Housing Crisis? What Housing Crisis?

Guest post by Director Greg Kyle

It’s been eight years since the beginning of one of the worst recessions to occur in the U.S. since the Great Depression of the 1930’s. To a large extent, the recession was brought on by a crisis of confidence in the housing market. At the bottom of the Great Recession, home prices had fallen by more than 50% in some areas, and many homes were underwater – valued at less than the mortgages on those homes.

Although the housing market has improved over the past few years and the recession may – for some – seem to be a distant memory, that is not the case for most Americans. A recent national survey commissioned by the MacArthur Foundation found that “three in five Americans (61%) believe we are either “still in the middle” of the housing crisis (41%) or “the worst is yet to come” (20%).”

Adding fuel to the fire, the survey also found that the vast majority of people are very skeptical about upward economic mobility. Nearly 80% of Americans believe that “it is more likely for ’middle-class people (to fall) into a lower economic class’ than for ’people in lower economic classes (to rise) into the middle class’.”

That news does not bode well for the strength of the U.S. economy, which depends on consumer spending for two-thirds of its GDP. Concerns over housing affordability and a pessimistic view of the economy could keep consumer spending weak over the coming year.