That's a national average currently at 10%, expected to rise to over 15% by the second quarter of 2009! (Reaching 25% in the West?)
If these estimates are accurate, the US economy may start feeling a much more significant impact, with more foreclosures and unwillingness of people to sell their homes at a loss. Already, these effects are starting to have an impact on labor mobility in the US.
The Washington Post has more on the housing crisis, covering the boom, the bust, and the aftermath, plus more. Elsewhere, some lessons learned from the housing crisis.
Like I've said many times before, renting has a lot of perks that tend to get overlooked. Until the housing market gets settled down a bit, renting may not be a bad way to go.
2 comments:
It's very true that the housing market is in a mess right now, and one has to be careful if one is thinking of buying a home.
However, it is a good time to buy if you have sufficient cash and want a good deal. Now those deals may even get better in the short term, but it's kind of like the stock market: you want to buy low, and we are in a period of time when you can do that. But just as with stocks, it takes a certain amount of psychological courage to buy low, and you have to pick and choose wisely.
The problem with the housing market bust was not so much ownership per se, but over leveraging on the debt side.
Negative equity implies financing., through both mortgages and home equity loans, that approached or in some cases even exceeded 100% of the value of the home. That's crazy.
Add to that the fact that many loans were made at the height of folly to people who really didn't have the credit strength to qualify. Think of the loans with no income verification, now called "liar loans."
Ironically, now is one of the safest times to get a home loan, since most lenders have tightened their standards considerably. If you can qualify, you probably meet pretty high standards.
But in reality, the housing market mess is one created by the credit markets, not the housing market.
Yahoo! The housing bust isn't bad news for everyone. Since I'm at least a year away from buying, I'm hoping to see prices drop some more.
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