Tim Geithner's Housing Bubble Nightmare
Treasury Secretary Hopelessly Underwater
It has been a tough week for Treasury Secretary Tim Geithner. First he was laughed at by the Chinese when talking about how safe the dollar was. Then we later found out that he can't sell his house either.
On top of that, he is among the 22% of homeowners that are hopelessly underwater on their mortgages.
The good news is he has a found a tenant that is willing to pay $7500 a month to rent the old ball and chain. Even then, the rent doesn't likely cover the mortgage. And when the toilet runs you can definitely expect a phone call at that price.
From CNNMoney by Ben Rooney entitled: Even Tim Geithner can't sell his house
"Treasury Secretary Tim Geithner is struggling to unload his million-dollar manse located in a posh New York City suburb. And like so many other Americans, he'll probably lose money on it when he does.
Geithner and his wife Carole put their 5-bedroom Tudor-style home in Larchmont, New York on the market for $1.635 million in February, just days after he was tapped by the Obama administration to help lead the nation out of the worst economic crisis in a century.
The Geithners paid a premium for the house when they bought it in 2004, plunking down $1.601 million after a bidding war. The "exquisitely renovated" home was originally built in 1931, according to a listing for the 0.2 acre property.
"When the house first went on sale it was very evident that he was not going to get what he paid for it," said Scott Stiefvater of Stiefvater Real Estate in Pelham, N.Y. "He was [bound] to lose some money."
It's a familiar story as the housing crisis unfolds across the country. Indeed, after Geithner's house sat unsold for nearly 3 months, the price dropped to $1.575 million. Still there were no takers, so Geithner listed it as a rental for $7,500 a month, and has since found a tenant.
But it's unlikely that even such a steep rent will be enough to cover the mortgage, in addition to the $27,000 in annual property taxes. Of course, no one should feel too badly about watching Geithner take a loss. As Treasury Secretary he's earning $191,300.
Meanwhile, home prices have plummeted 32.2% nationwide since the height of the housing bubble in July 2006 according to Case-Shiller. And millions of other homeowners who bought at the top of the market now find themselves unable to sell or refinance their way out of crushing monthly housing payments."
Welcome to the housing bubble Mr. Secretary.
By the way, here's a great report on why the bottom in housing is no where in sight.
Believe me when I tell you that it is well worth the read.
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