You’d be surprised what is going on in the current housing market. Many people are now trying a new technique by bailing out on their current home in order to purchase a new home while their credit is good. If you do the math, it would make sense at least from the buyer/seller perspective. Say you bought a $600,000 home at the peak which is now only worth $300,000. You’ve been diligently making your payments so your credit is still good. You see a similar home selling for $300,000. You decide to buy the $300,000 home, and then try to sell you $600,000 home with little concern of whether it sells or not. Your credit will be ruined but at least you’ll have a new place and for most people, good credit is all about being able to buy a home. This of course is illegal but that hasn’t stopped people this decade: Read More
Ed McMahon is a household name with most American families. His jovial attitude and his Publisher Clearing House awards are etched on the minds of many Americans. The idea of him knocking on your door and presenting you with an oversized check is at the core of the American dream jackpot. One would associate wealth when it comes to Ed McMahon. In another demonstration that the housing market is touching every niche of the U.S. housing market the Wall Street Journal reports that Ed McMahon may be facing foreclosure to no other than Countrywide Financial:
Myth Busted: Being Owned By the Ownership Society in California: How Housing and Credit Came Crashing Down.
In 2003 President Bush talked about an ownership society to encourage the American public to take personal responsibility for their own actions and success. This was the rallying cry for the major tax cuts that were being pushed onto the American scene supposedly to bolster economic growth. The plan itself seemed to be working for a few years since homeownership rates were going through the roof and it seemed that all was well. However, the underbelly of that boom was that America in a decade long bubble through deficit spending, was only forestalling a time when all would come crashing down.
The debate has shifted in the last few months with many now feeling that the credit crisis is behind us. Many are now looking forward thinking that the worst in the housing market is here and we are now nearing a short-term bottom. However, others have likened the current environment to being in the eye of a hurricane; that is, the calm right now is very temporary and we still have a large storm heading our way. In this article we want to examine 5 key housing stats that still show major weakness in the U.S. housing market:
It probably won’t come as a surprise to you that consumer prices are rising at an incredibly rapid pace. If you were to only look at the Bureau of Labor and Statistics (BLS) CPI numbers you would think that inflation is hovering around 3 to 4 percent. Of course this is utterly devoid of any reality given that food, energy, and even housing prices are growing exponentially. For the average family housing is the most expensive monthly cost to their budget. Given that 67 percent of Americans own their home and the rapid rise in housing prices over the past decade, why has inflation been low?
The much anticipated rebate checks start going out today. In fact, over the next few weeks $110 billion will be sent out to the American public. This week, only electronic deposits will occur with paper checks being sent out later. There seems to be a contingency of people who believe that this is enough to turn the economy positive and avoid a recession. I’m not sure how that will be the case since our employment situation is precarious at best.
I’ve been reading many articles talking about those that are currently “walking away” from their homes. It is now common knowledge that some people are intentionally walking away from their mortgage commitments. When we talk about walking away, we are talking about a very specific group that can pay but is choosing not to do so. Of course choosing to pay can be an argument in itself; are we talking about someone who just had their rate reset and is going to pay 80 percent of their net income to their housing payment or are we talking about a speculator who realizes he cannot sell his home and is now simply letting the mortgage go into foreclosure?