Three more banks close - home values continue to decline

Three banks in Florida, Maryland and Utah were closed yesterday. Home values continue to decline. People are afraid to buy a home now for fear they may lose there jobs. Home prices doubled in a five year period in Florida but wages didn't double. The doubling of home values was induced by the demand of buyers who could never afford the homes they purchased without the artificially low adjustable starter rate. The monthly payments many of these buyers were paying weren't enough to cover the mortgage and the deferred balance was put on the back end of the loan each month. The starter rate ended after  2 to 5 years and its time to pay the piper. Many people lied about there ability to pay - no doc liar loans - and now the scheme is up for a lot of these buyers. Just because home values have declined does not mean that you shouldn't be able to pay your mortgage. Its risky to assume the home you just purchased, which doubled in value in the five years prior, will continue to go up and be worth more when your adjustable comes due. Many people gambled and lost. Many made a lot of money selling at the top of the market. Risk and reward. Its no surprise that home values are now declining and home value to wage ratios are returning to historic norms. The fact that the government is trying to keep home prices artificially high is a joke. Pull the band aid and lets get it over with.