The Economic Mess

Slowly but surely the American economy is descending toward third world levels, with American families being pulled underwater with monstrous debt and little or no savings. If they have houses, those houses are either mortgaged to the hilt or they aren't worth anything or worth less than what people paid for or into them.

It's all by design, of course:

Families are making their way through the economic conditions of 2008-2012 and there appear to be some financial improvements, after a decline in the overall rate of home ownership established in recent Census Data. In the interim many have found themselves in economic difficulties with their mortgage arrangements, often established during the strong housing and labor market as of 2004-2007. Many have responded to the economic conditions by modifying their mortgages or simply becoming owners with no mortgage, or voluntarily or otherwise moving from owning to renting. We can see that families with mortgage difficulties in 2009 were more likely to end up as renters in 2011. Looking forward to 2013, we see that there is some modest reduction in the percent of families expecting to experience payment problems. If their assessments are accurate, we can expect some improvement in mortgage repayments in the coming months.

The WSWS has its take:

Not surprisingly, difficulty keeping up with mortgage payments is directly tied to job losses and stagnating or declining wages. Families are stressed by concern over whether they can maintain the cash flow to cover mortgage and housing expenses after a parent loses his or her job. Others struggle to keep up after taking a pay cut or being confronted with a forced early retirement.

At the same time, families continue to be hit by higher payments on adjustable-rate mortgages and declining home values. According to researcher Stafford, those who had made an “excessive commitment to housing”—dedicating 25 percent or more toward these costs in 2007—faced greater difficulty once the recession hit and home values began to fall.

Home ownership has always been considered one of the most important barometers of attaining the “American dream.” The research showed that among those who were behind on their mortgages in 2009, 19.3 percent had become renters by 2011. By contrast, of those homeowners who were not behind in their mortgages in 2009, only 6.5 percent had become renters in 2011.

Of course few "homeowners" actually own their homes outright. In truth, they are paying rent to a bank or whoever has the mortgage with the "promise" the property will be theirs at some distant date. They aren't throwing the money completely in a rathole like renters, but they are more likely to be in a ton of debt in their pursuit of "homeownership."