Economists in the United States are taking the position falling home prices are a significant problem preventing the economic recovery in the United States. The de-valuation of homes in the United States have cost Americans billions of dollars. The declining wealth of American homeowners has had a further negative impact on their confidence that the financial situation will improve in the future.
Richard Curtin, Professor of Economics at the University of Michigan, recently stated “people don’t expect their home to regain value, and that’s really lead to a change in consumer attitudes about the economy that we’ve just never seen before.”
Americans have a confidence problem in their future of their country. They no longer believe that the economy will necessarily improve and financial circumstances will get better. The average income of many American families has declined. The unemployment rate is still over 9%. The expectations for economic growth among Americans have fallen to one of the lowest levels in history.
The Decline of the Real Estate Market
Recent studies by economist have shown the decline in the real estate market affecting all aspects of consumer spending. It is estimated that Americans reduce their spending by twenty to seventy dollars a year for every thousand dollar decline in the equity in their home. During times of appreciation in real estate there was a “wealth effect.” The wealth effect made consumers feel that they had liquidity and, therefore, they spent more money. Often more than they actually had. The down side of the wealth effect is as home values have declined, consumer confidence has declined and there has been a negative reduction in the wealth effect, meaning that consumers feel they’re getting poorer when their houses go down in value and are less inclined to spend money.
Economy Will Eventually Recover
The prevailing view among the economists is that even though things do not look good right now, the economy will eventually get better and Americans will start spending again. Hopefully appreciating real estate prices will spear head the economic recovery.
If you are behind on your mortgage, a mortgage modification may help you. Our Law Office can assist you with the mortgage modification process. Should you find yourself facing foreclosure we can represent you in the foreclosure proceedings. Our foreclosure attorneys attend foreclosure court conferences. We litigate predatory lending issues, defective mortgages, defective foreclosures and a variety of other real estate related issues. We have extensive experience in dealing with the Federal laws in foreclosure and issues concerning foreclosure related bankruptcies with individuals facing foreclosure. You may be eligible to file either a Chapter 7 or Chapter 13 bankruptcy. These bankruptcies can stop debt collection practices, stop foreclosure and in some situations, eliminate second mortgage. At the end of the bankruptcy process we can assist you in re-establishing your credit. Call us and we will discuss all of your foreclosure and bankruptcy options available to you. Thank you for visiting our foreclosure blog. Contact us for a free consultation.
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