Report: Bernanke's own home down 260K in value

Say it isn't so: The Fed chairman, rapidly losing home equity in the housing bust?

Bloomberg News reports Fed Chairman Ben Bernanke's Capitol Hill home is slipping in value and may soon be worth less than he paid for it. An economist quoted by Bloomberg estimates Bernanke's house has lost $260,000 in value.

"Bernanke [pictured] lives in Washington's Capitol Hill area in a four- bedroom, 2,600-square-foot house he bought new in May 2004 for $839,000. Almost four years later, it may not be worth any more, according to real estate records and local agents.                  

More: "'Even though he's the Fed chairman, he's going to get hit -- but I think lot of people will in Washington,' said William Wheaton, an economist at the Massachusetts Institute of Technology. The value of Bernanke's home 'probably went up to $1.1 million and it's probably back down to $840,000,' because prices in Washington just a couple years ago 'got out of control,' Wheaton said."

Comments? Thoughts? E-mail story tips to peter.viles@latimes.com.
Hat tip: Michael Snyder
Photo Credit: Bloomberg News

Comments

[DC Resident]

What a stupid article. You quote an economist and some guy from MIT to argue that Bernanke's home has lost value? How about looking at the local MRIS databases? Or asking local real estate agents what similar houses have sold for? What the heck does an MIT economist know about home sales and values in a particular neighborhood in Washington DC?

[Pedro]

Do I sense a little cynicism regarding poor Ben. Typical, let's hate the rich guy even if he has earned it the old fashioned way....why, he should give it to some poor wretch who was born into poverty.

[Pete]

Why is THIS news? SO WHAT?!

Ben Bernanke is no more immune to what's going on than anybody else.

I guess the point of the story is for some dunderhead to feel empowered and happy that someone in his stature "got it coming to him!!"

Weak minded bastards.

[Bob Graham Las Vegas]

I hope no one is offended when I say I a not going to shed a tear for Bernanke's loss regarding his home value . What did the minus 260,000 do , make it worth only two or three million ? A house bought while he was on salary with the feds and their banking cartel . I cannot find even empathy for anyone who has been a party to the screwin the fed has given the citizens of the USA . I do not capitalize fed for a very good reason , you are only supposed to capitalize formal names . There is nothing formal about the fed in my eyes .

[Jay]

That's interesting. As a Washingtonian, I can attest to two things:

Prices are a bit out of control, but the funny thing is that valuations have been fluctuating around here very unevenly. There are some properties, which are in fact in less attractive areas, that are on the market for only negligibly lower prices than they would have been before the bubble burst. Maybe they will be there for a long time.

[Cal]

Someday, 10 years from now, 60 minutes will break the story that this massive cutting of interest rates and dumping of billions into the economy was just an effort by Bernanke to save his own home from foreclosure because he pulled out all the equity with a subprime refinance.

[Tim K.]

Actually, this explains a LOT.

Ben bought his home near the market peak of 2004. Clearly, if you think it's a good decision and a fair price to do that back then you'd have this incredible internal psychological pressure to believe that prices will not drop below that level.

I don't doubt that Ben makes sufficient money so I would be very surprised if he is actually under significant pressure to sell his place. I would also be surprised if he got funky financing.

But it's amazing just how tough it is to admit that your purchase is not what it once was. I'll bet there is some unconscious pressure in his mind to want to believe all of the information that favors keeping housing prices higher as "normal".

[Ed]

This is beyond irony and an obvious conflict of interest in what he's doing. What's next, we discover he owns 1000 ounces of gold and 10,000 futures contracts on oil?

[Anoymous]

Can't help but think of the Traffic song- Low Spark of the High Heeled Boys... seems to fit the general feeling regarding Wall Street financiers right now...

The percentage you're paying is too high-priced
While you're living beyond all your means
And the man in the suit has just bought a new car
From the profit he's made on your dreams
But today you just read that the man was shot dead
By a gun that didn't make any noise
But it wasn't the bullet that laid him to rest
Was the low spark of high-heeled boys

[Dr. John Ritter]

The bottom line is that he paid $839,000 and now it's "probably "worth $840,000. Where is the news in this?

[RuthD.]

>>>>>>>>>>>>>BooHoo!!!>>>>>>>>>>>>>>

[Sam]

At least this make him sympathetic to the homeowners who lost to the credit debacle generated by the subprime scam. He would feel their pain, a la Clinton' double speak. The one responsible for this financial melt down is his predeccor Green Span, who was chairman of FRB, and was responsible for the lack of regulations in the finanancial markets, and allowed the easy credit policies to be run a mock of sound economic principles. He is now working in HEDGE FUND, where hs is rwarded handomsely for his incompentence. That is the way the system works, the crocks and wrong doers in Wall Street and big business got rewarded for their mestakes, while the the taxpayers end up holding the bag, after these financial investmentbanks are rescued by the FRB.

[edward]

FYI -- You don't buy houses on Capitol Hill new. It is an historic district of federal style houses a few blocks from the U.S. Capitol and behind the Supreme Court.

[erinkeenan]

OMG. this story is so unbelievably awesome i don't even know where to start. of course i wish this were greenspan this was happening to. but wow, great story.

[GuineaPigZed]

I laughed so hard, I peed.
You've got to be kidding! If he can't make money on his house, how can I ?
He's in charge of what?
The thought, conflict of interest, come to mind.
Does he have a mortgage?
OMG, the emperor wears no clothes!
If he could lend money to JP Morgan, to steady Bernstein, why not guarantee Bernstein?
A secret fire sale, on the weekend.
Should the USA now be the owner of Bernstein bank?
I am trying to buy a house now. ( Yes I am crazy. )
Why does the bank act more like a loan shark?
When the Fed rate goes down, I expect mortgage rates to go down. I'll buy when they do fall.
Right now. today, I won't sign for more than 5 %.
If housing is really a government priority, why do we need the banks to suck us dry?

