Thursday, June 15, 2017

Homeownership Hurdles and Post-Foreclosure Stress Disorder

The financial crisis may be over for the most part in Oak Park, but memories of the foreclosure epidemic remain in the minds of many Americans. Indeed, according to a recent article in Mortgage Orb, knowledge of the foreclosure crisis could be one of the factors that is leading fewer Americans to become homeowners over the last several years. If there are fewer homebuyers out there, then the real estate market is unlikely to grow.
How might the foreclosure crisis be impacting home sales in the present?
New Study Discusses Low Rate of Home Ownership
The article discusses a recent study conducted by researchers at the Fisher Center for Real Estate & Urban Economics at the Haas School of Business at University of California, Berkeley, in conjunction with the Rosen Consulting Group. From the study, the researchers produced a report entitled, “Hurdles to Homeownership: Understanding the Barriers.” The study seeks to illuminate reasons for low real estate market growth “despite steadily improving job markets and historically low mortgage rates.”
In other words, most factors suggest that we should be seeing a growing real estate market, but the opposite seems to be true. The authors of the study indicate that, with all other factors being equal, we should have seen approximately 900,000 more home purchases in 2016 than we did. What is the problem? There are some issues we might expect, according to Ken Rosen, who is the chair of Rosen Consulting Group and the Fisher Center. As Rosen articulates: “Ten years after the Great Recession, major barriers remain for households trying to buy a home. Limited mortgage availability and excessive bank regulation restricts nearly a million households from purchasing homes each year.”
Yet affordability and supply are only two pieces of the puzzle. It is possible that there are two much more salient causes for the lack of growth in the real estate market: what the authors of the study call “post-foreclosure stress disorder,” as well as spiking levels of student loan debt.
What is “Post-Foreclosure Stress Disorder,” and How Does it Impact the Real Estate Market?
What is “post-foreclosure stress disorder”? After a major economic downturn like the relatively recent financial crisis, potential homebuyers may experience anxiety when it comes to taking a major financial risk such as that required to buy a home. As Rosen explains, “many households now suffer from post-foreclosure stress disorder, an altered perception of the financial risks associated with homeownership.” In order to reinvigorate the real estate market, Rosen emphasizes that this so-called “post-foreclosure stress disorder” will need to be addressed.
It is possible that post-foreclosure stress disorder is compounded with student loan debt, as well. As the article highlights, in 2015, the average student loan payments was $300 per month, which is about 20% of the median mortgage payment. In other words, many would-be homeowners with significant student loan debt cannot afford to buy a house (or buying a house might be financially difficult). That fact, combined with post-foreclosure stress disorder, may be contributing substantially to the current rate of home buying in the country.
Contact a Foreclosure Defense Lawyer
Some families experience anxiety about foreclosure because they are still at risk of losing their homes. If you have questions about avoiding foreclosure, an experienced Oak Park foreclosure defense lawyer can answer those questions for your today. Contact the Emerson Law Firm for more information.
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