Lisa Simpson
Jan 12,2010
In: Foreclosure

Foreclosures Took Away the Real Estate Wealth of the People by Trillions

A casual look at figures will show that foreclosures took away the real estate wealth of the people by trillions. The median home prices increased every year from 1989 till 2006 prior to the sliding that started in 2007. In the third quarter of 2009, of all the Americans house owners 21% had gone underwater.

Money generated from land has been a major source of wealth creation and movement of classes. Thus with land being hit, the pain from the wounds will take a long time to disappear..

Al Muller of Metro Market Trends, Pensacola said, “I keep telling people this is not a housing downturn. We are in the middle of the bursting of the biggest real estate bubble in the history of this country.”

The destruction of wealth in Florida and California along with some other states has been disastrous and catastrophic. Muller explained, “In the years of easy credit we all though that we had more money.” He was flicking through documents showing that during the first 10 months of 2009 there had been 3,018 foreclosure postings in the counties of Escambia and Santa Rosa. These were not just papers but related to the real lives of people who were friends and neighbours. He said, “We all thought (in the boom) that we could live in a bigger house. But we never realized that we were not getting any wealthier… Now there’s simply less money everywhere.”

Home equity fell from its highest point in 2005 to the 2nd quarter of 2009 by 37% calculating to $4.7 trillion according to the findings of Central Reserve. It will be clearer if we compare it the total of China’s economic output of 2008 being $4.3 trillion. The 2nd quarter of 2009 saw the total worth of America’s net worth total shrunk by 17% calculating to $10.7 trillion from the peak of 2007.

Thus the people lost their land, their houses, their money and their jobs. Last November unemployment read 10% after reaching a record of 10.2% last October. Over 7 million people had lost their jobs since the recession kicked off in 2007 December.

In some areas of Ohio the jobs losses came from one important employer. In Wilmington there are 14,000 residents. For 20 years he has been the home of a courier service Airborne Express. In 2003 it was purchased by DHL a branch of Deutsche Pos (German firm). But DHL could not run it after having exhausted dollars and downed shutters of its American operations causing the loss of 9,500 jobs.

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