[Head Pig]

Great post! I would be real curious to see if he owns the home outright or if he has a mortgage on it.......

[jb]

Bernanke (aka "Kristen" by bankers and wall street) will have no problem paying it off with hard work (note his kneepads)

[Jason]

Aaaawwww..... another coaster got bitten in the false housing gold rush? People on the coasts (and in some sections of middle america, but not all) have been stupidly over inflating their markets for years, sometimes at asinine levels. Yet everyone is surprised when the rug is pulled out from under them? Oh please.

It's funny that house values in my area are still increasing (albeit slower) even after the bubble burst. Of course, we've had steady growth of about 3-4% for years, so slowing down to 1% for a few years isn't going to be a kill.

[lc]

A "four- bedroom, 2,600-square-foot house" for $1.1 million is a sign of "out of control" home prices? I need to get out of L.A. more often.

[desmo]

I think he will just mail in his keys.

[Mickey]

Well, everyone is experiencing this. This isn't really news.

[Jack]

Bob-

Learn to read.

"The value of Bernanke's home 'probably went up to $1.1 million and it's probably back down to $840,000"

[Matt]

Slow news day? Moron reporter on the beat with nothing better to do?
Gee, I would have thought that because he was the Fed Chairman he'd have his own unique housing and stock market. Who would have suspected the economy impacts him like the rest of us!! What a waste of newsprint.

[Publius]

What's all this about conflict of interest? He's not allowed to buy a friggin house because he runs the Fed? Get a grip.

[Rick]

Any of you idiots that feel sorry for this guy ought to have your heads examined! He is a crook along with Greenspan. A concocted housing bubble that burst that cost investors BILLIONS while the CEOs lie along with the Reserve Bank heads and I read a sob story about one of the manufacturers of America's financial destruction taking a housing value hit.... PATHETIC JOURNALISM !!! This guy is a crook and belongs in prison along with his J.P. Morgan buddies who bilked investors and employees out of millions & millions of dollars on a Sunday evening just last week. WAKE UP AMERICA !!!

[FLEUR]

I'm just a stupid housewife....what do I know?
But I can tell you this much: what goes up, must come down; the economy is always cyclical. Get it: it's a cycle. That means that Bernanke's house will probably increase in value eventually. You know: go back up.
The kicker is this regarding the cyclical economy: if tax cuts remain in place (i.e. Bush's tax cuts) the swing upward will happen sooner and last longer than if the "feds" mess with the economy and start raising taxes which the dems swear they will do.
A Granny somewhere in the U.S.A.

[Bill Wilson]

Not "everybody" is experiencing this btw. I sold my home in Southern CA in July 2005, bought the same size house in the Charlotte, NC area on twice as much land (on a lake) for cash. Banked the difference. The new house has gained 35% since then (30 months) and is holding its value nicely. We have a construction boom going on here with businesses moving here from the high tax Midwest and higher taxed Northeast. Every direction I drive there's new construction. Sorry about y'all. By the way, if you now own commodities...SELL! Just a little tip.

[Richard A]

The value only dropped if he sold it for less than the price he paid. Vaulation occurs only when there is exchange of assets (cash).

[LeavinLA]

So... many... punchlines... where... to... start? LOL

[aaron]

This is just classic CLASS WARFARE rhetoric. Who cares? This isn't news. This is just silliness; and this is why I won't pay for newspapers that engage in such claptrap much less support their sponsors.

[Ward]

I think everyone is missing the point. This is one of the few guys in Washington that actually gets what the real problem is. To not think he doesn't know that the devaluation in housing going on is the worst since the great depression is naive. The Federal Reserve unfortunately can do very little about it though. Yesterdays action by the govt with FNMA and Freddie is what was needed.

[Michael]

Two posters mentioned conflict of interest. Why is it a conflict of interest for the Fed chairman to own a house? If food prices spiral out of control, would it be a conflict of interest for the Fed chairman to go to the supermarket?

[Barney]

Maybe, his friends on Wall Street who received $ 39 billion in bonuses in January will buy his house as a fourth vacation home.

[baruza]

In more important news, the New York Fed just announced they're accepting a wider range of Wall Street garbage in exchange for good ol' taxpayer treasuries.

From Bloomberg: "The new eligible collateral for the TSLF includes agency collateralized-mortgage obligations and AAA/Aaa-rated commercial mortgage-backed securities, in addition to similarly rated private-label residential mortgage-backed securities and any collateral normally eligible for Fed open-market operations."

http://www.bloomberg.com/apps/news?pid=
20601087&sid=aVL8jQ3AglT0&refer=home

Looking at the money Bernanke has tied up in his home is shortsited. The thing to look at is his much more lucrative exit options in finance. This is why the Fed looks out for its banker buddies and not the taxpayers: that's who'll be paying their officials the big bucks once they leave.

[Lou]

A house is a box that you keep your stuff in, not an investment instrument. My wife and I have been sitting on the sidelines patiently waiting to buy despite the fact that we currently have the cash to buy a one million dollar home in the Silicon Valley without a loan. But, we are experienced (and old) enough to spot trends.

Many of us here in the Bay Area are doing well and will continue to do so but, like a game a poker with many bad players there are going to be a lot of losers and for many of us this is all very, very good.

Warmest regards -Lou

[Gandalf]

I got mine for $15,000 and it is now worth $500,000. Took a while but by refinancing along the way I have even made real money outside the real estate business. Best investment I have ever made. However I have never been greedy in the process and never been careless in the use of the equity. Those folks that have gotten into trouble have thought they could get something for nothing and quick. Never have seen that work. Banks and others who have overleveraged get the same sympathy as folks that play margin - NONE.

[Howard Ino]

WOW I am impressed!!!

