The Human Aspect Of The Housing Bubble
This Seattle PI story will likely be played out in households all over the US. "Like thousands before them, Tom, 44, and his wife, Clare Cronkleton, 43, had grasped at home ownership as their ticket to the solid middle ranks of the middle class. The couple made the leap even on their relatively modest incomes, each in the $40,000 range, and with no money down."
"It took a second piggyback mortgage at a steep 15 percent interest rate to pull off the sale. (Then) their 8-year-old son, came down with a mysterious, flulike illness. In the summer of 2004, Tom lost his job."
"They had already refinanced their mortgage at a lower interest rate to cut their payments and drawn out what little equity they had accrued. Tom says, 'As long as things were going good, it was OK.'"
"They listed their house last winter (and) sold in a hurry for $300,000. By the time all the closing costs and commissions were figured, however, they still owed the bank money. The bank finally relented and agreed to a 'short sale'."
"People have been buying on the very edge of their ability to afford a home," says Glenn Crellin, at Washington State University. 'People are (getting in at) a below-average rate, and they run the risk. We may see some households no longer able to afford the houses they're in.'"