Shiller Foreclosure Analysis

Excellent article by Robert Shiller today in the New York Times called the Scars of Losing a Home. The entire article is an excellent read - here are some key parts:

ACROSS the United States, there were 243,353 foreclosure filings in April alone, nearly three times the total in the same month just two years ago, according to RealtyTrac, a company that follows the numbers. The trend is unmistakable, and suggests that, without government intervention, many millions of American families will be losing their homes before long.

... [W]e have to consider that we cannot squarely place the blame for the current mortgage mess on the homeowner. It seems to be shared among mortgage brokers, mortgage originators, appraisers, regulatory agencies, securities ratings agencies, the chairman of the Federal Reserve and the president of the United States (who did not issue any warnings, but instead has consistently extolled the virtues of homeownership).

... MAYBE that’s why President Bush’s “Ownership Society” theme had such resonance in his 2004 re-election campaign. People instinctively understand that homeownership conveys good feelings about belonging in our society, and that such feelings matter enormously, not only to our economic success but also to the pleasure we can take in it.

But we are now seeing the president’s Ownership Society plan operate in reverse. Already, the homeownership rate has fallen — from 69.1 percent in the first quarter of 2005 to 67.8 percent in the first quarter of 2008. That’s almost back to the 67.5 percent level where it stood when Mr. Bush took office in 2001. And it is likely to fall further.

The pain of this reverse movement could leave a psychological scar that will be with all of us for the rest of our lives.

The Great Housing Bubble and downward economic spiral is happening to everyone in the country whether they realize it and accept it or not. The reverberations and affects will be felt from one coast to the other. And he is 100% correct in mentioning all of the actors involved with the current mess. The home owner suffers the most and is the most visible since the bubble burst. However, jobs and entire industries have disapeared over night.

In 1969 Caroline Bird wrote a book called Invisible Scar. In the book she describes being inspired to write the book for a new generation that were not alive to realize the economic conditions and problems that had recently taken place. The memories of the Great Depression's economic hardship and suffering were fading. She wanted to preserve that knowledge and lessons learned for current and future generations.

Probably 30 years in the future sociologist and social scientists will be documenting the Great Housing Bubble for posterity. I would not be surprised if this article was in the bibliography.