Housing Bust Deals a Cruel Blow to Older Homeowners

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Maybe if you live in NY you could buy for 50K in the 70's and see 350K in 2006....but that isn't true for a large percentage of the rest of Americans. Retirees who will suffer the lost of their hard earned equity for retirement live in family suburbs throughout the U.S. Additionally, I don't know many retired persons who stay in their homes till they die so they can leave it all to their children!? These "old people" have paid their kids lifetime expenses, taken out loans to help with tuition, covered wedding costs, donated furniture, given their time to help with home improvements, co-signed for cars or down payments on a first home for their offsprings. Not to mention the hours of free babysitting ....etc...etc. And the reward? The attitude of their well educated offspring in scoffing at their parents last means to retire with some dignity. Be careful there...it will the "young" people who are going to be required to PAY-UP when their parents have to be on government assistance in order to keep a roof over their heads. Or maybe you won't mind to have them move in with you? hummmmm? None of us deserved this. Least of all the generation that KNEW how to live within their means. Those days are gone for sure.

KR of MI 10:08PM March 10, 2009

Not sure about this whole analysis. I don't see how housing has affected the 55+ set more than the rest of us. If you bought your house in 1970 for 50K...worth $150K 1n 1998...worth 350K in 2006 and worth 250K in 2008...you're not doing so bad. I can think of many demographics worse off due to the housing bubble...those who had to delay buying (and pay rent) for 5-10 years because values were hyper-inflated...those who bought less of a house than they should have been able to afford...
The 401K is a different issue and I do feel badly for people who have worked a lifetime to have it diminished at the last second, but as long as you were properly diversified and had enough for the next 10yrs in a safe vehicle, they too should be ok.
I hate to sound so harsh, but it really does serve as a good lesson to the rest of us...the market IS risky...DON'T FORGET IT!!!!

Mark of NY 7:40PM March 10, 2009

This article made so many good points that must surface if there is to be any progress in unlocking the housing/consumer market. A large segment of consumers are in a state of financial shock, similar to what our parents experienced in the Great Depression. This could cause a permanent shift in the consumer spending paradigm, depending on how long this "recession" lasts. People who have lost 30% off the value of their home and retirement account are not going to feel down in the dumps for a few months and then go back to spending and making the same kinds of financial decisions they did previously. Until the administration understands the impact on the *psyche* of the middle class, particularly the Boomers, and addresses that with *emotionally meaningful* tax relief, forget about propping up the real economy. "Inside the Psyche of the Former Consumer" - http://www.associatedcontent.com/article/1536333/the_rational_misers_inside_the_psyche.html?cat=9

kellysull of NC 7:12PM March 10, 2009

The drop in home values will not affect all retirees because many of them plan to be spending the rest of their lives in their current home anyway. The loss in value is only on paper. The ones who will lose actual value are the beneficiaries, who will be inheriting the reduced-value houses when the current owners pass on. The retirees were, of course, hoping to leave a sizable estate to their beneficiaries but now the size of their estates is diminished.

Howard of DE 11:03AM March 10, 2009

Not to forget that if house prices hadn't been inflated in a short period of time by the recent bubble (and had instead increased at steadier historical rates) there would be a lot less substance to this story. Just like a store jacks up prices on its goods so it can subsequently tout huge percentage discounts on "sales", there is more show than substance to looking at the whole financial crisis from the home equity decrease aspect.

JoeSwiss 3:54AM March 10, 2009

My retirement house was almost paid for when it was falsely foreclosed (payments were current and there was an excess in my account). Although I got the FTC to issue a Cease and Desist Order to Guaranty Bank, I still retired homeless.
There will never be justice for this generation.

Bill Rose of CA 12:37AM March 10, 2009

Need I say anymore? Talk about business killing the golden egg laying Goose, LOL, now when all of the creditor related businesses go broke and fire employees, they cannot even file chapter 7 bankruptcy because they forced the means test in the bankrupcy reform. In essence, they are now their own debt slaves. it would be funny if it wasnt pathetic.
On top of that, the banks will have to pony up more FDIC funds from their own profit/greed motives and actions, hastening their own demise. What clowns.

Jonbonjovy of OK 11:21PM March 09, 2009