Real Estate Housing Market News Update
According to a recent Fannie Mae study 33% of Americans would be more likely to rent their next home than buy. This is an increase from 30% in January 2010. Despite this trend, 44% of renters say they would be better off owning a home given their current financial situation. 89% of homeowners agreed. Also part of the study, 51% of said the current housing crisis has not influenced their long term willingness to buy a home.
Fewer borrowers are now underwater according to a Core Logic analysts. Unfortunately for homeowners, the news is the result of increased foreclosures and not a rise in home prices. Analysts also noted that negative equity is the main factor holding back the housing market. Homeowners with negative equity are less likely to maintain and improve their homes because of the small chance of a return on investment. The firm expects underwater homeowners to behave more like renters. Overall, 27.5% of mortgages have negative or near negative equity. In these situations, homeowners are more likely to be foreclosed or be forced to short sale their homes.
And now for the good news. The Federal Reserve released data indicating that the the average American's financial situation improved in the 3rd quarter. Household wealth grew by 2.2% and should give a boost to consumer confidence. The increase was attributed to gains in the stock market, which offset continued weakness in the housing market. Continued financial gains coupled with a recovery in unemployment should help consumer and business spending and support GDP growth, which will then spur activity in the housing market.
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