Who is to Blame?

I just saw a video you should take a look at on Bloomberg, In Depth Look - How Real Estate Came to Own Us. It's about a book Our Lot by Alyssa Katz. I've checked out the video a couple of times and personally I think it's all about the blame game. She talks about how government regulations were relaxed to encourage homeownership, hence the subprime market, hence the Great Depression of 2009 which we're all beset by...okay...whatever...

What she says is cool--keeping in mind I haven't read the book--but we have to look at the ABC of personal finance which goes a little like this...if your outflow exceeds your inflow, your upkeep becomes your downfall. Trust me, there ain't much beyond that, especially when you're considering purchasing a home. Therefore the only thing that matters is whether or not you can afford the home, not whether or not you can be approved for a mortgage. In the past anybody could get a mortgage, but now a lot of those anybodies are in foreclosure...ouch!

So, my point is I don't care what the government has done, is doing or will do in the future, we all have to exercise self-discipline regarding fiscal responsibility. The government never put a gun to anyone's head and made him sign on the dotted line to purchase a home. You've got to know what you can and can't afford, and it ain't rocket science to figure it out. Speaking of guns, as Dirty Harry once said, A man has to know his limitations.

On another note, when will all the madness end with a housing market rebound? I don't know, but check out Five Reasons the Housing Market Still Hasn't Recovered Yet and maybe you'll gain some valuable insight.

Since you asked me, I'll put on my swami garb and predict a turnaround in 2011. How did I come to that conclusion? First, I don't know a doggone thing about high finance and bonds and interest rates and economic cycles--sometimes I just don't know nuthin' period. But, if my burnt out Rutgers University brain serves me well, what I remember is that in 2007 the crap hit the fan in the mortgage industry--stuff was flyin' all over the place as most subprime companies were quickly sinking in quicksand during that summer. That being said, there were still a slew of 3 to 5 year subprime adjustable rate mortgages being approved up to the melt down. Add 3 to 5 years to 2007 and you get years 2010 to 2012. On top of the subprime there are a lot of toxic no-income verification mortgages which still have to implode, so my conclusion is the housing bottom has to be somewhere during those three years. Of course, the middle year is 2011 which I opine will be the rock bottom year. Sure, we'll get spurts in the housing market here and there, but they may be short lived. But in 2011 I think we'll see a somewhat steady incline. Keep in my opinions are like you know what...

All of that being said, there will be great opportunity during those years than ever before for you and Joe Sixpack. In fact, there's great opportunity now, as long as you know your limitations! Interest rates are still relatively low and there's a lot of inventory. Just get back to the basics of good credit, steady income and verifiable assets and you're golden.