The media regularly gives front-page treatment to data on the number of home foreclosures each month. The number is expected to reach three million for the second year in a row. However, there are more than 131 million households in the U.S. Another fact the media covers regularly is the number of home mortgages that are underwater. The number is about 20%, which still leaves 80% of mortgages with lower balances than the value of the homes they cover.
Americans understood more than two years ago that the home equity market was nearly gone. The chance to tap large reservoirs of home value for consumer spending, college education costs and retirement had mostly gone away. People had to survive and, perhaps prosper, in an economic landscape that had changed radically. Like unemployment, home value problems became a fact of life.
The consumer has begun to recover. Holiday spending rose between 3% and 4%, based on most measures. Unemployment has begun to fall. Tax cuts probably will be extended into next year. Long-term unemployment insurance probably will, too.
The fact of the home market collapse has touched millions of Americans. It has barely touched tens of millions more. Some of the touched and many of the untouched have learned to increase their consumer purchases as the housing catastrophe continues to be part of life.
Douglas A. McIntyre
Top Gaining Stocks
Top Losing Stocks