The Ouroburos Is In The House!!
Dude, this is getting a little too esoteric for our little old Sonoma Housing Bubble, no? But I just couldn't think of a better image to depict just what the hell is going on out there. So step into Socrates' cave ( yeah he had one too, mortaged to the gills probably) with me for a moment. A little note on snakey-boy and a wiki-def here. Either way it's all housing bubble to me.
They used to talk about Nero fiddling while Rome burned. They didn't talk about him taking piano lessons, trying to write a western novel, catching up on the Bloshevik Revolution or honing his power napping skills all financed by the Housing Bubble. How long can one live just draining out the equity in one's house and ones' family savings? Two, three years? Not too long. Especially if there's a toxic re-fi loan involved and interest rates continue to climb.
Alan Beggerow has stopped looking for work. Laid off as a steelworker at 48, he taught math for a while at a community college. But when that ended, he could not find a job that, in his view, was neither demeaning nor underpaid.
So instead of heading to work, Mr. Beggerow, now 53, fills his days with diversions: playing the piano, reading histories and biographies, writing unpublished Western potboilers in the Louis L’Amour style — all activities once relegated to spare time. He often stays up late and sleeps until 11 a.m.
“I have come to realize that my free time is worth a lot to me,” he said. To make ends meet, he has tapped the equity in his home through a $30,000 second mortgage, and he is drawing down the family’s savings, at the rate of $7,500 a year. About $60,000 is left. His wife’s income helps them scrape by. “If things really get tight,” Mr. Beggerow said, “I might have to take a low-wage job, but I don’t want to do that.”
This has got to be one of the most distressing stories that I've seen in quite a while. House as ATM in extremis. The rapid inflation of the RE bubble has helped to put the noose around these dudes neck and they don't even know they're standing on a trap door on a dead end street yet.
So we have a new group here. Folks who have been squeezed out of the employment market, feeling wealthy because of the increased value of their house, living at a time when credit is easy. What we have here is a recipe for disaster.
While driving into San Francisco yesterday I was listening to the radio and an ad came on for this company.
A fast talking voice peppered out all the possible excuses one might hear while being turned down for a house loan, or re-fi. The main ones being no money, no job and poor credit. Not with these guys however. If you have a pulse, you got the cash. Do it over the phone. Do it online. In this self-esteem RE universe nobody is turned down, everyone's a winner. The ad was followed by some sort of warning equally fast talking. The RE equivalent of the hoarseness, coughing, rectal bleeding and dizziness warnings one hears at the ends of ads for new prescription drugs.
So there we have it, housing going from shelter, to ATM to Ouroburos.