Rasmussen reported today that 35% of people currently say their house is worth less than what they owe on their mortgage. The percentage of people who believe that their house is still worth more than their mortgage has dropped 6% in a month.
The question I’m pondering today – let’s assume that in some point the Residential Real Estate market does rebound (more than likely from a surge in inflation driving up the price of everything).
When the housing prices get close to the amount of debt people are carrying what do you think the reaction will be? Will people “get out from under” the 4,000 square foot house they didn’t need and buy a modest house that is within their income, or will the game just resume and people double down on the “buy as much house as you can qualify for +10%” flipping game? Have people learned their lesson or has government policy just taught people how to play the game better?
A rhetorical question, I am sure. We will convert some folks to responsibility, but we will not likely eliminate the opportunist who sees a house as a means to quick profit. Best to eliminate government interference, but what are the chances?
The lessons aren’t harsh enough to brand a new reality into our collective mentality. There are those of us who have always understood living within our means, few people who have been severly hurt by the bad economy were among our ranks.
If people were serious about learning from past mistakes and changing future behaviour, we’d be the thinnest group of debt free people on the planet.
I bought my present home at the age of 26 with 25% down. My home has never been a burden to me; it’s a blessing. I’m 41 now and even though my wife lost her retail manager’s job in 2008, we’ve not had to struggle or lose sleep because we didn’t overbuy.
Well, the exit strategy for the administration is to “phase out” mortgage insurance. That’s the democrat’s “looking out for the little guy” for you. Looks like their vision is for us to become a nation of renters.
I don’t notice that it has occurred to anyone that the stability of our society is in part built on most of us having some equity in it. If you don’t have any skin in the game it becomes pretty easy to walk away, in a variety of ways.