@cicerone imposter,
I'm still waiting for your apology for telling me I"m "out of my league" when what I posted was accurate and current, whereas you relied on home valuation figures that appeared to be several years old, and you then viewed the modest current increase in home valuation as a negative for the housing market when, in fact, the contrary is true--it signals a positive sign for the housing market and a sign of recovery from the price plunge in home valuations due to the recession and the collapse of the housing market.
Quote:How is the housing market supposed to start showing improvements when a good % of them will be losing their homes?
You still seem fixated on the number of homeowners behind on their mortgages as a barometer of the overall housing market.
But people who are behind in their mortgages are not affecting the more generally accepted indications of health in the housing market--new housing construction starts, how long new and existing homes remain on the market before being sold, home valuation changes, the number of completed housing sales, the number of actual foreclosures which leave banks with unoccupied and unsold homes, etc.
Some people are behind in their mortgage payments because they purchased homes they could not afford to begin with, or because of sudden unexpected other debts--medical costs, for instance, are a primary cause of home foreclosures--or even because they purchased a second home before selling their first home or because the sale of that home fell through. And some might be behind because they have lost jobs and are searching for new ones. A certain percentage of homeowners may always be behind on their mortgage payments, regardless of how strong the overall economy might be simply because of their individual financial situation. But banks have become more amenable to trying to work with those behind in their payments because the banks now want to try to avoid unnecessary foreclosures if they can--they really don't want to go into the real estate business and be stuck trying to unload homes that aren't selling quickly.
Foreclosures affect the housing market when they start flooding the market with homes that languish unsold, because that affects overall housing values in an area. And that is not currently the case across the board in the U.S. as it was a few years ago when foreclosure rates were higher and home values were plunging. Even if half of the 6% you cite as being behind in their payments were to default, that's not going to blight the overall housing market--other people will still be able to buy and sell homes. While homes continue to remain on the market unsold, that's also a buyer's market, and, combined with very low mortgage rates, those with the capital and risk qualifications can continue to buy homes, homes which might be currently undervalued, and they might well see their investments pay off handsomely in the future.
Home buyers are consumers, and consumer spending depends on consumer confidence in the economy. Even those with relatively stable jobs and incomes can feel unsettled and reluctant to buy when the overall economic news indicates a still stagnant economy, or high unemployment numbers, or increasing inflation in the cost of food, home heating oil and other necessities, and they are faced with significant costs in other areas, like health care and their childrens' college tuition, and concerns about their own ability to retire some day. Homeowners who might have thought about buying up to a more expensive home might be more inclined to stay put, still fearful that that better home would suddenly decrease in value after its purchase, or that they would have to sell their existing home at too much of a loss to affect a sale. People who might have easily qualified for a mortgage a few years ago, when the banks were less risk aversive, now have a harder time qualifying because the banks want more proof of credit worthiness. So demand for housing, as measured by home buying, is still being held in check by a variety of factors, and that's what's really affecting the housing market.
So it's not just a matter of people being unemployed and unable to buy homes, as you've been suggesting. Factors affecting the housing market, and the economic health of that sector, are considerably more complex than you've even begun to contemplate. Dare I say
you are out of your league here?
People who are struggling financially can't buy a lot of things, including homes, and they are more likely to try to hold onto what money they have. More people are trying to save rather than spend now, because the recession gave them a wake-up call and they realize they have to be better prepared and protected. Seniors and those on fixed incomes are contending with very low interest rates, and poor return and lower income on safer investments, and a still volatile and shaky stock market that makes more risk taking too uncertain and unappealing. And murmurings of a double dip recession can still be heard in the land, so anxiety about a fragile economy is still high.
So, I feel the overall arrest in plunging home valuations in the last two years is a healthy sign in the housing market, and homeowners have re-gained some of the equity in their homes, which can help to encourage sales. As the overall economy continues to improve, consumer confidence will continue to improve, and people will begin to do more spending, and more buying, in all sectors. Since buying a home is the largest purchase most people ever make, and where they might exercise the most caution, particularly in the wake of a steep recession, the home housing market will likely be the last sector to show a substantial rebound. But rebound it will.
When you are able to discuss this topic with the complexity it deserves, there might be some point in my continuing to discuss it with you. You clearly are nowhere near that point yet. Particularly when you make statements like this...
Quote:It still amounts to the same thing; the value of homes are worth less than their mortgage; ergo, they can't pay it. If the value of homes were much higher - like five years ago, they would be able to take money out on their equity.
Someone who is already struggling to pay their mortgage, and is behind on payments, is a bad credit risk for an equity loan or second mortgage of any type--and that factor is unrelated to the current valuation of the home.
If current value of the home is below the value of the mortgage, it simply means that when, and if, they sell the home, the amount they receive for the sale may not pay off the mortgage and they'll owe the bank or lender additional money. You're not thinking straight about this issue.
For now, I am happy that this week's economic news was a little brighter--in the stock market, in the jobs situation, and
in the housing sector. If that trend continues, even at a slow pace, it will bode well for Obama's re-election, particularly since the Republicans currently lack a candidate with really broad appeal even within their own party.
