According to a survey conducted by Fannie Mae, 26 percent of mortgage borrowers now believe that they are underwater, and they are getting more anxious about it all the time[1]. The company that they are keeping is not serving to help them stay optimistic, either, with 57 percent of underwater borrowers indicating an acquaintance with someone who has defaulted on their mortgage versus 43 percent of the general population. Furthermore, the poll also revealed that only a third of American workers with a home mortgage “perceive their savings to be sufficient,” and that the growing concern about job loss is causing more and more homeowners and would-be homeowners to seriously consider renting instead of home ownership. Doug Duncan, Fannie Mae’s vice president and chief economist, blames these concerns for the fact that “consumer spending…ground to a halt in the second quarter [of this year]”[2]. He believes that as long as consumer confidence remains low, the housing market will continue to experience setbacks in its recovery.
Do you think that the market is even making a recovery?
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[1] http://www.dsnews.com/articles/financial-mindset-of-underwater-borrowers-survey-2011-08-16
[2] http://www.prnewswire.com/news-releases/fannie-maes-quarterly-national-housing-survey-finds-job-loss-a-concern-for-26-percent-of-american-workers-127728968.html
No, we’re not in any recovery at all. As a Realtor for the past two years, I’ve seen a rise in sellers, renting their homes out and a rise in tenant activity. Commercial loans, according to this newsletter have risen what? 24%?
There are two markets who are buying now and only up to $60k (in my part of the country). 1) Investors/builders/handymen buying near a highway.
2) First time homebuyers who don’t know any better and MAY have the 3.5% down IF they’re approved for an FHA backed loan.
What do I mean? Young first timers don’t have the wherewithall to research where there is work and industry if they (sorry, when they), lose their job.
They’re too young and naive and “invincible” to be concerned about losing their job and therefore they believe they’ll always be working or “there’s a job out there somewhere”. No, there’s not.
So no, we’re not in a recovery and renting and tenant activity has been on the rise since 2009 and will continue to rise into the distant future. Tenants line of thinking is very simple: “What good is a great rate if in two years I lose my job? Two years?” That’s too liberal of an estimate. “I don’t have the 3.5% down. I spend what little I earn on over-priced groceries and gasoline”. Some people as well, once owned and won’t again. Some people know they’re not mentally fit to own. Tenants, who can rent a 3bd/2bath 1400 square foot house with a garage in a gated community (lots of these up here), realize, one doesn’t need to own to have a fulfilling life.
Recovery?
Not exactly surprising. In the IT business alone, we have outsourced enough operational, engineering, and research jobs to create entire sub-economies in India and China. Those positions are not coming back. So, if manufacturing is all but gone, and the white-collar work is going too, what is left to power our own economy?
We are not in a recovery, rather a devasting recession! I as a Realtor have lost all hope that anything positive will be done to fuel our economy. The thought of taxes rising and loosing the interest rate deduction is devasting!
I am working 20-times harder to make a 20th of what I previously made.
Just wait — Emperor Obama is not done with us yet. With Costa Rica as a 51st state and his “overload the illegal immigrant system” proposal he pushed out last week, I don’t see the tide turning toward recovery of anything financial by the government at all. By the way, who’s asking for a 51st state? Only the liberals who hope to capture millions of new welfare dependents (voters) who will then vote for Democrats without thought.
Good grief!
Is the current real estate situation Obama’s fault? Probably not at it’s core, but is he concentrating on fixing it with another “bail out” that only benefits unions and government employees who never had their jobs in jeopardy in the first place like last time?
To him, Socialism is the answer; always has been his thing whether you like to admit that or not. Since his time back in college it has been known and exposed. I don’t see how that would help the current situation in a free-market society. Oh but wait… hasn’t it started already? How many people are now dependent on the government who weren’t before? What did they say now… millions of people are now on “unemployment insurance benefits” that weren’t before? And if the comments and reports are even half accurate about future job losses, guess how many more will become dependent on the government? Obama’s dream is coming closer to reality — not in total, but the more people becoming dependent on the government, the more control they feel they have.
I don’t buy it though.
I think people are smarter than this. People who are losing their jobs didn’t want to lose them, and they know they won’t make anywhere near what they did for monthly income from unemployment checks. Unemployment payments also don’t increase depending on how many babies a mother and her teenage daughter pop out in the next few years, unlike welfare.
If people lose their jobs by no fault of their own, they should have a government that will help them during that time that the rug was pulled out from under them. But in this case, the government [I believe] has caused many of the problems that are resulting now. After all, the companies of the United States didn’t just all get together one day and say, “Hey, let’s all start firing millions of people just for kicks and see what happens!”
I think all of this backs up what others in this discussion string had said about things not getting better anytime soon, and potentially much worse. I just find it ironic that a government that rolls out plan after plan (promise after promise is more like it) to fix the current real estate crisis, let alone the economy as a whole, is continuing to screw up the process further all in the effort of re-election campaigns.
For crying out loud — we had this during Clinton’s era when he made all the sweet deals with China including giving them our supercomputers and weapons technology in exchange for campaign contributions — and you wonder why everything here is now made in China, and why China used to be almost 30 years behind us in weapons technology but now equals us (and in some cases has surpassed us)? That was all Clinton. Bet a lot of people didn’t remember that until I reminded them here.
Sorry about that — that section didn’t have much of anything to do with real estate.
I sincerely wish the government (and the banks that are beholden to them now) would make it easier for investors to do business so they can get properties moving again. The banks don’t want “Joe Public” to make money off of their losses so they play games denying short sales even though the government has bailed the banks out and the losses are only on paper. This ego-mania mentality of “we’re better than you” by the banks is never going to help. Unless the government works “with the people and for the people” recovery will take forever. But then again, Socialism requires the masses to be dependent on the government — which just happens to be the direction a certain President seeking re-election has wanted to see since his college days. I don’t expect a reversal in his idealism anytime soon. Do you?
If you’ve read this far, thank you for tolerating my ranting and raving here.
I respect both people who agree with me as well as those who oppose it. Not everyone sees things from the same perspective. However, I do think that investors have a massive opportunity to replace their job (that they might lose anyway) with real estate in the coming months/years IF ONLY the government would start improving investors’ ability to do business rather than trying to stop the “evil investor scum trying to leach off of the real estate crisis.”
Scum needs love too.
Have a great day!