The LAT REALLY is on "top of their game!"

It's no wonder that Big Media is failing!

[Michael]

So how much money did he lose exactly? $0

[Michael]

Actually his house is worth $1.5 Mil - a GAIN of $400,000 conservatively based on facts rather than speculation. The median 4 bedroom house in DC in 2004 was $400,000 and now it is $700,000.

http://www.trulia.com/real_estate/
Washington-District_Of_Columbia/

[FTC]

This article is pretty lame:

First - yes check with local realtors in Washington, not some guy at MIT about Capitol Hill home prices.

Second - Of course he lost value on his home, as he bought it near the peak. Usually when you are appointed by the President to serve, most people would have to move to Washington (surprise surprise) and he had to move at the peak.

So what happens? The house declines in value. How profound!!!!!!!

Thanks for "enlightening" us. But the joke is on me. I read the article.

[Luce_sociator]

Is that picture of him supposed to be "poor homeless guy sleeping in his limo."

[John]

WHAT'S THE PROBLEM?????????

HE IS STILL AHEAD OF THE GAME!!!!!!!!!!!!!!!!!!!!!

[Liz]

I live in the Capitol Hill neighborhood, and yes, it IS possible to buy new there (if you're independently wealthy, or darn close to it anyway) - there are three "mansions" that were recently constructed on the 600 block of Maryland Ave NE that replaced a dilapidated church buidling. I've watched them spring up from the rubble over the past year.

[ted evans]

He bought it for 839 it has now maybe lost value to 840. I am no economics major, but seemingly this loss is hard to find, perhaps you mean his appreciation is not as great as it may have been.. Your story is---------

[Chicago Resident]

LAT needs a better editor.

[Joey]

Wow ... the LAT at their best.

Comon guys - why don't you go manufacture some REAL news. Isn't that what they call "investigative reporting" - give it a try sometime

[Ronald]

Let me see so he pays less taxes on his home. He has not lost any value for a home he is living in. If anything he is paying less for a house he bought than a year ago.

Now if he sells for a loss this would be very different. Fact is he isn't selling his house and his house is probably paid for. If I was him I would be very happy to pay less taxes.

[devan95]

Note that the left stream media never mentions the good news - that lower property values means a huge tax cut for all property owners!

[Ron]

"What the heck does an MIT economist know about home sales and values in a particular neighborhood in Washington DC?"

Posted by: DC Resident | March 20, 2008 at 08:16 AM

The MIT economist is one of the leading real estate experts in the country. I think he has a pretty good handle on it.

[MyLessThanPrimeBeef]

There is a story about the founding of the Benin kingdom in the Gold Coast region of Africa, concerning seven lice..yes, 7 lice.

The story goes that a prince of the Yoruba people wanted his own kingdom and so he went to the king of Yoruba. Soon, he received from the king's messenger a gift and when he opened it, there were seven lice in there. Puzzled, he asked his advisors. They then explained to the prince that it was a test from the king to see if he could handle taking care of just 7 lice. So he did and was given his own kingdom.

Now, if Bin Lackey can't handle his own little personal economy, how can he handle the economy of the only superpower in the world?

So, for me, this is relevant news.

BTW, I just read that Henry Waxman is going to looking into the Bear Stearns bailout. He must have heard Volker.

[Mike]

If he does owe over 800k -- and who said he did -- how does a guy making 190k a year afford 60k/year mortgage payments, plus high Washington taxes, plus insurance, plus upkeep, etc?

[fred]

his term is up and the new prez will appoint someone different...

[FLEUR]

I'm just a stupid housewife and even I know that the economy is cyclical. You know: what goes up, must come down. It' a CYCLE, Stupid.
Bernanke's house value will eventually go up again.
What really matters is how fast and how smoothly the economy recovers and that is dependent upon such matters as the tax rate. Even that icon of liberals everywhere, John F. Kennedy (who was more conservative fiscally than he was socially) lowered taxes every time he wanted to improve the economy.

[adrian]

I just heard on the radio about a bill which would trim the principal by 10% and adjust the ARM for the folks in foreclosure. As long as the banks will take the burden, since they give the loans, I think it's fair.
And I'm sure the banks will be more reluctant to lend money on inflated properties or income liars.
This will help shrinking the pool of buyers who can qualify for new mortgages.
Finally, I will be able to settle in a house myself, after all these years of frustration.
BTW, I can put down at least 30%.

[Jack]

So, what is the new here? Benny B does not have a lock on home values. I have never read so many stupid comments from people who most likely don't even own a home, paid for or not. And why was this news?

[appraiser]

The sadness of the story is this guy should know more than anyone about the housing market.....HE is the FED CHAIRMAN!!!! Obvoiusly, that does not mean too much in this market. If he is oblivious then how is the avg Joe 6-pack? This is what is scaring the crap out of Americans. I loved his quote on CDO's to the Congressional Hearing....."I don't know what they are worth, no one does."-PRICELESS

[tuma]

If Ben himself could not see through the fog of artificial prices and bought that high, I wonder how he can save us from this mess...

[Adrian Vance]

My but journalists to get their enjoys off of the strangest things...

[the problemwithcaring]

Not "everybody" is experiencing this btw. I sold my home in Southern CA in July 2005, bought the same size house in the Charlotte, NC area on twice as much land (on a lake) for cash...Sorry about y'all.

Posted by: Bill Wilson |

Before you give yourself a tummy ache laughing, Sit the "We're a Halfback State" Kool-Aid down for a minute Bill.

I have some liberal-biased "facts" as Stephen Colbert calls them:

1) Other CA residents (and NY residents and DC residents and Florida residents) who want to sell to move to the great North Carolina region, like you did- can't sell their houses right now (ever?) and move. The barn door is closed.

