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Victimized by the housing bubble?

Posted by Scott Van Voorhis May 30, 2012 06:54 AM

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Is is time to bequeath our society's greatest honor - that of aggrieved victim - to homeowners who bought during the housing bubble?

Apparently some on the comment board of this blog think so now.

It can tend to be a pretty conservative bunch, so I was a bit surprised by this sally.

Here's what thirtysomething had to say:

The underwater homeowners are exactly what I'm talking about! They were VICTIMIZED by high housing prices. You seem to think this is a good thing -- so good, in fact, that we need more of the same to "rescue" them? Not saying that is impossible, but that's simply passing the hot potato (and high costs) to a new victim.

As for those retirees, go ahead and cry me a river! If they are long-time homeowners, they've already seen a terrific ROI. You want to reinflate prices so they can suck the life blood of the younger generations to pad their retirements?

High real estate prices are bad for society. Good for banks, bad for everybody else (aside from those seeking to profit at the expense of others).

So are homeowners who got stuck with underwater mortgages truly victims of the runaway prices of the mid-2000s?

Let's turn this around a bit. In the years I have been writing this blog with Rona, I have read countless diatribes on the comment board blasting homeowners who bought during the bubble as witless chumps.

Frankly, it always seemed pretty unreasonable to tar a sizable slice of a whole generation of homeowners for simply having the misfortune of entering their prime buying years at a time when real estate prices had gone haywire.

But victims of the bubble? Maybe, but I don't really know how that helps someone who is stuck in an underwater mortgage.

Life is often what you make of it, good and bad. The best cure for most underwater mortgages is time - given how prone our economy has become to speculative bubbles, prices may be down now, but they certainly won't be forever.

This is especially true in Greater Boston, where new housing construction has lagged for decades amid rising demand from higher-income buyers. (The latest Case-Shiller report finds Boston-area prices rose in March in the latest sign of the budding turnaround in the real estate market.)

But in the end, it's about the house and whether you are happy living there - or at least could be happy after doing a little work.

If the answer is no, and you are so far underwater you see no hope of breaking free even in a rising market, then maybe it's time to consider cutting your losses.

But those cases are few and far between - a recent survey of underwater homeowners found just a fraction are hopelessly submerged, owing double what their house is worth.

By contrast, half were down by 20 percent or less - certainly not ideal but no reason for anyone to be throwing their hands up in despair, either.

This blog is not written or edited by Boston.com or the Boston Globe.
The author is solely responsible for the content.

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About boston real estate now
Scott Van Voorhis is a freelance writer who specializes in real estate and business issues.

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