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A Tale Of Homebuyer's Remorse

GUY RAZ, host:

This is ALL THINGS CONSIDERED from NPR News. I'm Guy Raz.

If you bought a home between 2004 and 2007, you may have been given the following advice:

Ms. DAWN CROWELL: You need to invest in your future. This is a great investment. It might be painful for a while, but it's a great investment.

RAZ: That's Dawn Crowell from St. Paul, Minnesota who, like millions of Americans, has seen the value of her home plummet. Now over the past four years, Americans have lost more than $5 trillion in wealth that was tied up in their homes. And some economists, including one who we'll hear from in a moment, say that house prices might still be too high, overvalued by as much as 30 percent.

We begin the hour with a look at the state of housing. But first, back to Dawn Crowell who decided to become a homeowner in 2004.

Ms. CROWELL: I was recently divorced and have four children. And it seemed to me, from the advice of everyone I came in contact with, whether it was friends, people at church, everyone said I needed to get into a house. I needed to buy a house. It was the best thing I could do for my financial future.

RAZ: At the time, Dawn and her four kids lived in a two-bedroom apartment in St. Paul.

Ms. CROWELL: All of us getting ready in one bathroom was quite interesting and it was chaotic. And we were always on top of each other. So the thought of a house, where we would have space, was just, you know, an amazing thought to us.

RAZ: But with her modest salary, she wondered whether she could afford it.

Ms. CROWELL: Single mom, no finances, no - you know, I really had nothing. And the thought of having a house was just ridiculous to me until I started to look.

RAZ: And soon enough, things started to fall into place.

Ms. CROWELL: The real estate agent was amazingly helpful. You know, her best friend was a broker and was able to help find a loan, and it all became a reality very quickly and very easily.

RAZ: Despite having a weak credit record, Dawn got the loan and she ended up buying the house. The mortgage took up about 75 percent of her monthly income. She says it was a struggle, but she managed with help from her parents. That is until recently when she stopped paying.

Ms. CROWELL: In May of this year, I lost my job and been looking furiously, but I still am unemployed. And the letters are starting to come in saying, okay, well, we are going to have to foreclose.

RAZ: She can't sell the house because she owes more on it than it's worth. So, Dawn, like a lot of people across the country, is wondering whether she bought into an idea that was false - the idea that a home will only increase in value. Transcript provided by NPR, Copyright NPR.

NPR transcripts are created on a rush deadline by an NPR contractor. This text may not be in its final form and may be updated or revised in the future. Accuracy and availability may vary. The authoritative record of NPR’s programming is the audio record.