The recent Federal Reserve report is troubling for a variety of reasons but a large factor contributing to the decline in net worth of Americans is the over reliance on real estate. You simply do not lose 40 percent of your net worth in three years and expect minimal impacts to the economy. It was also enlightening to see that the bottom 90 percent of American households actually saw their income fall in this period. So again the question remains, why would housing prices move up when incomes are falling for the vast majority? It also may answer why prime markets, those targeting the 10 percent that did see incomes rise are in fact stable or moving up. Yet overall the negative equity situation is one in which a large number of American families are impacted and will have long lasting effects on housing moving forward.Read it at Dr. Housing Bubble
The lingering problems of negative equity – Over 10 million Americans are underwater with 1 million having loan-to-value ratios of 150 percent or higher
by Dr. Housing Bubble
Dr. Housing Bubble is on this.
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ReplyDeleteIf Real estate prices are a function of income...
ReplyDeleteWe could lower rates.
A first time buyer subsidy.
We could bailout underwater homeowners....
every thing except deal with income.
Or Congress could spend to increase demand for labor so incomes rise?
Too Politically controversial. Unlike having millions of unemployed, tanking home values, sinking incomes and stagnant business which is really great politics!