Economists consider the housing crisis to be the biggest drag on the economy.
The housing crisis continues to weigh on investors, according to a recent survey conducted by Millionaire Corner. Nearly 70 percent say they are acquainted with someone who has had trouble selling their home over the past couple of years. Forty four percent do not believe the housing sector will rebound within the next two years. Of these investors who have a net worth of $5 million or more, more than 57 percent share this pessimistic outlook.
After more than four years after its initial collapse, economists consider the housing crisis to be the biggest drag on the stalled economy. Millions of Americans are downwardly immobile. One-fourth of all houses in the United States are in foreclosure or the market value has been overtaken by the mortgage. Thus, homeowners are stuck, unable to perhaps move to a new location where the job situation is better. The housing crisis wiped out more than half the $13.5 trillion that homeowners had in equity in early 2006, according to Federal Reserve data..
The biggest lesson learned from this prolonged economic downturn? According to 51 percent of Millionaires, it is that their primary residence is not a stable financial asset. “Housing (is) not the American dream, it’s the nightmare,” Karl E. Case, co-founder of the Case-Shiller home-price index recently told The Los Angeles Times.
Which is why some analysts are dismayed that President Obama’s $447 billion job creation plan did not address this persistent scourge beyond a pledge “to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent. That's a step that can put more than $2,000 a year in a family's pocket, and give a lift to an economy still burdened by the drop in housing prices.”
The ripple effect of the housing crisis has been more of a tsunami with jobs lost due to the halt to construction of new housing and financial institutions reeling from billions of dollars in bad mortgages. Makers of building materials, producers of furniture, home appliances and lawn products have also felt the squeeze.
Earlier this summer, the National Association of Realtors sent a letter to Shaun Donovan, secretary of Housing and Urban Development; Timothy Geithner, secretary of the Treasury; and Gene Sperling, director of the National Economic Council, cautioning that regulations and legislation that tighten access to credit and affordable safe mortgages “are not the solution to righting the housing market and economy. A strong housing market recovery is essential to the nation’s economic strength.”