The number of new home sales dropped again in January to number not seen in more than 50 years. The population today is 2/3 bigger than 1960 and much older since families are smaller. It’s true a bigger percentage of families do own their homes today but that is a trend that is rapidly reversing.
The millennium generation (turning 18 since 1999) has been hit harder by unemployment than any other group and 20 percent have moved back home with their parents. The good news is they are the only demographic in which the majority describes themselves as liberal and there are more Democrats in this group than their elders.
Home sales were actually up in the western half of the Midwest and unemployment is relatively low. This is portrayed by the press as the conservative values of these states and their not having participated in the real-estate bubble. The reality is that these states have lost their manufacturing jobs too, but have more raw materials and food products to export to China. There are few new jobs outside of oil and gas drilling that pay a living wage. Most are the type that don’t require a verifiable green card.
Home foreclosures continue to climb as provisions written into the bank bailout by the Bush Crime Family give huge incentives to banks to foreclose as they are compensated by the government at a higher rate than if the loan were paid off. Walk away’s are becoming so common that in many markets it doesn’t affect the consumer’s credit rating that much. Rental units advertise openly to these people and many home owners are “trading up” for a better house for less money by turning in the keys and taking over a foreclosed loan. Do not attempt this without legal advise, in some states the lender can come back years later and extract the deficiency from you, which can be most of the home's value.
Trading one loan for another cheaper one may seem like a shrewd move but in a year or two things will likely be even worse. It doesn’t do the economy any good to operate on that assumption, but you need to look out for yourself. A plan that avoids debt entirely is always the best way to weather bad times and we haven’t seen the really bad times yet. www.prairie2.com