Reader comments
Greg Kratz: Readers have little sympathy for real-estate 'gamblers'

midwest | 10:56 a.m. April 29, 2009

We signed all the paper work yesterday on a home for us-affordable, in excellent condition- an investment only in that someday it will be sold when I move on. That house BTW was never on the open market. The owners were transferred, house for sale, we were told of it, and we bought it. Had we not, two others were standing in line, wanting to move in. Not an "investment". All depends on why one is buying/selling. If a person is goign to invest, rather than occupy, recognize sometimes things go sour. And live with it.

No sympathy | 12:07 p.m. April 29, 2009

One problem - all of the real estate investment "hucksters/coaches" who sold real estate as a "can't lose" investment opportunity. Most of them charged for this excellent advice. They are part of the cause of this problem, but they have walked with the money that they have (fraudulently) taken from their "students". They didn't invest, they charged people money to "learn" how to invest... and then steered them towards properties they received commissions on.

The laws of supply and demand are pretty much immutable. If the cost of buying a home means that you have to rent it for more than other rentals in the area, then either pray to be lucky enough to get the foolish/rich renter, or expect to take a loss. At some point you run out of homeowners who can afford to buy/live in homes available, and then you are at the mercy of the rental market. $200K-250K houses as rental properties makes no sense, but people bought them anyway because someone promised that they were a "good investment". Buyer beware - and maybe even think things through for yourself.

Augie | 7:16 p.m. April 29, 2009

I have friends who sold their houses at the top of the market. They took the money and ran. They did not share their earnings with anyone and are doing just fine. Why should we bailout their buyers who got stuck???

Comments continue below

Anonymous | 10:43 p.m. April 29, 2009

Where's the sympathy for financially-responsible younger familes with excellent credit scores, moderate incomes, and money in the bank. We've been forced to rent for years because people like this real estate investor and others drove the price of housing up so high that we could not afford to responsibly buy.

That's a large part of the reason you are reading so much anger and emotion. A sizable minority of the population--mainly Gen Xers and Gen Yers--have been hurt by the housing bubble, forced to put their dreams on hold.

All that policies like Obama's do is delay even longer our chance to become part of the homeowning class.

Anonymous too | 11:18 p.m. April 29, 2009

I agree with Anonymous it's sad for the young buyers.....eight houses? Greed Greed Greed...at least they could have had the sense to deal with one investment house at a time. I don't feel sorry for them at all.

Hans | 11:39 p.m. April 29, 2009

You gamble... you lose... too bad.

The Real Deal | 12:06 a.m. April 30, 2009

Homes are not worth more than 7 times the yearly income they bring in in rent. Like PE ratios for stocks, this is how you determine how much a home is worth. When people learn this, they will not be overpaying. People should also save up and pay cash. Paying interest is simply paying rent on money. But it is a lot cheaper to rent the home from a homedebtor or homeowner, rather than rent the money. Just because one can afford it, does not mean one should pay the asking price. I don't smoke or drink, but I could afford to. I could also afford to pay $1 million cash for a home, but that would be stupid. The less you pay, the better. I'm waiting for homes to hit $100,000 or $200,000 again on the coast. It has been years since we had a good earthquake and the TV covered the damage 24 hours a day. Even the overpaying margin borrowing fools don't pay much when that earthquake damage is being shown on TV.

Feel For Them | 12:48 a.m. April 30, 2009

I feel for them, only because I feel bad for ANYONE who is having a hard time. However, that is where it ends. The key word is GAMBLE.

If you gamble and you lose I don't feel bad for you. You took a RISK that you shouldn't have taken. The word GAMBLE means "an enterprise undertaken or attempted with a risk of loss and a chance of profit or success." That right there is something you should not do often. Now there are justifiable risks, like starting a business, but hopefully you don't put yourself in risk of bankruptcy. You should always EXPECT something back for your investment. If it is up in the air you should do something else.

Some people got absurd amounts of money and won, and they are surely not sharing it. The government shouldn't bail these people out.

