This article on money.com puts some data together that might help shed light on why, given the massive run up in credit and debt servicing, people are still spending. (Sorry if it’s been discussed–I haven’t seen it)
This first quote is echoed daily, by my peers, most of whom are otherwise very intelligent…:
Most – 55 percent – are confident that their homes continued to increase in value compared with a year ago
74 percent of the survey respondents said they were confident that they could sell their home within six months at the price they think it’s worth.
I guess that proves it, five quarters of American’s can’t do math.
85 percent believe their home will rise in value during the next five years, and 63 percent believe a house is a good investment.
When is the last time 85 percent of American’s agreed to anything?
And the clincher, in my mind:
most homeowners (76 percent) have not, for example, pared back their consumer spending in response to current market conditions.
Maybe this is because they have plenty of cash, no debt, and lots of equity? Hardly,…
they added mortgage debt in the first quarter of 2007 at an annual rate of $510 billion. The ratio of equity-to-home-value stood at 52.7 percent, a record low.
How in (insert diety of choice)’s name can people have the lowest equity-to-home-value ever! I’ve seen the MEW numbers before, but come on. Has everyone gone and bought a McMansion? I always knew there were plenty of dumb-masses, but holy crawfish.
Indeed, 69 percent reported that they’re confident enough that they are likely to renovate or make some improvement in their home during the next 12 months, and 27 percent said they are likely to be moving on up…
If 70 percent of people are looking to renovate, why is Home Depot stock in the crapper?
Excuse me, but I need to go liquidate my holdings to buy a coleman stove, some ramen noodles and a shotgun. ;^)
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