Just a few years ago, home ownership was something available to just about anyone—an economic reality that to an extent, contributed to where we are today. Nevertheless, the mortgage boom helped a lot of people realize that benefits of home ownership. It’s simply too bad that it came with so many hidden financial pitfalls, many of which have subjected sub-prime borrowers (and also those with standard mortgages) to serious, long-term hardships.
Today, almost the exact opposite has become reality. Mortgages are exceptionally more difficult to obtain and when they can be approved, the houses themselves don’t qualify because of drastically diminishing real estate values.
This week, reports surfaced that new home sales are at an all-time low. Well, at least since the government began keeping records in the early sixties.
Housing industry analysts and real estate professionals who are on the street trying to sell are waving their fingers at the expiration of a Washington-backed tax break for new home purchases, perhaps the federal government’s most successful economic resuscitation strategy.
Last year at this time, experts across the cable channels confidently predicting that by this summer, we would be breathing a sigh of relief at a blossoming economy. Instead, it appears we have stagnated at a new normal. Housing sales are down 32.4 percent from last July, which was a time widely thought of as the “heart” of the downturn.
For the last few decades, home ownership became the definition of financial stability. It was sold to people as a way to reach the “good life” that helped color America as the land of opportunity. The collective nationwide strive to qualify for a mortgage eventually became a target of the financial industry, from politicians on influential economic committees to Wall Street executives. Finally, houses became a real commodity, bought and sold as quick investments and wealth starters for people at all income levels, not just the upper middle class.
Today, home ownership is a stain on the financial records of families across the country. People are bitter, saddened and broke. A rising tide of personal and commercial bankruptcies can be attributed directly to the real estate crash. For citizens who once used home ownership as a goal on their way out of a separate financial setback, disappointment abounds.
There is more to the reported decline in housing sales than just the expiration of a tax break, according to industry watchers.
Chris Low, a chief economist with FTN Financial, a financial services and analyst group, believes there is a mindset problem in America relative to home buying. "A double-digit drop suggests to me that there wasn't just a tax effect at work in July, but a change in sentiment, a change in the willingness to make such a big purchase. It is especially surprising given where mortgage rates were. It is just a reminder of how much work there is still left to do before housing can be deemed healthy again."
Normally, factors like low interest rates spur home sales. That is simply no longer the case. People, in short, are scared. And there is also a very overt mistrust in the financial industry. The have-nots are seething at the haves, or at least those who are perceived to have.
The situation in the foreclosure world has become so brutal that houses are selling for pennies on the dollar to investors and families are able to remain in a home without paying for months before a back-logged bank official can make steps toward legal eviction.
It appears, that at least for the next few years, American home ownership isn’t going to carry the status it did just three or four years ago. Many believe it may never be again.