For the first time since the Fed began tracking these data in 1945, Americans owe more on their homes than their homes are worth. Newly released numbers have the exact figure at 47.9%, an all-time low despite the rapid gains in home values in the 1990's and earlier part of this decade.
Despite a likely recession brought about by the ongoing fall in home values (and massive housing inventory, evident by the rising number of homes for sale on HotPads) some economists are calling for an even steeper decline in home values as the best chance for a recovery.
The statistical storm clouds are lending more credence to talk of another big rate cut by the Federal Reserve when it meets later this month.
It appears based on the numbers that most Americans would use their home as a bank to tap their equity instead of waiting to buy an item for cash. I know even I was guilty of doing the same thing in 2003-2004.
With the rapid appreciation of homes here in Phoenix in 2004-2005 it was very easy to borrow against your home. I believe this market correction will make many people more financially savy. Perhaps we have all learned not to buy wanted items on a whim but needed items with more thought and diligence.
Posted by: phoenix real estate | Sunday, March 09, 2008 at 03:34 AM