Historically, Americans have wanted to own their homes. This is true, even though, on average, Americans move every five years.
The goal of home ownership was a social phenomenon. But because prices always seemed to rise, and because you could get leverage (mortgage), home ownership became the most popular capital investment.
All this burst in 2007-10. The housing market continues to fall. The Case-Shiller housing price index of 20 American cities fell 3.6%, September to September. (This index is an average of the previous 3 months.) It was 3.8%, August to August.
This was a little worse than industry forecasts: 3% (Bloomberg News) and flat (Reuters poll of economists). In other words, the decline continues to be relentless.
The hardest hit was Atlanta: 9.8%.
This is an important assessment:
David Blitzer, chairman of the S&P Index Committee, gave CNBC his view of the situation: “Consumer attitudes have gotten a lot more negative about long-term commitments, and the No. 1 long-term commitment most people in this country made is buying a house.”
The move from long term to short term is a major change in attitude, if true. The job market surely seems to contribute to this change. People want to remain mobile. If you get fired, you may have to move .
Reuters reports that the number of U.S. homeowners who are behind on their mortgages decreased modestly in the third quarter, though levels remained high.
Furthermore, the number of properties with amounts owed on mortgages that exceed the actual property value (i.e., negative equity) is dropping. But not by much: From the second quarter to the third, those properties only fell from 10.9 million to 10.7 million. These slight drops, although a positive step, are hardly a drop in the bucket.
“An additional 2.4 million borrowers fell into the near-negative equity camp in the third quarter,” promoting concerns of more foreclosures to come.
There is no end in sight.