COMMENTARY | After seeing the lowest number of house foreclosures in four years in April, the numbers spiked in May, continuing a trend that will likely not end until some 15 million homeowners have lost their homes.
A report from CNN Money and RealtyTrac indicates that the housing market, after seeing a slowdown in foreclosures in the early part of the year, were on the rise again. The foreclosure rate was up 9 percent with a 12 percent spike in foreclosure starts. The housing industry attributes the increase to the final settlement in the robo-signing scandal (where banks processed hundreds and thousands of foreclosures under fraudulent conditions), which allowed banks to again process foreclosures with confidence.
But Zillow reported in May, according to CNN Money , that more than 30 percent of homeowners, nearly 16 million, were underwater with regard to their mortgages. Zillow’s numbers somewhat corroborated a report by HousingPredictor.com, which noted that some 7.6 million homeowners had lost their homes since the housing bubble burst in 2007 and another 7.4 million were expected to lose theirs by 2016.
Those numbers are being bolstered by more reports and studies revealing numbers that point toward a population whose assets have decreased since the housing crisis/financial meltdown that led to the Great Recession.
One report, the Survey of Consumer Finances , showed that the average American family’s median net worth fell from $126,400 in 2007 to $77,300 in 2010. The Federal Reserve noted that the levels set the average family back to same net worth of the average American household in 1992.
The Fed attributed most of the loss to families either losing their homes or seeing their home values plummet after the 2007 housing and mortgage crises. Average home prices fell from $246,000 to $174,500 in the three-year period.
Savings and investments took a hit during the financial meltdown that followed shortly after. Entire pension plans, retirement portfolios, and savings accounts were impacted, many nearly or completely wiped out as millions lost their jobs.
And while the Department of Labor was recording unemployment rates unseen since the Great Depression, the long-term unemployed (27 weeks or longer) reached record levels as well. With the jobless finding it more difficult to find work, many settled for jobs that paid less just to have an income to pay the household bills. Median pre-tax income fell 7.7 percent, the average household making $45,800 in 2010, compared to $49,600 in 2007.
It doesn’t appear as if it will get any better anytime soon. Unemployment in May saw an uptick, according to the Bureau of Labor Statistics , the first such upward jump since June, July, and August of 2011 , when the unemployment rate leveled off at 9.1 percent. Dropping since, it rose from 8.1 percent in April to 8.2 percent (12.7 million) in May. To make matters worse, the long-term unemployed numbers rose from 5.1 million to 5.4 million.
The decrease in wages on a household scale also means less disposable income — less money to save, less money to invest, less money to spend. The Fed study indicated that between 2007 and 2010, average family savings fell 4.4 percent, also the lowest levels since the early 1990s. Although gas prices were a little lower in 2010 than they were in 2007, they have since increased as well. ABC News reported in March that food prices have increased due to higher transportation costs, not to mention a shortage in world food stockpiles and an increased redirection of grain production to animal feed and biofuels. Kraft Foods alone increased prices on their products worldwide by 7.6 percent in the last quarter of 2011. Grains from rice to corn saw increases of over 100 percent in prices in 2007 and futures speculation has also had a hand in raising prices, according to Wired . The food index of the Consumer Price Index rose 4.4 percent from March 2011 to March 2012 as well, according to the Bureau Labor Statistics.
If you’re anything like the average American, you’re household net worth is considerably less and you’ve either lost your house, got behind on payments, or are in the process of foreclosure. To add insult to injury, your income is probably less than it was five years ago, you probably have experienced a period of joblessness (and might continue to be), and your dollar buys you less at the store.
And yet, Americans still feel as if things are a bit better in the US than around the world. In fact, Gallup recently found that the closer to home they were, the more positive Americans were about the economy. Only 15 percent found economic conditions poor near where they resided, 22 percent within their home state, and 30 percent in the US. Americans found poorer economic conditions in Europe (40 percent) and the rest of the world (41 percent).