foreign Banks that was behind the toxic mortgages.  

 

When the housing collapse was well on its way, people like me, bought a home, not for investment but as a place to live. At the height of the housing bubble, my place sold for $300,000. I bought it for a discount of 45%, about $75,000 below the appraised value.

 

Did I take advantage of other Blacks? No, the same disaster that hit Black neighborhoods also hit affluent White neighborhoods. The White people that I bought my property from was in serious trouble. We call these people, "want to" sellers.

 

In my Association in Havre de Grace, MD, many homeowners are in trouble with people delinquent in paying Association Fees. At least two Home Owner Association Accounts are in collections.

   

When I signed the papers at closing, the owner got up out of her seat, danced around the room screaming "Yes, Yes, Yes." She was so happy that she got out of the financial mess that she got herself into 4 years earlier. At least she was out of most of the mess. She still has to pay off thousands of dollars in associated loans. She was only in her early 40s but she looked like she was approaching her 60s.

 

Moral of the story, financially educate yourself as early as you can in life because if you don't, the system will eat you alive!