It's easy to see the little guy getting squeezed right now. The whole mortage deal is a big mess. Too many first time buyers that never looked own the road. These folks should never have bought unless they knew how they would afford the payment bump. The loan companies were irresponsible IMO as they could have kept the same qualifications and stalled the housing market into realilty long ago.
I have a couple employees that are going through BK due to this. They now plan to rent, but the rents are up 10% or more our west as these people have to go somewhere. The bumps raised the loan payments from $1,800 to $2,700 It's all very sad. These folks spent their savings to cover the bump and some even dipped into 401k's. But fortunately it's no where near the majority. The rents will be $1,100 to $1,500. The news and net makes is seam like a huge part of the population is in this mess. In reality it's around 1%-1.5% now and may top at 3% for what I hear.
But even with higher rents, as these folks settle in, they will have more spendable income IMO. That should eventually shore things up a bit. Also, not noted are the people wanting to buy at these price levels, but are still waiting as the news keeps saying it will get even cheaper. So, in the end I know of 2 really struggling and 10 ready to buy when the time is right. Many bank owned homes are not even available for sale yet out here. In addition the market is also comparing home sales to some of the largest volume numbers in decades. So the comparable number for growth will look even worse. "Worst decline as compared to the Highest increase". A little leveling applied to the numbers would show it's not as bad, but that is not newsworthy, is it?.
In my business I see lots of deferred purchases. Folks are staying away form the Wants and are more focused on the Needs right now. But in a few months those wants will become needs. The needs part of the business is better than average right now.
The news is not helping this much right now. Too much doom and gloom being played over and over. Even folks that are not in hot water, get in a funk because of it. The information age tends to cause the lines on the graph to move much quicker and more abrupt. Just my .02.
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