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Politics & Government

Moms Talk: Talking to the President about Real Estate

President Obama answered my Twitter question—well, kind of.

It's not every day a Midwest mom gets to ask the President of the United States a direct question.

Yesterday, President Barack Obama made history with a live, streaming "Twitter town hall." In anticipation of the event, the administration set up regional curators to ensure all areas of the country were represented, and had them solicit questions to submit.

One of those curators was local Star Tribune Business Reporter Kara McGuire, and because of that, my question managed to make the cut.

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My question was about an economic concern that many families are facing currently: underwater homes.

For those of us who bought our first homes at the peak of the housing bubble, the deflated market has become a weight we simply cannot shake or recover from.

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We didn't "buy too much house" or "get irresponsible mortgages" like so many accuse us of doing. We bought exactly what we could afford to pay, and, like many first-time homeowners who lacked downpayments, we obtained a second mortgage to cover the downpayent and avoid paying PMI (an additional monthly insurance for those who don't have 20 percent to use as a downpayment).

We did everything we were supposed to do. We locked in our mortgage rates immediately rather than take adjustable rates that could balloon on us. We didn't do interest only payments or anything like that. We planned on staying put for at least five years before looking for something else that could accomadate a growing family.

We purchased our starter home just a few months after we got married. Isn't that supposed to be the American Dream?

Instead, we are trapped in a nightmare. The two-bedroom/one-bath house that made sense for a couple and maybe a newborn is growing smaller since the arrival of our second. We converted the attic into a third room so the kids would stop waking each other at night, turned the basement over to storage, and now carefully cull through the items that keep moving onto the sunporch, wary that we could quickly turn into an episode of Hoarders.

We are in no danger of missing a mortgage payment. But because our house has lost so much value, we also have no hope of ever moving out.

That's the part of the equation that is missing from the Obama administration's attempts to assist underwater homeowners. All of the focus is on making sure that struggling homeowners can stay in there homes. But there's no assistance for those of us who don't want to stay there, for families that want to relocate for a job, for a bigger home, for a better school district or a smaller mortgage. 

If families can't pay their mortgages, there are programs that step in and offer a hand up (although many of those have been troubled, to say the least). For families who have no issues paying but simply have a house that just doesn't meet their needs anymore, they are trapped.

I desperately wanted an answer to the question I tweeted the president: "How will admin work to help underwater homeowners who aren't behind in payments but are trapped in homes they can't sell?" 

Unfortunately, I didn't really get an answer. (See how he dealt with it at the 22:00 minute mark in the YouTube video.)

There are many, many factors that are leading to the prolonged recession—housing, unemployment, stagnant consumer spending, the growing gap between the rich and poor. But often it gets underestimated the extent to which housing is at the root of it all. 

People who cannot sell homes cannot move to where new jobs are located. They cannot open up smaller homes for new couples or empty nesters to purchase. They can't buy larger houses that bigger families are trying to sell. And they can't adjust their household costs in order to free up more money that can be spent on consumer goods and services, stimulating the economy and creating more jobs.

If I spend all of my money on an overinflated mortgage worth twice what my house is currently valued at, all of my income goes to a bank, and they now have the money. Few if any additional jobs are created. 

Now, if I had a mortgage that was more in line with the value of my current house, the money that is freed up could be used for a meal out, some new clothing, books for the kids, all things I seldom purchase because we have little "extra" money. All of those purchases contribute to consumer spending and help create new jobs. 

The recession is being prolonged by the housing market. The market will remain weak or worse until someone finds a way to help people sell underwater homes. And that plan has to include people who have paid their mortgages, not just those who are in danger of foreclosure.

I hope eventually the administration finds a way to actually answer my question, because I don't think this recession can end until it does.

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