Wednesday, October 19, 2011

Falling home prices perpetuate gloom amongst homeowners

by Sarah Jawaid and Blake Warenik, National Housing Conference

Today, the New York Times published an article about struggling homeowners who see no end to the economic crisis, largely due to falling home prices. While economists have said the downturn is due to dropping wages and lack of jobs, it seems the largest burden some families face, often underappreciated by economists, is equity lost on homes. “People don’t expect their home to regain value, and that’s really led to a change in consumer attitudes about the economy that we’ve just never seen before,” said Richard Curtin, a professor of economics at the University of Michigan who directs its Survey of Consumers.

While home prices may continue to fall, that doesn't mean that young adults in America are necessarily willing or able to take advantage of the housing market. The Center for Housing Policy's Jeff Lubell was interviewed in U.S. News and World Report in an article released today highlighting how the recession may have altered the meaning of the American dream for young people. Employment and income instability, the foreclosure crisis and other concerns have come to the forefront for young adults in deciding whether to buy a home or even have children.

Citing Freddie Mac data, the story said that in the last year homeownership rates have fallen by 4.4 percent (to 21.9 percent) for people under 25 and 7 percent (to 34.7 percent) for people 25 to 29 years old.

"I think if I were a youth in that age group, I'd be focused more on maintaining my ability to move and be mobile," Jeffrey Lubell said in the interview.

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