Mike Leehtorus | 2:18 a.m. April 30, 2009

When you make a financial decision you reap the rewards or the pain. Your choice, no one else. Don't cry or whine when things go sour. You only have yourself to blame.
The problem here is the savers and people that watched their money are now paying for your mistakes and to top it off we have to read articles about you whining.

Jeffers | 3:12 a.m. April 30, 2009

What is most irritating is that for a person simply wanting a home as refuge, the market has become so exploited and distorted over the years by people like this that you're stuck renting -- and holler it from the rooftops all you want, but frankly, renting sucks after a while - especially if you're wanting a more stable environment (harder to find a landlord who isn't a speculator) and are sick of moving every couple of years or every year, in some cases.

What was once a privilege to the disciplined and prudent became a free-for-all for larcenists with a misplaced sense of entitlement. As a result, the mere idea of buying a house has become anathema to anyone with any sense -- which, granted, is a rare enough breed. I have saved diligently over the years, but I wouldn't dream of subsidizing someone's greed with my hard earned money. I'd rather buy a freakin' Airstream!

RR | 5:13 a.m. April 30, 2009

There are plenty of people who were priced out of markets like Washington DC, Boston, NY, LA, San Francisco, etc as the bubble expanded. Now they get to pay the freight on Obama, Reid, Pelosi et al burrying their "American dream".

As a part of that section of the population, I highly resent that I am unwillingly being forced to subsidize other people's ignorance, greed or stupidity. One of those three is to blame when a home owner finds themself in trouble with a mortgage, whether you want to admit it or not. The Democratic leadership in Washington continues to put forward individual bailout plans are ill advised and highly irresponsible while paying short shrift to a much larger segment of the population. The Democrats helped create this mess, but they are single handedly compounding it. The more they do to fix the bursting bubble, they longer they will prolong it and the more expensive it will get.

This is what we get when we all life long politicians to serve in Washington. Their goal shifts from representing the best interests of their constituants, to getting reelected. And shame on all of us for reelecting them year after year.

mike | 5:24 a.m. April 30, 2009

Why feel sorry for those that invested and lost? That is the chance you take in our Capitalistic system.Is anyone who made a lot of $$ borrowing from the banks giving extra money to the bank after they made huge profits? NO. So why shouldsomeone who lost be forgiven? I personally made lotso fmoney flipping over 40 houses during a 10 year period but I also lost a lot of money toward the end. I loaned several clients money and will never get paid back becasue they went under so should the government or banks bail me out of those losses? No, I took a chnace and risk and most of the time I won but not all of the time. No Risk..No Gain. No Pain...No Gain. High Risk=High returns. Low Risk=Low Returns.

spitfire guy | 5:28 a.m. April 30, 2009

We as a nation will learn nothing by this. Financially irresponsible people are being bailed out and those that did the right thing are left to pick up the tab.

Bail Out | 6:05 a.m. April 30, 2009

Thanks to the government bail outs, the real estate speculators that got burned will learn nothing. As soon as the market turns around, they will be right back at it. What incentive do I have, as a bank or an individual, to be careful when I know that if things go south my big brother, the federal government, will be there to bail me out?

As horrible as the Great Depression was, it ushered in years of financial responsibility, and consequently, prosperity. I am not advocating for another Depression, but when society as a whole does not feel at least some measure of sting from its irresponsibility, then it will not take long to be right back where we are now.

VS | 6:31 a.m. April 30, 2009

I have no sympathy whatsoever. In fact, not only should get file for bankruptcy but they should be put in jail for a year so they learn that greed is not good. 8 homes - how greedy can they be. The only acceptable reason to buy 8 homes is if you have enough money to pay upfront for each of the 8 homes..i hope they get what they deserve..

Big Dragon | 6:56 a.m. April 30, 2009

I think we should have a moratorium on real estate investing. I have absolutely no sympathy for the investors getting into trouble even if they lost their jobs or got sick. Investments are subject to risk. If you have 8 houses that are beyond what you can safely afford then you are clearly intoxicated with risk and should fail. I don't care if you can't sell them. Everything sells at the right price, and sometimes that price is half or lower than what you paid 2 or 3 years ago.

