Thursday, May 18, 2006

FB Zombies

How many FB zombies are living among us (if you don't know what an FB is, click here)?

Some choice quotes from this post:
If someone is on the hook for a huge mortgage, and mortgage rates go up, he cannot readily sell his home at the price he paid. He is in an "upside-down" position: What he owes is worth more than the sale value of the asset.

This is normal in the new car market. Drive off the lot, and you can’t sell the car you now own for what you owe. Americans have learned to live with this with their cars. But they don’t expect this with their homes. That is why they sign on the dotted line for homes that they cannot really afford. Then property taxes rise, and maintenance costs rise, and – if the have an ARM – monthly repayment costs rise. Yet they can’t get out.

They pretend that they can hang on indefinitely. Some can; some can’t. Those who can’t lose the property in a repossession. But the debt doesn’t go away. They still owe the difference between what the house sold for after commissions and what they owed at the time of sale.

This has not yet registered psychologically with most new home owners. They have never seen a down market in housing. Now they are going to.

The ability of people to sell their heavily mortgaged homes is now dramatically reduced by the new bankruptcy law. They have traded mobility for home ownership. This is especially burdensome for young married couples, where geographical mobility is vital for upward social mobility.

In the next recession, people who lose their jobs will not be in a position to pick up and leave. They will be forced to take any kind of job just to maintain their mortgage payments. This will greatly benefit employers. They will be able to secure the services of creative people who would not normally work for such wages.
People will take any job to pay the mortgage? Any job? So what does that say about future wage growth; about Americans not wanting to do the sorts of jobs that we tacitly tolerate being done by illegal aliens? Is that why there is a crack-down on illegal immigration brewing? Is this what the "ownership society" is all about?


Blogger moonvalley said...

Another great piece. I love your photo, and as for "ownership" society, I agree. It's all gonna be about who owns the "owners".

May 18, 2006, 10:48:00 AM  
Blogger Marinite said...

In online video games the kiddies like to scream "owned" (or is that"pwned"?) when they kill you or whatever. I think that will be extended to recent buyers soon enough.

May 18, 2006, 4:11:00 PM  
Blogger fredtobik said...

lol, funny marinite...

it is pwnt or poned, but i am sure the kiddies get the point with pwned. my fav is actually wtfpwnt!

I knew you weere a closet MMORPG!

May 18, 2006, 8:09:00 PM  

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