2) Lost of people in Charlotte work in financial services. If they aren’t currently being laid off, they sure are worried about it. How do the employees of Wachovia feel about the future of the state economy? http://tinyurl.com/2uuy97

3) We all know that BOA employees have nothing to worry about. Unemployment in general, though, is rising in Raleigh Durham and statewide.

4) The developers are STILL building in NC as we speak, after the "The Charlotte Observer won an for a yearlong series on the area's high rate of housing foreclosures and the questionable sales practices by one of the nation's largest homebuilders" AND despite continued and historic vacancy rates. http://tinyurl.com/2sh5gb

5) Although the median prices increased last year, sales in Raleigh Durham (triangle) housing market fell by 29 percent." http://tinyurl.com/2ztd4d

Rising median price, falling sales...nah that doesn't sound familiar at all.

6) Mayberry seems a nice place to visit. Not to be rude, but many of us would still rather not live there. They assume that housing problems, while not severe everywhere else as they are in California, are national in scope.

7) On a personal note - I'm sorta glad California is rid of you. One less emptySuiterNesterMind.

[Rubicon]

Finally, this article exposes the real problem with the housing crisis. It wasn't bad lenders or stupid buyers! The problem is the decline in home values! Which wasn't helped by 17 (yes 17!) straight interest rate hikes -by none other than the FED! But nobody speaks about that! Housing values have declined so much in many markets (including mine) that even if you are Ben Bernanke or someone with excellent credit (like me), it can be IMPOSSIBLE to refinance your home mortgage. Why? Let me explain. If Bernanke's home is now worth what he paid for it (i.e.$840k) in order to find a lender today, the home would have to appraise at 80% loan to value ($1,050,000!). Guess what? That ain't gonna happen anytime soon. Result: No Refinance for you Benny baby! Do you think Uncle Ben was duped by scheming mortgage lenders? Did he not read the fine print? Or was he so stupid that he paid too much by speculating that his home would rise in value after purchase? This ridiculous blaming of the victims and not the FED itself for over-reacting, has been the common rant of the media. If the Chairman of the Fed is now in this bind, how the heck would the normal guy have avoided this!!

[Roger]

Talk about a slooooow news day.

[Willie O.]

I shed tears for thr retired folks, living on fixed incomes, depending on CD's and other monitary money funds, 401k's etc to give them a monthly check.
While not so nice and kind BEN lowers the interest rates/Fed rates we get slammed for the 3rd time.
But lets ALL feel good that we have saved the banks so the sub-primer rich crowd and their million dollar homes get better rates. Lets all be happy that those folks can still take their lavious trips, cruises around the world and buy their summer homes in New England when it gets to hot for them.
No wonder the private jet industry is booming while the airline industry faulters, the rich are singing while Rome/USA burns.
As for lower refi rates for the small confused or horn swaggled home owners is a good idea, bailing out anyone owning a home over $500k is redicious and trust me, WE WILL ALL pay dearly for G.W.'s, Treasury and BEN's slick moves for years to come.
Worried about the stock market, get ready to see the 7-8,000 ranges again.
Question, is there any real men or women left to run this nation that ARE NOT in bed with big business, labor unions and special interest groups.

[Ross]

Ben Bernake was the chairman of the princeton econ department for many years. I am also sure he has sat on many corporate boards etc before coming to the fed. i.e. he had a bunch of money before he came to to fed, so he can afford a $850K house. It is not some conspiracy, unlike how Obama could afford his Chicago home.

[Ryan]

I bought a 2750 sq. ft. home for $275,000. What a moron.

[tony]

If someone reads this and doesn't think its newsworthy, have the decency and class to either ignore the story or not complain about it in such a petulant way.

Personally, I think it is noteworthy to see that America's #1 Central Banker is buying at the bubble's peak, ignoring data everywhere that says housing is overpriced, etc... It sheds a lot of light about why the country is in this great mess.

The people leading us are as blind as bats and as smart as posts.

[RLinc]

Conflict of interest? What, the guy can't own a house!? I suppose we should add onto the job requirements for Fed Chief, "applicant must not own any property, can only be a renter". And when is everyone going to realize that the government cannot solve all of our problems. You're the ones who are causing the problems. One guy, Fed Chief or not, cannot keep home values from going up or down. There's no magic wand you get with that job that you wave and make things happen. There are 300 million people in this country. Every decision is going to help some people and not help other people. You can't make a decision that works out great for everyone, we all have different lives and circumstances. The key is to make decisions that help a majority of people (not everyone). And sometimes things don't happen like you think they will. The guy is just a person, like all of us. He doesn't have superpowers. Just get sick of people bitching about everything. . .has anyone ever heard "you gotta take the good with the bad"?

[CSR]

Ben Burn-a-key is a puppet. He can no more control the equity in his home than the trailer trash who bought a 4000sf home three years ago on a "stated income" loan.

If you want to tell me some real news...tell me just how much his masters' net worth has "fallen" because of the housing bubble.

Ask the JP Morgan, Rockafeller, Warburg, Chase families just how "badly they've been hit" during this econimic crisis. And when your done there...ask the Rothschilds.

Peter, try something real journalists like to call "investigation". The guy on TV or behind the microphone is NEVER "The Guy"...it's the one's that aren't in the media that are running things...of course, that would require research.

[David Gerlach]

Like Ben Bernanke had anything to do with what is going on now. You clam blame the flippers & mortgage companies that financed folks that shouldn't have received loans on a bicycle much less a house. Mortgage companies loved all the cash rolling in because of the refi's. Soooo many people thought they were now rich and cashed in on false equity. They (mortgage companies) had to know that never in the history of this great country has property values grown so quickly. And all those ridiculous appraisals produce on behalf of new home builders. Oh there were so many people in bed with this ridiculous rape of our economy. A lot of smart people cashed in and got out. They will be back when we see the bottom.