A lot of younger people like myself would love to buy up houses but people are refusing to lower their prices. I'm left sorting through foreclosures and short sales...most in disrepair or with uncooperative tenants. The alternative to that is to stay with family because many rents are just as high as mortgage payments. Investors like the one chronicled in this story have priced normal people like myself out of the market for years by greedily hoarding housing. How about some sympathy for me and other families who were forced to sit this out or overstretch to achieve their dreams?

Anon | 7:04 a.m. April 30, 2009

Since homes became a speculative vehicle, it is but obvious that it would behave much like a stock market does. No one shed a tear for the people who lost money after the 2000 bust. Why are homeowners special? In fact, this whole game is costing renters in two ways. First, some of their tax money is being used to bail out the losers as well as banks making bad mortgages. Secondly, many renters have been shut out of the market because of the absurd prices and have to play the patience game waiting for normal prices to return. Shed a tear for them, not the greedy and irresponsible homeowners who overreached.

Steve C | 7:24 a.m. April 30, 2009

Real estate has never been an investment. When one sells a home, he is lucky to get back his loan interest, repairs, taxes and insurance. However, we all have to live somewhere.

Believe it or not, today there are bidding wars on inexpensive foreclosures in Phoenix. People claim they are paying cash for these "investment" properties. However, they are using borrowed money from credit lines at banks. You see, the mentality has not changed.

Get ready for another drop in real estate sales prices and more foreclosures. Lending continues to tighten and unemployment is still rising.

anybody | 7:42 a.m. April 30, 2009

The hardship is not so much the investment / "gamble", but that they bought houses using borrowed money. Like buying stock on margin. Unlevereaged investors should be able to wait out the market more so than those who borrowed to buy. It reminds me of the couple who took equity out to pay for their kids' college education and when the kids eventually paid the parents back, rather than pay down the mortgage, the parents bought stock -- they've gambled twice and now both their house and portfolio are down. I'm sure these people thought they were smart, and it probably helped that mortgage interest is tax-deductible.

Stop Whining | 7:43 a.m. April 30, 2009

This is embarrassing. Both sides are whining like 6 year olds. Come on, I literally am sick from reading this article and the comments. People who sit around and feel sorry for themselves and blame everyone else for them not having what they want are exactly why we are where we are.

@Big Dragon....no we don't have sympathy for you either. You go off on your lack of sympathy for others then you blame them for your problems and ask for sympathy? It's not other peoples fault that you live in live with your folks. Get over blaming others and do something about it.

@mike...thank you for taking responsibility for yourself, its nice to hear one person do it.

Big Dragon | 9:30 a.m. April 30, 2009

@Stop Whining: I never indicated where I personally live. I simply listed options one has to consider in such a twisted market like this one. You have misinterpreted the words in which I used.

You also incorrectly assume that the market's problems are my problems. I could buy real estate right now if I wanted to. A lot of people sitting this bubble out have the capability to buy. It's a common misconception. In the rush to save investors by throwing money at them, all those people unwilling to join into the market's ponzi scheme are being trampled upon. All I'm asking for is the sympathy to be redirected where it belongs. It belongs with the people who are the engines of prosperity, not those clamoring over each other to speculatively hoard, trade, or flip unaffordable properties and drive up their perceived values to unsustainable levels using money compoundingly created out of thin air. Let the investors face the consequences of excessive risk, over-leveraging, and the full effects of capitalism's balancing behavior so the market can safely with sound buyers not willing to overpay or overstretch.

Future first time home buyer | 10:37 a.m. April 30, 2009

Where's my sob story? I've been ready to buy a home for a couple of years now but have put off buying because 3 years ago I did a few hours of research and used some High School math to realize there was a housing bubble and that it was due to pop very soon. I refused to over pay for a substandard house I could afford or take on a mortgage I couldn't afford for a house I wanted to live in and have been renting ever since. I really want to buy a home but all these bailouts and sob stories about people who gambled and lost on real estate keep supporting the bubble instead of letting things get back to normal price to income ratios. I can afford to buy; I've got a good sized down payment, above average income and good credit but I refuse to overpay for someones overpriced house. I know that despite everything the government has done to try to support home prices it will eventually fail, it has too, they can't avoid the math no matter how much taxpayer money they steal.

