I just read the most recent “the sky is falling” real estate article from the Star Tribune. The Star Tribune profiles a family (the Floyds) that are losing to foreclosure their house in North Minneapolis that they’ve lived in for 23 years. Today they owe 4X the amount they originally paid for the house! Instead of this being an article about how important money management is and how crucial it is to live within your means, the newspaper made it into another example of all the bad things happening because of falling home values & the subprime mortgage debacle. Apparently the Star Tribune believes that any story about real estate has to be negative and has to be the fault of the market.
I’m sorry for what is happening to the Floyds, but it seems obvious to me that somewhere along the lines they lost sight of some simple money management principals:
“Who wants to pay the mortgage company and still have nothing to show for it?” said Thomas Floyd, whose loan now far outweighs the value of his house.
Ouch. Considering they paid $59,000 23 years ago and now owe $250,000 (something Star Tribune doesn’t mention until 1/2 way through the article), if they had kept to their original loan they should owe less than $30,000… so where did the $220,000 go? They mention home repairs, renovations and credit card bills… but how does that come to $220,000?
This is a very sad story of good people who made terrible financial choices, and a story being played out all over the country right now. Too bad Star Tribune didn’t write about that.