But Ben, he had very little hand in this mess. He sure is stuck with an ugly hand. I sure hope his plan works.

[Nick M.]

ABOLISH the Federal Reserve!

[bubba]

ha. haha, hAHAH, HAHAHAHA HAHAHAHAHAHAHAHA, BWAHAWHAWHAWHAHW. heheh. man thats funny. Congressman Paul was on TV today layin down the truth about the FED.

DELEGATES:

VOTE RON PAUL IN THE REPUBLICAN NATIONAL CONVENTION IN MINNESOTA IN SEPTEMBER. hes catchin on, im tellin ya.

Abraham Lincoln went into the national convention in a very similar situation. Abe walked out the GOP nominee. Dump that idiot Mcain and vote for Congressman Paul. he will PWN the Fed.

[Chris]

Ray wrote: "I bought a 2750 sq. ft. home for $275,000. What a moron."

Maybe so, but I bet you didn't buy a 2750 sq ft house for $275,000 in one of the nicest neighborhoods in Washington D.C.!

[Robot Philosopher]

Good! He deserves it. Now...let's see Bush and Cheney get a taste of their own medicine.

[Janet]

I live across the street from Mr. Bernanke. Indeed, Capitol HIll is a "historic district." My grubby house was built in or about 1910. Nevertheless, Bernanke's place is new. He lives in an old school building that was converted into condos a few years ago.
BTW, he cleans up after his dog.

[Dr. Evil]

If I were Bernanke I would probably have many houses so this one is probably like an apartment that the rent went up on. Whoopee. Just another write off. I'm sure that he is as terrified as the rest that only have one house. "Riiiigggghhhttt". Guys like this could care less. It's more like the song "I live in a motel, tear out the walls, I have accountants pay for it all. Life's been good to me so far." Drop in the ocean to him.....Big deal....Some other moron once said "I feel your pain" or another one said "read my lips". Mister Bigglesworth says "Riiiiggghhhtt" also. Don't you Mr. Biggelsworth? Yes, you are a good kitty...Mum Mum Mum...Oh yes you are...Mmm mmm.... Back to my ""Laser""....and MY evil plan to rule the world. I will show Mr. Bernanke and the rest how it is done. (Insert Evil laugh and little finger held up to corner of mouth). I guess you had to be here in my laboratory to get the full effect. I am still working on taking over the Internet. (Insert more sinister laugh here).

[Justin Thyme]

Always room for a human interest story, but never enough room to investigate the chain of command that led to this disaster. How about an article how Carlyle Capital's fund collapse caused a run on Bear Sterns and the fund was full of garbage securities - bad loans repackaged as great bonds on inflated property with false underwriting by big name underwriters. Lets take this economic meltdown off the backs of the chumps left with the overpriced houses and the high interest adjustable loans and put it right back on the guys that made all their money selling the overinflated loans and making money on both sides of the transaction. How about a few interviews with the salient analysts and writers who told us homes were a great asset to tap whenever we needed some tax free cash?
How about just a tad bit of responsibility being loaded onto the shoulders of the bastards who brought us here. Bush, Cheney, Rumsfeld,and especially Mr Bubble himself Fed Chairman Alan Greenspan, also the entire congress, Fannie Mae, Freddie Mac, the IRS and all the other players in this round of rape the middleclass taxpayer aka Great Depression 2 - bigger and better, not to be confused with the last round episode known as the Savings & Loan Scandal.

[DCox]

This is news? I live just west of D.C. and everyone--rich, middle-class, whatever, are all experiencing this phenomenon.

Besides, do you really think that as long as D.C. is in existence, that the prices will not simply rebound?

Again, how is this news?

[super jumbo loan rates]

looks like we're not the only ones with our values going down!

[rkd]

I don't know what is worse in many of these comments... the ignorance, the envy, the venom.
1. "Sub-prime" mortgage lending was invented by Uncle Sam, and forced on financial institutions by court fiat and meddling leftist politicians. Anyone remember mortgage "red-lining"...the dastardly practice of not lending money to those who have little down payment, little credit history, and little chance of paying off the loan ?
2. Whether one's home value goes up or down is irrelevant to one's qualifications for any given job.
3. Any individual with common sense and rudimentary math skills can tally up how much money is coming in, and what they can afford. Why is it always someone else's fault when people buy things they obviously cannot afford.
4. "..a crisis as bad as the Great Depression...." Actual foreclosure rate - 6%, unemployment - 5%(11 million illegals notwithstanding), DJIA within 13% of all time high, highest home ownership rate on record (foreclosures notwithstanding), record % of market investors, etc. etc.etc. WE HAVEN'T EVEN HAD 1 QUARTER OF NEGATIVE GROWTH YET PEOPLE..... GIMME A BREAK.
5. Get a life.

[Claire W Solt, PhD]

A lot of this comment indicates that peopl;e are still in a bubble mentality. Here in Florida prices went up 10%/yr for several years. If people give back one year, it is not a big deal. Nt dad was a stock broker and he said people forget to add in what they have saved in rent when calculating,
There are not a lot of sob stories the media love. That makes me suspicous. I know thaqt the Hope Alliance has already rewritten a million mortgages. The problem is being handled. A lot of the financial problems are caused by fear of the Dem congress and it's bad proposals.

[Cohosh]

YES YES YES! I hope HE FEELS the pain brought on by selfish greed and the machinations of the FED. The fractional Reserve system was designed for ONE purpose, to assure that bankers can keep extracting money from us even when they DON'T earn it.