@FFT Home Buyer | 12:02 p.m. April 30, 2009

...you're one of the smart ones. When I moved here 2 1/2 years ago, every local I talked to said that Utah was "different" and that home prices weren't going to drop like they were bound to in other places. Sadly, that delusion continues among many who think their house is worth what it was(n't) two years ago. How people in Utah think that the average salary can accomodate the average home price is beyond me. It can't--and won't--last, folks.

Geordie | 12:49 p.m. April 30, 2009

Sorry, no sympathy. These are the people who speculated with the collusion of the banks and drove the prices out of the reach of those of us who expect to actually pay our bills. If they didn't know that the game was to jump off before the train wrecked then they were the marks in this game. They pay the bill for the other, smarter gamblers. The only way to fix this is to let the banks who made bad loans crash, along with their investors. The speculators who wanted to make a killing out of real-estate need to be taught the lesson. Otherwise all of us are ruined, even the ones who saved their money and waited for the inevitable.

NOW we're talking... | 2:12 p.m. April 30, 2009

What really gets me mad is when many of those people who bought at inflated prices during the peak whine about how bitter they are that they bought at the height of the market and how everyone else is now getting "great" deals...uhhhh, prices are still overpriced in my opinion and are not a deal. Those bitter people were just the stupid ones who didn't do enough research before they bought. All this talk of how now is the "perfect" time to buy makes me laugh.
My husband and I are like the many other commenters on this board, we have good, stable good-paying jobs, have a sizeable down payment that could easily cover a 20% down payment even in this overpriced market and absolutely no debt-not even car payments or student loans. Seen those advertisements from the NAR on how its the perfect time if you're in the position to buy? They're talking to all of us but unlike some of the others who are still overpaying right now, we won't be fooled.

PGH | 2:31 p.m. April 30, 2009

I live in an area where prices never went up too high (Pittsburgh PA) and this housing crash is going to make me rich ... I have been saving and saving ...and now I am snapping up properties from all the idiots (mainly amatuer investers gone bad) left and right ... just bought a 2 bdroom townhouse for $16k - needed almost nothing and will rent for $700/mo easy....and about to close on a HUGE 2 unit (1-2br apt, 1-4br apt) for $12k....

let the market crash ...

and PS - I also have no sympathy for people who make bad decisions. like the dude above said - It is really simple math ...dont need a guru or an MBA to figure out this stuff... but if you want to refi your house, and buy a flat screen ....go ahead ... cause I'll buy your house when you get foreclosed on .... and I will be happy to rent it right back to you : )

Too cold?

Tough

imprisonem | 5:50 p.m. April 30, 2009

Bring back debtors prison for these lazy "I don't wanna work" speculators. They are useless to society. Then pass laws where no one individual may own more than 2 Single Family Homes. Then you will see prices fall to affordable levels and stay there forever. Gee, maybe some of these unskilled speculators will actually serve you burgers at your favorite Fast Food Venue.

to imprison them | 12:26 a.m. May 1, 2009

I agree. Pass that law.

SB | 12:50 p.m. May 1, 2009

"Nothing comes from nothing..."

Starting with no money, taking a loan, and then getting rich!! Something out of nothing - does it work?

Laws of conservation do hold in this universe atleast. Advise: get a real job... work creates wealth.

jr | 3:01 p.m. May 1, 2009

2.5 to 3.0 times the average income in any given community should be the average price for a house. That's what the average has been for the past 100yrs. 2.5 to 3.0 times your annual income is all anyone should pay for a house because that is all you can reasonably afford. Like many other responses, I don't like the idea of paying for someone else's losses. If you roll the dice in Vegas and lose, don't expect the casino to give you back your $..

401K | 6:59 a.m. May 3, 2009

If the government tries to bail out homeowner to prevent forclosure, why not also bail out (say modify the maximum losses to ３０%) retirees on their 401K and/or IRA accounts also ??

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