Today's housing crisis is rooted in efforts by Bush & Co., Inc., to make government the problem, beginning with a series of interest rate cuts shortly after 9-11. The GOP Congress helped, of course, by working tirelessly to spend the government out of existence. These same Republicans also set about dismantling programs intended to house our most vulnerable citizens. Federal subsidies were cut or failed to keep pace with a growing demand. Bush appointees even went so far as to oppose state efforts to enact protections for low income wage earners from the financial predators who concocted the current mortgage crisis.
And it's all come crashing down. Prospects are dimming for lower and middle income Americans as the present housing downturn wipes out wealth amounting to trillions of dollars. Millions of our families, neighbors and friends - homeowners and renters - are headed for eviction.
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You're probably already familiar with the subprime mortgage crisis. Here's what the Los Angeles Times had to say about the problem last November:
Homeowners will see their property values sink by $1.2 trillion next year, and 524,000 fewer jobs will be created -- both a result of the trouble caused by loan defaults and rising foreclosures, according to a report released this week for the U.S. Conference of Mayors.
Well, it might get worse. Mortgage defaults could be spreading into prime territory. Kelly Bennett, of the San Diego Voice, reported today that local analysts are worried about the share of prime loans with late payments, which tripled to 1.54 percent in just one year.
"That's the part we are all watching," said Mark Carrington, director of analytical sales and support at First American LoanPerformance. "The subprime, that's to be expected. What we're watching is the prime delinquencies beginning to increase."
Right now, Government Sponsored Enterprises hold a total housing debt of $6.3 trillion, according to an editorial in yesterday's Seattle Post-Intelligencer, which noted that the easiest comparison for those trillions is comparing it with the public debt of the United States, only about $4.4 trillion.
And there's no end in sight. MSNBC's John W. Schoen reported on a Standared & Poor's index that revealed home prices plunged by a record 8.4 percent in November.
"Nothing in these numbers suggest a bottoming out. The numbers universally are disappointing," said David Blitzer, S&P's managing director and chairman of the index committee. "Maybe when we get into the spring/summer home-buying season and with lower interest rates, maybe it will all come together."
Guess who gets burned: the poor, and the middle class. Despite home prices falling on a national level, affordable homes are and will continue to remain out of reach for middle-income households in an increasingly unstable real estate market, according to a study of select metropolitan areas conducted by Moody's Economy.com for Homes for Working Families. Another study, Paycheck to Paycheck: Wages and the Cost of Housing in America, found that homeownership is unaffordable for persons working in the five highest-growth occupations – registered nurses, retail salespersons, customer service representatives, food preparation workers and office clerks.
Renters in many cities may be in for a share of the grief as well. While rental housing is affordable to a greater range of workers, workers in low-wage occupations continue to struggle to afford the rents in many metro areas, the Paycheck study reported. Financial market turmoil is impacting multi-family building sales at the same time apartment demand is on the increase. Can rent increases in some localities be far behind? Meanwhile, banks involved in mortgage foreclosures are forcing renters from their homes. While most tenants may recover on their own, some will require government assistance to get back on their feet - but they will have to wait in line behind those who have already applied for subsidies that have been cut or failed to keep pace with demand even before the crisis hit.