I smelled a rat, and sold in 2000 when the bubble started. I have ammassed lots of savings by just renting my house instead of renting money to live in the house. You see, the difference is that I AM FREE OF MORTGAGE and can do anything I want without being tied down as a slave to a Wall street Hedge fund. When alleged "owners" start jumping off of buildings in despair, then might be the best time to buy. If I "miss" the opportunity, I still have my money even after Bernie and the Boys tried to devalue our currency. The Billionaires who own this country won't let Bernie keep destroying the dollar. I just learned that the Treasury Department of the PUBLIC DEBT has a new rule. THEY ACTIVELY DISCOURAGE THE SELLING OF U.S. BONDS. WHY? because even though Uncle Sam is hurting he wants investors to follow Paulsons lead and pay high fees at Goldman Sachs to earn even less interest on dodgy investments like RBS's, CDOS, and SIV's. Ha ha ha. Too bad Bernie---your own greed has got you. You can lie to others all day long, but when you start believing your own lies---YOU will have to suffer the consequences of your own ego. BTW the Office of Public Debt has a new rule written by Mr Paulson: "Effective Jan 1, 08 no one may purchase more than 5k worth of I bonds per year" Why? because the statutory interest on I bonds is more than banks pay, and Treasury wants you to give your money to the bankers not the US Government. Sounds like a "Conflict of Interest" Pauli- pun intended.,

[Ben]

Bernanke is just a pawn. He is not the one receiving millions in political contributions from lawyers and investment bankers. He is not the one rewarding false financial reporting by giving billions of $ to badly managed banks.

[Alex]

To the idiot that said they won't sign for a mortgage unless it's 5%....You're a moron! Do you even understand what's happening. Bernanke and the Fed keep cutting rates so the banks will loan money to each other...not so you can have a cheaper mortgage. Now, in times past, mortgage rates used to follow Fed cuts. For the first time since I can remember, they are not following such....at least not long-term fixed rates. The banks are using the savings that the cuts create by investing elsewhere.....and not in the American market. If I were to guess, they'll be purchasing euro-backed securities if not Asian currency.
I'm a loan officer and I can tell you I still have the same long-term rates as I did 8 months ago. Except now, you need a 720 minimum fico with 20% down and $$$$ in reserves. You see, the banks are not going to front money to the average Joe who may or may not default. Most bankers assume the latter so they've tightened their guidelines to the point where 80% of America will never qualify. So.....Mr. I-won't-sign-unless-it's-5%....Good Luck!!! Unless you wan't to get an ARM, I don't forsee 30 yr. hitting 5% anytime soon. But, get an ARM for 5% and when its due to reset, go ahead and find a mortgage for a house that has lost 30% value since you purchased it. I'm sorry, but it's people like you who the Fed depends upon duping so that all their friends on Wall Street can drive Maseratis....in the words of Jim Rogers. God Bless Jim!!!

[Flippy]

I agree with the poster DC Resident who correctly observed that an economist from MIT can't really comment on the property values in DC. That is why web sites purporting to be able to calculate your home's value will never succeed. Because as any real estate agent will tell you its all about location, location, location. My house will always be different from your house. I would say that in all, Ben's neighborhood is still and will most likely always be prime. Why, its the location stupid.

[art]

oh poor Ben ! like a really give a crap about his property devaluation ! we always seem to stray away from the big picture here > we have a major problem with our country .. everything is starting to unravel from the collapse of the banking industry , a deteriorating environment to new infectious diseases that most of you are not aware of , and a host of other monumental problems that are not being discussed. . and here is a dickhead writer who's topic of conversation is about poor Ben's property. .

[jr]

In the past few years we have had near "zero" inflation as told by the Gov'mint. So how is it that the estimate of my house went from about $190K to $370K? That kind of increase was being paid for by buyers in most areas across the US. But that is not inflation? 31 continuous years of trade deficit. Through March, more debt than all of 2007. But do not worry, the Wizards of Wall Street and the Gov'mint will help us little guys. Print more money and send us a rebate. I paid my taxes in a dollar worth $.40 and get a rebate dollar worth $.35. Boy, am I feeling good.

[Tintin]

Poor boy, even he is affected.
What a comedy and stupid article; you think we all are stupids as well. The Fed is making big money...big...big.
Owning the country ah! Smart guys!

[JS]

Bernanke is the Pope, and the Economy is the new Universal Church. The point of the story is ONLY one thing: to show that the Pope is also subject to the same consequences of sin as the rest of the sheeple. You're supposed to feel sympathy for him, and by extension, realize that "we're all in this together." This is also why the story is a lie. Bernanke's home value is doing fine, but we must BELIEVE it is not or else some might get the sneaking suspicion that Bernanke and the rest of the fed are above the law. This is economics by press release, since not even the gold standard can save us now.

[Larry]

It's necessary to understand the most basic proposition: if there is a lot of wealth and power lying around, then unscrupulous individuals will move in and seize it. Most people don't realize the full truth of this, and therefore they don't understand what the Federal Reserve system really is. Control and acquisition are the keywords, and the totally fictional money that flows in the banking system (yes, it doesn't exist) is not suitable for those who wish to gain wealth and power. Think of it this way: the wealth of a nation is like a rich harvest of tangible goods, and there are those who want to control and take ownership of that harvest -- and they do. When was it ever any different in the ancient world system of brutal selfishness? The Federal Reserve system is merely the efficient, computerized, latest version of this ancient shell game, and the illusions they produce, and the sleight of hand they show to the public are generally sufficient to keep the scam going -- until they get too careless and the whole phony structure comes tumbling down. Why are they never called to account? Because those who could do the calling are either in their pay or have been frightened by threats -- or simply silenced.

[J.D. Long]

Someone needs to go down and Appraise the so called so called ranch the pickup truck cowboy lives on Bush and see what it's worth and let him know how much he's lost since he's screwed everthing up for everyone!

[Smoke-N-Mirrors]

The housing market has to have high appraisals. It allows financial companies to overstate their balance sheets (like Bear Stearns, Lehman, Citi, BoA et al). The housing market is illiquid and as a result take years or a decade to correct. Income has not kept up with costs and that can only have one result barring insane financing methods. Anyone out there want a 100 year mortgage that your children and grandchildren will be party to?

