The Okvath family, recipients of an Extreme Home Makeover in 2005, have listed their mansion for $1.3 million. The 5,346 sq. ft. home is on a 1.07-acre lot, has 6 bedrooms, 5.5 baths, and a 3-car garage big enough for four cars and includes a home theater with seating for 12.
Unfortunately, it seems that it is growing more common for these Extreme Home Makeover houses to be foreclosed on, mortgaged to the hilt, or sold off to pay debts. Many people, when presented with something for “free” don’t value it and tend to waste it.
Another problem for many of the recipients of Home Makeovers is the cost of upkeep. Many of these new houses have high electricity bills, high taxes, and cost a lot to keep going. Instead of building a $2m home that the new owners can’t afford to keep, perhaps ABC should focus on building smaller homes.
If they insist on building luxury homes (they do have to be Extreme don’t they?), they should be put them in a trust and provide for upkeep/taxes as part of the deal.
More info from AZ Republic, WSJ Blog, ABC15.
It’s basic human psychology that if something is free, we tend to value it much less. Take for example the rash of foreclosures on homes from the show “Extreme Makeover, Home Edition“.
Most of the people who participate in the show receive a brand new, high-end home that is mortgage free.
The problem is, many of the people who should be grateful for the opportunity to get back on their feet and own their home free and clear – instead act as though they’ve won the lottery and immediately take out a home equity loan to get at the cash in the property.
Just a few of the Extreme Home Makeover foreclosure cases are in Atlanta (’08), Atlanta (’09), Idaho, Michigan, and Oregon.
This is a prime example of why “Foreclosure Bailouts” don’t work. When people get “bailed out” they rarely value the help they’ve been given and tend to make the same mistakes over and over. Case in point are the statistics on the re-default rates for loan modifications. In a study by the Office of Thrift Supervision, over 55% of modified loans were back in default after 6 months.
If the government artificially props up housing prices by repricing loans and allowing “cram downs” they will just prolong the problem and we’ll still be dealing with unstable home prices 3 years from now.