The erosion of the syndrome known as the "Wealth
Effect" is showing that fall out from the housing slump is having a major
impact on the U.S. economy, according to Housing Predictor analysts.
Consumer spending habits slowed for a time after the housing bubble burst as
the "Wealth Effect" made people feel like they were losing money as
equity in their homes dissipated with falling home values. Three years after
the financial crisis consumers have changed their habits, cutting
spending on many consumer goods.
A study conducted by Harvard’s Joint Center for Housing Studies showed that the
real estate bubble would have only been about half its size had banks and
mortgage companies not offered the new breed of mortgages, reducing the number
of troubled properties in foreclosure substantially.
The foreclosure crisis has resulted in more than 6-million U.S. foreclosures
and is gaining momentum as more homeowners lose the ability to pay mortgages,
and other upside down mortgage holders walk away from their homes. Historically
housing leads the U.S. economy out of recessions, but the economy has sustained
a massive blow from the bankers, who developed new mortgages and sold them to
anyone that could sign their name.
Contact:
Mike Colpitts
Editor
HousingPredictor.com
225 Main Street
Destin, FL 32541
850-622-1016