[hurricanewarningdc@yahoo.com]

Stupid article - too stupid to be repeated by the LA Times or Drudge. Anyone who lives in DC will tell you that prices around here have barely dropped. Contrary to the two years of cloudy news reports, they've only recently begun to fall, thanks to sellers who are finally(!) getting off the fence. That said, while Bernanke's home might have fallen back a little, if you can find me a 4-bdrm rowhouse in the Capitol Hill area (presumably in great shape - I doubt Bernake is living in a hovel - or in a bad part of the neighborhood) for $800k, please pass it on. It will be back up to it's original increased value once the cycle turns up again.

[motorman]

no one loses money on a house unless you sell when the prices are down.

[Andrew Burkett]

A home purchase is consumption and should only be viewed as an investment if it is a 2nd home purchased for investement purposees. If in Dr. Bernanke's case this home was purchased at $839,000, the only time the value or potential value of the home should come into question is on a future sale date. Additionally, if the home's value has retreated from the $1.1M to its purcahse price it would have lowered Dr. Bernanke's property tax liability. Thus, the current valuation of Dr. Bernanke's home is actually an advantage and will only be a disadvantage at a point in the future when he leaves office and purchases a home in a 2nd or 3rd location.

[Steve from Ohio]

It must be a slow news day to report such a non news worthy story.

[Dee]

The problem with all this fed bailout time after time is that they kill the smaller companies by not allowing them to move up and take over where the monster failed when it got to many heads. If a biz fails it should fail, period. Another company will fill the void if there TRULY is a market for what the company going down was selling. To reward bad business decisions and greed with a bailout because they are simply big is ridiculous.

Now they are loaning out billions to other financial institutes to cover their mistakes as well. Thing is they are getting a much lower rate on that money than the average tax paying homeowner pays on their mortgage. So WHY then doesn't the government just loan the tax payer the money directly (since it is already their money to begin with from TAXES) to mortgage their homes at the lesser rate they are giving the finance houses? Why because how then could all their fat cat friends make BANK off of pilfering the 3-5% inbetween for being the middleman otherwise? This is being shown for the scam that it has become. They took the risk giving out the loans and now we have to cover for them. How exactly is that assuming the risk? They always tell us they make interest because they ASSUME the risk. Well earn your interest then and if your risks come back to bite you OH WELL close your doors. They are having it both ways and more.

Let any individual assume risk in a venture that fails and see how much the gov cares about you.

[Steve]

No Congress, no President has been strong enough to stand up to the foreign-controlled Federal Reserve Bank. Yet there is a catch - one that President Kennedy recognized before he was slain - the original deal in 1913 creating the Federal Reserve Bank had a simple backout clause. The investors loaned the United States Government $1 billion. And the backout clause allows the United States to buy out the system for that $1 billion. If the Federal Reserve Bank were demolished and the Congress of the United States took control of the currency, as required in the Constitution, the National Debt would virtually end overnight, and the need for more taxes and even the income tax, itself. Thomas Jefferson was concise in his early warning to the American nation, "If the American people ever allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the people of all their property until their children will wake up homeless on the continent their fathers conquered."

[Carl]

SO NOW WE KNOW WHY THIS CROOK IS LOWERING INTEREST RATES AND DESTROYING THE WESTERN WORLD'S ECONOMY - To save himself a couple hundred thousand dollars.

PLEASE If you live in Washington DC - lynch this crook. If you don't understand why he and his predecessor are doing the opposite of what they should, go YouTube and Google stories by Ron Paul, Jim Rogers, Marc Faber, etc. They are not only bad, they are CRIMINALS!

[NJ Native in SoCal]

DC Resident, are you a moron? It clearly states in the article that ..."it may not be worth any more, according to real estate records and local agents." Try reading the article before you say it is stupid. I'd trust an MIT economist's opinion over yours by the way. Don't be mad at the article when you probably were one of the naive buyers that bought a house the past few years and expected its value to continue climbing until rapture...

[Francis]

My son is a realtor.... His take on this,, in Minneapolis...

Homes over 500k.. forget about selling..

Homes less than 250K,, some drop ,, .. maybe 5%

In a recession,, the richest.. always get hit the hardest..

[Nave]

Big deal. Is it written in stone that the value of a home should always go up so the homeowner can use it as his/her own private cash cow. People should learn to spend what they earn, not look for easy cash from home equity lines. This whole debate about saving homeowners is completely moronic and wouldn't exist were it not for the fact that a majority of US citizens are homeowners with the power to wield their votes. Did anyone talk about bailing out investors who lost a bunch during the Nasdaq crash? You speculate and you win sometimes and you lose sometimes. This whole bubble was massive speculation for the most part even by ordinary homeowners who wanted a piece of the pie and easy money in the future with ever increasing home prices. The renters by choice who prudently avoided the housing market over the last few years are the ones whose voices need to be heard more. Bernanke and his gang are only interested in rescuing Wall Street from their own created debacle at the expense of ordinary taxpayers. The excuse used is that it saves everybody which is completely lame. Ordinary citizens feel the pain at the pump and elsewhere due to a slumping dollar. Now on top of that, it looks like there definitely is a conflict of interest as Mr. Bernanke tries to beef up the price of his own home and reinflate the bubble.

[Michael Snyder]

When I sent Peter the link to this story yesterday I suggested he throw it to the sharks. And like the Rorschach test it's an opportunity to see what's in you. Kudos to those who realize this crisis has very little to do with the real estate market per se, and everything to do with the radically over leveraged positions held by key players in the bond market.

