i know the economic data has been better than expected an i know consumer sales was very surprising; actually sales is whats really sparking ths rally aside from china.. anyway, loo a how many homes are under water(mortgages),how many people stopped paying their mortgages either as a result of foreclosure or the fact that they are delinquent and know they ar going into foreclosure so of course they are not paying their mortgages. essentially,they are living in homes rent and mortgage free. how great is that !!! well,does anyone think a big portion of the increased sales numbers has been a direct result of the aforementioned? i mean,if ost people were making a true attempt to pay their mortgage,perhaps they would not have the disposable income they have. of course they may be unemployed but if you have no rent or mortage you can still go to the mall and do some shopping...please opine.
What percent of people do you really think however aren't paying any rent or mortgage and are then just spending their money on consumer goods? I own some rental properties and they are all paying - people who are renting apartments are paying, and there are still a huge majority of people paying their mortgages. Remember that if a house is underwater that doesn't mean the person isn't still paying their mortgage. I'm sure what you are saying is happening in some cases, but I think it would be a super small amount of the overall spending. JJacksET4
Zoom out a little: lots of people are no longer "house poor" because of being foreclosed out, or adjusting their mortgages (although not many people seem to have succeeded in this) or from what you describe. That automatically means they now have disposable income they didn't have before, besides being a little wiser about the real value of homeownership, of course. The falling price of houses also means people who buy now aren't as "house poor" as those who bought a few years ago, but still have to go out and buy new appliances, drapes, rugs, furniture, etc. They can afford to buy a bit more of these things now. During the bubble, it was common for me when walking the dog around my neighborhood to see Mcmansions with no drapes on the windows: the folks who bought those monstrosities obviously couldn't afford anything else once they were done paying for the house itself. I don't see that anymore.
i think many choose not to pay their mortgage even though they could still do it for some time into the future. the reason for this is that they are well aware about the hopelessness of their financial future: no job prospects now or several years down the road, the house is unlikely to regain its value, etc. basically the bankruptcy is a given, it is just a matter of time. therefore some make a choice of living a good life instead of throwing the money into the mortgage sinkhole. i guess bankruptcy and foreclosure take time (years??). the main difference for these hopeless folks is whether to wait for bankruptcy leading a crappy lifestyle or a relatively rich one.
i just think alot of irresponsible people went on spending spree's this christmas. of course there are plenty who lost their homes due to bad situations but even they will still go to the mall and blow 500 bucks because they live in a home mortgage free until they are kicked out. i think most of you are underestimating this.