"The Mortgage Bankers Association (MBA) and the Research Institute for Housing America (RIHA) are pleased to announce the release of a new exclusive report: "The Great Recession and Attitudes Toward Homebuying" by Professor Gary V. Engelhardt of Syracuse University.
The report finds that almost 80 percent of American
households believe that now is a good time to buy a home,
despite high unemployment, slow economic growth and
problems plaguing the economy. This positive attitude
is attributable to low house prices and low mortgage
interest rates. The data shows that the pattern of
home-buying sentiment during the current recession looks
similar to that of past recessions and is consistent
with the long-run average level.
Engelhardt notes that what is different about the
current recession is that positive home-selling sentiment
is at a historic low, dominated by deeply negative
sentiment, which is strongly related to difficulty in
finding buyers at desired sales prices, as well as the
large overhang of mortgages past due or in foreclosure. The study utilizes 30 years of data from the University
of Michigan's "Survey of Consumer Attitudes" to
examine public sentiment regarding homeownership before,
during and after the financial crisis. In particular, it
measures the extent to which the most recent recession has
changed consumer sentiment toward home buying and selling. This study is available for download, free of charge,
at www.housingamerica.org." Interesting hypothesis, says Jim.
Submitted by Jim Wagner
Posted by Kathy Meeh
7 comments:
Well, duh. This is news to whom?
Very weak market, positive consumer sentiment against difficulty finding buyers, and the overhang of foreclosures. What breaks the logjam to get the housing market moving again?
Strategic default. If your mortgage is under water, stop paying even if you can afford to pay. Corporations do this all the time. Live in the house, pay the taxes, keep the insurance up, then invest the money you save by not paying the mortgage.
http://en.wikipedia.org/wiki/Strategic_default
Yeah, invest the money you save in what? Oh, of course, corporations. You can't fix the greed and inequity in the world by becoming part of it but you can honor your word and yourself above all else.
Buy another house with the money you save. Buy a new car. Buy gold. Travel. Live the life you want. It's not about honor or your word. It's a contract with the lender. If the bank loans you money against the value of the house, their contract with you is that they'll take back the house if you don't pay the mortgage. When the value of the house turns out to be less than what the bank loaned you, invoke the contract and tell the bank you're giving them the house back. That's the deal the bank made. Take them up on it. Live in the house until they take it back, which they won't do for a very long time.
When, recently, American Airlines filed for bankruptcy, it did so deliberately. The airline had four billion dollars in the bank and could have kept paying its bills. But it has been losing money for a while, and its board decided that it was foolish to keep throwing good money after bad. Declaring bankruptcy will trim American’s debt load and allow it to break its union contracts, so that it can slim down and cut costs.
American wasn’t stigmatized for the move. Instead, analysts hailed it as “very smart.” It is now generally accepted that when it’s economically irrational for a company to keep paying its debts; it will try to renegotiate them or, failing that, default. For creditors, that’s just the price of business.
The double standard here is obvious and offensive. Homeowners are getting lambasted for doing what companies do on a regular basis. Walking away from real-estate obligations in particular is common in the corporate world, and real-estate developers are notorious for abandoning properties that no longer make economic sense. Sometimes the hypocrisy is staggering: last winter, the Mortgage Bankers Association—the very body whose president attacked defaulters for betraying their families and their communities—got its creditors to let it do a short sale of its headquarters, dumping it for thirty-four million dollars less than the value of the building’s mortgage.
A wave of strategic defaults—a De-Occupy Your House movement—would get banks to take mortgage modification more seriously, which would be all for the better. The truth is that banks have been relying on homeowners to do the right thing. It might be time for homeowners to do the smart thing instead.
http://www.newyorker.com/talk/financial/2011/12/19/111219ta_talk_surowiecki#ixzz1hJAj8Azm
See also "Stop payment! A homeowners' revolt against the banks" by Christopher Ketcham in the January 2012 issue of Harper's Magazine.
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