The 'market" may like Bernanke & Paulson's actions last week but in reality they just increased the speed of the shell game. Instead of allowing these over rated over leveraged positions to unwind they've decided to homogenize them into the national debt. You can argue the form, but on the bottom line the Fed's still trying to violate the laws of physics. Just because these positions have been shifted doesn't mean they've gone away. Look at it as tunneling under your house so you can fill in the gully in your back yard. You may end up with a level yard, but your house is going down in the next good rain storm. You know, the storm that washes all of that fill out of the gully.
For those of you taking delight in someone else's pain, I have a little Zen for you. We're all on this rock together. Whether you realize it or not, whether you own or rent, Democrat, Republican or Independent: When one of us loses, when one of us harms another, we are all diminished. Times are tough, folks are losing their homes and the fact they made a bad decision does not make them bad people. Nor does it lessen the pain of watching their dreams evaporate.
Corruption is rampant at the highest levels of government and finance and it seems our best defense, our Fourth Estate, is more interested in politician's sex lives and the syllable by syllable dissection of a sound bite than digging into the real issues that effect us all.
Writing to our "representatives" in government provides a bit of therapy and perhaps a form letter in reply, but it's clear these people are not listening. Politicians are trotting out bail out plans like they were at a trade show and perhaps they are.
Wall St. may be getting comfy, (for now) and the dog and pony show should be amusing. But in the end gravity will prevail. Meanwhile, back at the blog, we'll be keeping the bast**ds honest.

[MyLessThanPrimeBeef]

In the past few years we have had near "zero" inflation as told by the Gov'mint. So how is it that the estimate of my house went from about $190K to $370K? That kind of increase was being paid for by buyers in most areas across the US. But that is not inflation? - JR

------

JR, I think I commented on this once already. For us idiots who didn't know, it's called the subsitution effect - a Noble-Prize-worthy propaganda piece from top researchers at the prestigious Global Brain Overheating Institute.

It goes like this: If beef is too expensive, people will eat chicken instead, which is hopefully cheaper, thus keeping inflation in check. Now, if homes become too expensive, people can become homeless instead. And voila, his housing expense goes from, say $1000 a month, to zero. Thus, there is no inflation. Everyone is happy, including those at the Bureau for Labor Statistics. Just don't ask your boss for more pay, that will ruin the economy.

I just luv that 'Substitution Effect.' Com'on, give me more of it. Let us eat air and drink dew. If we all become homeless, we'll lick them evil inflation.

[Tex]

By "conflict of interest" I think people mean that Bernanke's personal situation explains in part his mentality that falling home prices are a BAD thing that must be avoided at all costs to help the poor homeowners who overpaid from 2004-2006. If Bernanke had owned his home since 1998 OR if he lived in a rent-controlled apartment in DC, he would probably think (as do most people on this blog) that declining home values are good for society and that the market should be allowed to run its course without federal intervention.

[An uneducated hick]

Excellent article! Bernanke can't even secure his own finances let alone handle yours and mine.

So Ben is about to go upside down on his investment? I thought world-class economists were supposed to have learned how to make money--not lose it. Wow, the people that have placed their faith in this fool must go to church on Sundays and believe Santa comes down their chimneys in December. But then again, roughly half the population of the US have IQ's of 99 or below, so I don't expect it to get a whole lot better than having George Bush as a president.

This reminds me of an experiment showing monkeys throwing darts could out stock-pick the majority of stock brokers. Why do so many people choose to switch off their brains and trust others to make risky decisions for them? I think it is partly because when all heck breaks loose, and they lose their arses, they don't have to take responsibility for what has transpired. It provides them the right to shift blame.

Lesson Number 1: Learn to accept responsibility for your own life.

Lesson Number 2: You are better off buying when the mainstream media says, "whatever you do, don't buy" than you are buying when they say "now is a great time to buy." Vica versa is true also. In short, never follow the herd just for the sake of following. Herd following has less chances of a good outcome than a simple coin-flip.

Lesson number 3: Never make a financially-based decision ruled by your emotions. Calm down, take some time to do your research, and let logic govern your transactions.

Lesson number 4: Stop trying to find a better parent. Start thinking for yourself. (see lesson 1)

Markets and economies are cyclical. You could train a monkey how to sell in the down cycle and buy in the up cycle. With a little effort, a human being can somewhat hone in on the peaks and valleys and out-earn the monkey.

So if a monkey can do it, why can't the Fed chairman? Perhaps he is too close to the problem. For example, you can't see the dynamics of a bad relationship with a wife you fell too strongly for until you break away from her influence, get alone for a while, and reflect upon what transpired. All your friends try to warn you, but you so want the outcome of your dreams that you turn a blind eye to common sense.

I don't fault Bernanke for being passionate about the economy. But I do fault him for helping to dismantle America's economy.

Your's truly,

An uneducated hick

[rudy]

who is Ron Paul?
i do not know..do you?
Peace, Freedom and prosperity

[rudy]

if he wants to sell? ...he has to pay 6% comission...it is around 50k..(this is a loss)....no to much for someone who spend to much time knowing how to bring the dollar down..he did this because he wants to pay off the mortage?..hummmmmmm..smart gay..
and don't forget to abolish the PRIVATE FEDERAL RESERVE BANK AND DO NOT WORRY ABOUT HIS FUTURE HE HAS A JOB IN MY COMPANY..CLEANING FLOORS?...HMMM LET ME THINK ABOUT IT....
pEACE, fREEDOM AND Prosperity

[IAmSoOverMe]

840K is nothing to Ben. It's not even his primary residence probably. He's got other homes in the Hamtpons, California, & Europe. That guy makes so much money that he wipes his butt with 840K. There is no telling how much wealth the banking cartel crew have. It's not something any of us will ever be informed of. He probably gets paid in gold or Euros. He doesn't want any of the monopoly money they print.

[Fred]

Ben's buying at the top of the market just shows that he had (nor has) any clue what is going on in the economy. And now Bush wants to give him more power? We are doomed!!!