A recent survey indicates 35% of homeowners owe more than what the house is worth. The last two-and-a-half years has seen home values drop precipitously. And, those wishing to sell must drop the price or wait in this buyers market. The reality of the marketplace and the attitudes of homeowners vary along many demographic lines.

According to a recent Rasmussen Report, the younger age groups were the most overextended, with 45% of those in the 18 to 29 and 30 to 39 year old age groups claiming they were under water. This is often the result of putting too little down and reaching above their means in hopes that the value of the property would prove to be a profitable investment.

Interestingly, nearly 40% of those 65+ were up-side-down, which may be due to refinancing to take out money to fund retirement. Of those claiming their homes were worth less than their mortgage, 32% were white, 60% black and 38% classified as other. Non-married homeowners are more likely to own more than the home’s value, 39% versus 34% for those who are married.

As might be expected, the lower the income the more likely it is that a person will be overextended on their mortgage, 53% of those with incomes less than $20,000 which slides to just 18% for $100,000+ earners. The bump in the middle of this downward trend is for those with incomes of $40,000 to $60,000 having the second highest under water rate at 46%.

When asked what should happen if someone can’t afford to make their mortgage payments, respondents were clear. An overwhelming 60% said they should sell their home and find a less expensive one, compared to only 26% who felt the government should assist them in making payments. Two-thirds of whites said sell the home, while a little more than a third of blacks agreed as did half of those classified as other.

The government, after seizing Fannie Mae and Freddie Mac some two years ago, is poised to extricate itself from future home-financing involvement. The Administration will soon be offering several options to Congress. Whatever plans are adopted, a raise in borrowing costs will result. This will suppress home prices for years to come.

One thing is certain the housing market will continue to flounder. How long is up for speculation. This is not good news for the recovering society. Since homeownership is the major individual asset, those who have positive equity will not be in a hurry to sell and take on a bigger commitment.

Until all the factions involved in the housing market can agree on who guarantees loans there is little likelihood of financial institutions opening their coffers to provide loans to those hoping to buy houses. If this does not happen, our children and their children will have difficulty in attaining the American dream of owning a home.



Source by Don Potter