Skip to comments.The Housing Market Is Depressing America
Posted on 04/20/2012 4:25:55 AM PDT by Kaslin
Just 49 percent of homeowners in America now believe their home is worth more than they paid for it.
Rasmussen Reports has asked that question for years, and it has never before fallen below the 50 percent mark. This represents a sea change in personal finances that challenges core assumptions about the way our economy works.
Most Americans were brought up to believe the cornerstone of good financial planning was to buy a home, pay the mortgage on time and watch the equity grow. That doesn't work at a time when home values are declining.
Economists measure the lost equity in housing to be in the trillions of dollars. But the impact on individual families is even greater. Consider this: Four years ago, 80 percent of homeowners thought their home was worth more than they paid for it. That number fell to 62 percent last fall and 49 percent today.
In just four years, roughly one out of three homeowners went from having made money with a supposedly safe investment to seeing all the gains disappear. That's a stunning turnaround for people who thought they were doing the right thing and buying their share of the American Dream.
Adding to the sense of gloom, homeowners don't think we've hit bottom yet. Just 21 percent believe that their home will go up in value this year, while 25 percent expect further declines.
Even looking ahead five years, only 46 percent believe their home will go up in value. Such a low number would have been unthinkable until recently, and it's one reason many homeowners feel trapped.
The housing crisis was triggered by a soft economy, and most Americans recognize that it won't be solved until the overall economy regains strength. They're not looking for a quick fix with some magical new housing policy. Instead, they have serious concerns about jobs, inflation, federal spending and deficits that cloud prospects for a robust recovery.
But while the soft economy was the trigger, most homeowners recognize that the underlying cause of the housing crisis was a corrupt relationship between the federal government, elected politicians and well-connected financiers. While the housing market was collapsing, the financiers were getting bailed out.
Seventy-seven percent have an unfavorable opinion of Freddie Mac, and 73 percent say the same about Fannie Mae. Those two government-sponsored enterprises changed the rules of the mortgage game. One "innovation" was to encourage policies that let people buy a home with no money down. Most Americans reject that type of new math.
Fannie and Freddie, encouraged by politicians from both parties, sought to make homeownership available to everyone. But only 26 percent of Americans believe that should be the guiding principal of federal housing policy. Sixty-three percent think the primary goal in issuing a housing loan should be whether the homeowner can repay it.
By ignoring generations of experience and the common-sense wisdom of the American people, Fannie Mae and Freddie Mac broke the housing market. Even more, they turned the American Dream for millions into a financial nightmare. Adding insult to injury, Fannie and Freddie stuck taxpayers with a bailout bill currently estimated at more than $300 billion -- with no end in sight.
Wrong. The Obamunist and Obamanomics are depressing America.
Housing was in abubble. It is now at a reasonable level. People leveraged their overvalued houses to buy cheap trinkets manufactured by outsourced Chinese slave labor at Wal-Mart. Now the trinkets are in the land fill and the money and equity spent. And everyone wonders where the recovery is.
AND the next round of foreclosures is expected to hit in May which is reported to double what is currently on the market for sale.
Yeah I heard something to the effect of the foreclosure machine is about to be cranked up again.
The robosigning dust up caused the foreclosures to be halted until the “investigation” was completed.
The speed and number of foreclosures is expected to ramp up this summer.
Seems to be just another crisis that they can take advantage of. And golly, just look at the timing of this crisis.
If these people are still employed, and have been able to keep up on their mortgage payments, there's still a chance their investments are satisfactory, if not "safe."
The idea of a "safe" investment is one promoted by the media and financial services companies. There are less risky investments, but there are no "safe" investments. If there were such a thing, we would call them "money generation machines." When people signed their mortgage contracts, there were no guarantees that their home would earn x percent per year.
If you're a homeowner and want to be upset because your house is worth less because the Obama economy is in the tank, fine. That's a good reason. But the value of home prices rise and fall for many reasons. If you maintain your mortgage, and pay your property taxes, you still own your home. It still represents a tangible value, and can be used for collateral. That's more than renters can say.
What amazes me is that homeowners dont get together and form a political union to slow new housing development when house prices are going down.
Here in Maryland house prices have dropped by about 80 to $100K from their peaks in 2006 (not nearly as bad as other areas) yet developers are continuing to plow down acres and acres of trees (are they not green?) to put new developments that compete with existing homes, and our government at the state and local level is the green Democrats.
Meanwhile they continue to hike our taxes to pay for more roads, schools and a ton of climate change green taxes and mandates.
If house prices are going down in your area look around and see if new houses are being built. Your local politicians control that rate of growth,
It’s going to get even worse when obama’s plan for the government to buy foreclosed homes goes into effect. They plan to rent them out. Coming to a suburb near you.
what is really hurting America is our expectations and dependence on bubble economic cycles instead of long periods of consistent, sustainable growth followed by short market corrections.
