Yesterday I showed a foreclosure. Until fairly recently, Westchester hasn’t witnessed much in the way of “underwater” home ownership. We’ve always had our share of foreclosures, but they were far from commonplace. The house was a mess. The walls contained broken dreams of home ownership and you have to wonder about the people who lived there.
There have been a lot of blogs written lately about who is to “blame” for the housing bubble and its disastrous aftermath. Some bloggers blame lenders, some blame agents, brokers, NAR, the Fed, home owners…the list goes on and on.
But one common thread I find very discouraging are blogs which lay blame on the homeowner who was underwater. They should have KNOWN better. They were GREEDY. They were IRRESPONSIBLE, they were this, they were that…
In truth, the housing debacle is as much a result of the decimation of the middle class as it is about a housing bubble itself. Families have found the ground shifting under them faster than they could ever have imagined. Many homeowners have found themselves into the horns of a dilemma. This is the story of my generation. As a forty-something I’ve felt the sands shifting under my feet ever faster. I have found myself scrambling to earn those ever elusive extra dollars that will allow me to keep my own home – even as I help my clients sell theirs.
The middle class has been under assault for the past 30 years.
Elizabeth Warren outlined it the best in the presentation embedded below. For those who don’t have 50 minutes to view the video – here is a brief synopsis:
Dr. Warren did a series of studies comparing the income and expenses of a family of four living in 1970-1971 to a family living in 2005-2006. The summary of her findings gives us eye-opening insight as to what has happened to the middle class.
How did this happen?
Was it rampant materialism combined with childish irresponsibility?
So it wasn’t traditional “luxury items” that got people into trouble. The electronic craze, such as wide -screen TV’s play nominal role at best.
Here is the trouble – the expenses that are down are the flexible expenses. The expenses that are up are not flexible. The expenses that are UP are what Elizabeth Warren calls “Fixed, relentless expenses.”
So, next time we see a family in trouble. Let’s not think ill of them. Let’s stop pointing fingers. Remember if you point a finger and look in the mirror – you see a finger pointed back at you.
For those who ended up leveraged to the hilt – I can see how it could have happened. As their income potential kept declining, they kept thinking “I am smart, I work hard, I have a good reputation in my field and I play by the rules – so things will get better – this is only temporary.” In previous recessions this would have been the case. But the last recovery was truly jobless. The rich got richer, but the middle class went nowhere. They never even recouped the ground they lost in the crash of 2000. So they borrowed on their homes which went up in value thinking “this will pass – its GOT to pass.” Everyone felt that eventually things would get back to normal and the jobs and money that went with them would flow freely once again. But things didn’t get back to normal. That was the “old normal.” Instead, we have a “new normal” which is an unacceptable normal where the middle class are being pushed off the cliff and into the abyss.
Lets also remember that the bottom line here is jobs, jobs, JOBS. We need to swing the doors wide open on well paying career opportunities. We need to stop out-sourcing, downsizing, and importing cheap foreign labor and keep well-paying jobs HERE in America.
© 2010 Ruthmarie G. Hicks. https://thewestchesterview.com. All rights reserved.
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