We read too often about the foreclosures of homes – but what about the folks who are making payments to houses that are no longer worth what they owe? RISMedia posted an interesting article today on the impact that mortgage payers are having on the American economy…
With home prices stagnant in much of the country, payments on mortgages that are
underwater could absorb billions of dollars that might be used for other
forms of consumer spending—a drag on family finances, the housing market and the
overall economy. And the drag could persist for years.
Here are some of the impacts they noted:
- Of the estimated 15 million homeowners underwater, about 7.8 million owed at least 25% more than their properties were worth in the first quarter of this year.
- Many of these homeowners are paying much higher interest rates than the latest national average of 4.25%.
- In normal times, the U.S. should be putting up about 1.7 million new houses annually, but this year it’s running at about 600,000.
There are obvious changes in the real estate market, but as RISMedia points out, it’s having an impact on all aspects of life…
Rather than going out on their own or starting families, young Americans are doubling up with friends and relatives, saving more and paying down debts. Older Americans are staying in their jobs longer, hoping that the single biggest asset for most of them—their homes—will recover in value.
Submitted by Minnesota REALTOR, Mary Rugani.