The coming mortgage mess is just a redux of the 2007/08 collapse that is totally avoidable but encouraged by the same people that complained the housing market was helping GWBush’s poll numbers.
They are giving sub-prime mortgages with crazy terms to people with no jobs and can’t pay even their own taxes. Once those toxic loans are bundled and sold off to Fannie and Freddie, who will eat those costs? Those of us stupid enough to actually pay our mortgages, that’s who.
I remember a protest back in 2004 when a group of minority activists (hispanics, blacks, native Americans) were calling for their own “40 acres and a mule”.. meaning reparations. Well, it looks like some are getting just that...
Don’t confuse cause and effect, the cause is high energy costs.
on top of all of this the union, oriented teachers in this country are raising our children to be commie or commie sympathizers. demanding it all for free and having a bloodlust for the financially successful and or fortunate. we went way wrong in the sixties with our schools and allowing public unions. the commies have a put a strong foot hold on America. hope we can change enough to reverse this trend.
Everyone here (Newport News, VA) is actually talking about how the housing market is finally picking back up. Then again, I just got my city assesment and it was down another 15%. At least my taxes are going down.
Up here in Taxachusetts - even though my property value has decreased of late - the taxes keep going up and up.
Ain’t it neat how THAT happens? Thud
The housing market is up dramatically in the Lehigh Valley of PA compared to this time last year. The newspaper just had a front page spread about how it has improved.
Realtors say the glut of foreclosures have been dealt with and if a house is priced reasonably, it will sell quickly.
Values have not rebounded much, just sales. But increased sales means increased buyers and when there are more buyers out there competing, chances are prices will improve.
The majority of buyers at this point are first time buyers and empty nesters looking to downsize. Current owners are not upsizing yet, but that may come.
This article is poorly reasoned. Part of the cause for ever-increasing home values was ever-increasing demand, which was fueld by the “easy money” policies of Fannie and Freddie. It was an artificial market that was bound to collapse when people realized it was built entirely on unsecured credit — there was no real money behind the illusion.
It was a great run for the construction trades and real estate agents, but was never sustainable by the sheer demographics.
People too effing stupid to understand what the consequences of building ten years worth more houses than you have families to live in them would be ... fully deserve to be depressed.
It took an idiot not to understand that the housing bubble would pop.
Complete idiots who were so damned stupid they got in peoples faces and tried to argue this wasn’t coming (which resulted in more people investing in real estate that will take two to three decades to break even at best) fully deserve both everything they get, and a heap of ridicule besides.
The decline in the price of a needed good is not the bad thing. The wildly inflated price was the bad thing, and damn the politicians of both parties for not recognizing the disastrous social consequences of skyrocketing prices, whitewashed by 0%-down mortgages and low interest rates. But I also single out George Bush for damnation, since he was a cheerleader for Americans becoming serfs once again to an all-powerful government entwined with banks to the point of fascism. Yes, the Democrats were worse, but then, the campaigned on big government; Bush promised to rescue us from them.
A $200,000 home is a nice thing. It’s only something for people to gnash their teeth over when they paid $700,000 for it.
Bingo! I had so many arguments w my business collegues who were so brainwashed. I did not buy a house in the bubble thank god and was told i was an idiot, missing out, etc.
Only an idiot could not see that prices were a reflection of easier money and nothing in real value.
In my way of thinking , the only thing that really should push home prices up are increased wages and earning, increasing population via immigration, etc.
Not one single person during the bubble era could explain to me why housing was going up 10% plus a year while average salary much less a % and how that was real or sustainable.
My city isn’t by any means conservative, but city council is actually represented relatively well. In the South District, which is probably 95% black, they have 2 representatives. One of them is your normal Charle Rangel type and the other is Tina Vick, aunt of Michael Vick. Vick has forged relationships with the conservative women who represent the Central and North districts and they can get her to vote pretty much how they want in exchange for a few bones downtown. The mayor is also from the South district, but has been bought and paid for by the business lobby. His campaign was funded by the white, wealthy, Episcopalian Jamestown descendants. The tax base is also pretty diverse. They have already decided not to raise the property tax rate, though some fees and the cigarette tax are going up.
My sympathies lie with those who saw their rents increase from $200 in 1990 to $500 in 1995 to $1,000 in 2000 to $2,000 in 2005, and wondered with mortal terror whether rents would reach $5,000, most of their monthly salary, by 2010. Then came the banks and the government, promising that they could freeze their costs at $2,000 with zero downpayments. “Why rent for $2,000 when you can own, and lock in those low payments?”
I didn’t buy because I was single, and didn’t need an entire house. The ones who are screwed are simply those who cannot move to a better labor market because their house is worth less than their mortgage; I’m not even feeling bad for those who bought at $400,000 in 2000 and whose house now costs only $300,000, but meanwhile, it’s half paid off.
The over-supply is NOT because supply accelerated so quickly, by the way, but because demand dropped so suddenly.
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.