RealEstateEconomyWatch.com

Although some of the major measures of housing activity like, existing home sales, new home sales and housing starts have trended modestly upward during the past several months, confidence in the nation”s  housing sector remains shaken. According to a survey released last week by the National Foundation for Credit  Counseling, nearly one-third of current homeowners doubt they will ever be able to buy another home.  And 49 percent of the respondents to the survey agreed with the statement: “because of the current economic climate, the American dream of homeownership is no longer a realistic strategy for building wealth.”

The dismal mood of homeowners can be primarily attributed to the dramatic drop in home values over the last several years. According to the National Association of Realtors, the median home price for existing homes in May was 25 percent below its May 2006 level. As a result over 20 percent of homeowners find themselves underwater- where the wow gold deutscher anbieter current value of their home is less than their mortgage loan balance.

Underwater mortgages are limiting the number of loans that qualify for a refinancing in President Obama”s Home Affordable program. The original objective of the program was to help 4 to 5 million homeowners refinance over the next several years. But the program required that homeowners could only be 5 percent underwater which is currently limiting the number of households that qualify to participate in the program.  In response, the Federal Housing Finance Agency is considering modifying the program to boost the maximum loan-to-value ratio to 125 percent.

Whether the Administration modifies the LTV ratio for refinancings is uncertain at present. From a business perspective, it is difficult to justify permitting homeowners who are 25 percent underwater to refinance their loans. This would be a homeowner bailout of large proportions which goes against the grain in a free market system. Whatever ends up happening, one thing is clear: attitudes toward homeownership have shifted in America.  At least for now, owning a home is no longer synonomous with wealth creation. More and more Americans are renting rather than owning. And more and more homeowners are staying put in their homes rather than trade up to purchase a larger home. Both of these developments are inhibiting  new and existing homes sales which is delaying a sorely needed  housing recovery.