The recent profile of “Mr. Microsoft” and his decision to walk away from his mortgage generated quite a stir.  Some were supportive, while others were vehement and angry.  The Mr. Microsoft story was a story profiling one individual, but perhaps there is a Mr. Microsoft in a neighborhood or city near you.  Perhaps there are hundreds and thousands of Mr. Microsoft’s all over this country, working hard, and eager to buy a slice of the American dream.


The average employee at Microsoft has a 4 year degree in engineering, computer science or other highly employable field.  Many have masters or doctorate degrees.  Most of them worked very hard to obtain their degrees and they feel a sense of entitlement from their hard work.  It’s not a sense of entitlement in the ordinary sense, but one of expecting a comfortable lfestyle and the ability to buy a modest place to live and call home.  Outside of Microsoft, other engineers, scientists and doctors from companies everywhere feel the same way.   The median household income in the United States is only $46,326, accorindg to the Census Bureau.    In many cases, the educated “Mr Microsoft’s” that hold degrees and work in corporate America earn twice that amount or more.  The homes they want are not the McMansions that the media mistakingly cites as the cause of the foreclosure flood.  They just want a modest home, similar to what they may have grown up in, or in many cases even smaller:

  • 1000 – 1500 square feet
  • 2 bedroom and 2 baths
  • Built within the last 15 years to reduce maintenance costs

The list above are not the requirements for a McMansion!.  The list of requirements above is very modest, but the prices in major metropolitan areas and up and down both costs for homes meeting that list are simply not affordable, to anyone with an average Mr Microsoft salary (excluding Bill Gates of course).  Rather than using the intelligence they are  so fond of, the Mr Microsoft’s of the world ignored reason and reality (the reality that RENTING IS CHEAPER THAN OWNING), and enabled the con artists of the world (bankers, mortgage brokers, real estate agents, appraisers) to sucker them into one of the worst financial decisions they have ever made.  And that horrible decision has only two possible outcomes:

  1. Write it off, and walk away and leave the mess to the con artist bankers (and unfortunately the taxpayers)
  2. Continue to throw good money after bad on a depreciating asset

The Mr Microsoft in Redmond chose to recognize his mistake and walk away.   What will the thousands of other Mr Microsfts in the country do?  It’s a difficult decision to make, but it may be even more important than the initial purchase decision.  Read this story for another view on somebody else struggling with this very decision.

Home prices continue to plummet across the nation.  Lending standards are finally APPROACHING (not there yet!) reasonable levels.  Prices will not stop declining until the monthly cost of ownership equals the monthly cost of renting.  We have a long way to go. Now is not the time to buy.