[An earlier version of this piece appeared in Forbes.com.] Falling house prices tend to be bad for incumbent politicians during reelections. Take, for example, George H. W. Bush. Vice President George H. W. Bush was elected president in a landslide in 1988. The U.S. housing market had been booming for years before that election. The Northeast
Jun 29, 2022·edited Jun 29, 2022Liked by John Wake
John, you state "Home equity fell much more for homeowners with mortgages, of course, because the amount you owe on your mortgage doesn't fall when your house value falls. A small percentage fall in house prices can cause a huge percentage fall in your home equity and family wealth. Recent home buyers with small down payments can quickly go “underwater” and owe more on their houses than their houses are worth."
Makes sense. So would you also say that if interest rates stay at or above the levels they are at now, and a market recovery seems distant, paying cash (as opposed to a mortgage) is better path for more people if they can afford it?
John, you state "Home equity fell much more for homeowners with mortgages, of course, because the amount you owe on your mortgage doesn't fall when your house value falls. A small percentage fall in house prices can cause a huge percentage fall in your home equity and family wealth. Recent home buyers with small down payments can quickly go “underwater” and owe more on their houses than their houses are worth."
Makes sense. So would you also say that if interest rates stay at or above the levels they are at now, and a market recovery seems distant, paying cash (as opposed to a mortgage) is better path for more people if they can afford it?
Maybe John will weigh in on my question....
Thank you - very insightful